Rare Vintage Whisky
The New Liquid Gold
By James Espey, OBE
In the uncertain world of 2015, wealthy investors are looking to spread their risk by selecting a wide range of investments from shares to property and also high-value items such as rare paintings, watches and fine wine. More recently, they are starting to discover that old vintage whisky is becoming an extremely popular asset class, showing exciting growth in a low inflationary environment.
Discerning investors have always enjoyed both the social and fiscal advantages of investing in fine wines, such as first growth Bordeaux and top burgundies like Domaine Romanee Conte. Indeed, until recently, it was an investor’s dream, and as a consumable, exempt from capital gains taxes in countries where this is applied.
Three interesting negatives have slowed down, almost to a standstill, growth in fine wine in recent years. Firstly, China was a burgeoning market and gift giving of fine wine, slightly akin to bribery at times. Top clarets and burgundies were being bid for at auctions all over the world by the wealthy Chinese.
The Chinese Premier Li Keqiang is stamping down on corruption vigorously and, as a result, the sale of fine wine has dropped dramatically.
A second problem with wine is the concern with counterfeiting, and there have been a number of cases in recent years of people being convicted of passing off inferior wine as first growth claret.
A third negative is that fine wine needs to be stored in climate-controlled conditions to preserve its value and, on some occasions, the wine is corked or suffering from some other problem. On the other hand, whisky can be kept safely in reasonable conditions, as long as it is looked after properly and in a place where the temperature is reasonably constant.
A shortage of good vintage whisky
Whilst I am primarily involved with Scotch whisky, I have worked in the total industry for many years and have followed the growth of whiskies globally. Ten years ago, bourbon was stagnant in the USA, and today not only is it in short supply but more importantly, consumers are searching out the best bourbons for their private collections and investment. Prices are rising rapidly.
Good vintage Japanese whiskies are becoming very popular and it is almost a cult drink today. Old Canadian whiskies are growing in appreciation and importance. I would suggest that readers should follow The Whisky Magazine Index, which has tracked the explosion in the auction scene that has taken off in the UK, U.S., Europe and Asia. In Scotch whisky, The Macallan has been ranked top for five years, though it is now being challenged by the prices of Karuizawa, a Japanese brand and, of course, in the USA by Van Winkle.
Let me quote from a few recent articles – The Times (UK), Friday, February 20th, 2015.
“While the concept of liquid investment is not new, Scotch is becoming a popular bet with limited editions changing hands for six figure sums. Buyers are typically businessmen from America, Europe and Asia, and the rise in value is attributed to scarcity. Andy Simpson, a founder of Rare Whisky 101, a brokerage firm, said that blended whiskies from the 1950s could fetch more than £26,000 (circa $40,000).”
Men’s Journal on March 4th said that whisky has become a collector’s item, an investment portfolio and an extremely valuable commodity. There is escalating international demand and decreasing supply is driving increasing serious returns. According to information from The Platinum Whisky Investment Fund, the top whiskies have appreciated in value from 130 percent to a staggering 230 percent in a few years.
Internet and Auctions
There is clearly a growing interest in collecting rare whisky through live or Internet auctions, but in addition, there are special trading platforms, such as BottleSpot, one of the first markets designed specifically for trading liquor online. The site now exists as a mix of vendors who have listed over 100,000 bottles this past year and a half and there is also a growing interest from private sellers who are actively listing their collections.
Here Is My Advice
If you are interested in the whisky phenomenon, start by buying two bottles of whatever you like, the idea being to drink one with your discerning friends and sell the other, which will more than pay for both after a few years. I predict growth of a true vintage whisky of repute of at least 25 percent per annum for the foreseeable future. If you are a serious investor, then set aside whatever you deem appropriate financially, take advice and invest in good old whisky stock of all types now. I also believe that in the next few years old grain whiskies from different regions will grow in importance and value because of the unique balance, flavour and taste profile – I call them the gems of tomorrow.
There has been a lot of talk recently about non-aged whiskies.
If you wish to drink non-aged whiskies, do so, but I would guard against investing in anything without a vintage, which will guarantee its true history. A number of whisky brands are pushing non-aged brands because the reality is they have run out of aged stock and they are stretching what they have by being more flexible. I am also wary of over fancy packaging, a problem which I believe has affected the sales of cognac. If I am paying a lot of money for something I value, be it an old watch or painting or a bottle of Scotch, I want to know its true pedigree and feel comfortable that I have not been duped.
The Last Drop
Whilst of course I may be biased, I have had the privilege of working with and creating some of the great brands in our industry, such as Johnnie Walker Blue Label, Chivas Regal 18 and The Classic Malts. Seven years ago, however, I decided to form a company The Last Drop Distillers Limited with the slogan “before there is no more.” In a nutshell, big companies, understandably, are interested in volume and good luck to them. On the other hand, I want The Last Drop to be the world’s most exclusive spirits company and therefore we are hunters seeking the odd barrel or two tucked away in a cellar somewhere.
Our first release was a 1960 whisky blend of only 1,347 bottles, all since sold. Our second release was 478 bottles of a 1950 cognac and there are 20 bottles left. Our third release was 388 bottles of a 50-year-old whisky, voted by The Jim Murray Whisky Bible and the Whisky Advocate as the best Scotch whisky in the world in 2014 – all have been sold and essentially they have all doubled in value in a very short space of time.
We have just released 592 bottles of a 1965 (48-year-old blend) that The Jim Murray Bible has voted the best Scotch whisky in the world for 2015 with yet another 96.5 score. The good news is 180 bottles are available in the USA through our importer www.infiniumspirits.com
What Should You Do?
I am very confident that for a long time ahead investment in Scotch whisky will do extremely well. It is a fun and rewarding investment and also a hobby which essentially is part of one’s social life. You can make money out of your investment, you can enjoy it with your friends or you can do both.
What fun to be with like-minded people and have an evening enjoying the very best whiskies of all types from all over the globe.