Diversification is a term commonly thrown around by financial experts - in the past it referred to expanding your financial portfolio with different forms of commodities and equities. Stocks, bonds, ETFs, the list goes on.
Yet the newer generation of investors, that grew up during the 2008 Lehman Brother Housing Crisis, have found new ways of investing. As distrust of corporations grew, tangible commodities such as art, limited collaboration shoes, and even watches, started to become massive stores of potential value.
Whatever the item, it’s undeniable that collectability is the defining factor for investing in these objects. Much like wine in the past, whisky has also joined the ranks of sought-after collectible status. As recent as August 2020, a bottle of 55-year old Yamazaki set the new auction record for the most expensive Japanese whisky sold in history. Liquid gold, indeed.
Possible High Returns
If you’re like us, and you don’t have the better half of a million dollars lying around in pocket change, there are other ways to begin a journey towards investing in whisky. Begin by investing in distilleries that allow you to own and house a cask of whisky on-site for as long as you want to age it. Over time as the spirit proofs, your cask is assessed and revalued based on its regauged litres per alcohol (RGA), age, and distillery reputation. On average, annual profits from whisky cask investments have ranged between 10% to 30%, depending on the investment distillery of choice.
Before you get out your cheque books, there are caveats one must consider before investing in a distillery. First off, casks of whisky are inherently more valuable the older they are. Prospective investors must be prepared for a 12 to 18 year investment. Along the same lines, as whisky ages in a barrel it also evaporates. Known as the angel’s share, this process is inevitable and results in the average Alcohol by Volume (ABV) in a cask to decline. Investors must be sure to avoid letting their cask ABV fall below 40%, which is one of the legal requirements for a spirit to be termed whisky-worthy. Finally, a good rule of thumb would be to begin investing in younger casks from reputable distilleries with a higher ABV, to give yourself some breathing room as your cask ages.
Investing in Rare Whisky is Pandemic-Proof
Even in a pandemic-laden economy, it appears that buying rare whisky as a form of investment seems fool-proof. Despite tighter pockets, spending on rare whisky has not dwindled a single bit. In fact, statistics say otherwise. By the numbers, The Wealth Report found that the value of rare whisky has compounded faster than cars, art, and wine, hitting an astounding 564% growth over the past decade.
The advent of online marketplaces and virtual auction houses have contributed significantly to this surge of demand for rare whisky. Experts, available around the clock, work tirelessly to pair available offerings with that of the respective investors’ risk palette. Further pushing up prices is the fact that not all whisky collectors purchase bottles for financial gain. Bottles of rare whisky are consumed more often than imagined, which leads to a dwindling pool of supply and limited availability.
The Demand for Rare Whisky Continues to Surge
Outside of advancements in technology growing the interest in whisky, increasing global wealth and demand in the Far East has led to prices of rare whisky skyrocketing to unseen heights. Commonly seen as a premium product from the West, rare whisky has long been associated with sophistication and class.
Enjoyed by the children of the nouveau riche in China, who spare no expense for entertainment, whisky has become a cornerstone of their lavish and grand lifestyles.
These High Net Worth Individuals (HNWI) under the age of 30 consistently fuel the ever growing market for rare whisky in China, where it stands as the third most popular alcoholic beverage across the nation. This swell in the rare whisky market does not appear to be going away anytime soon either. Aside from being a functional store of value, rare whisky possesses a certain grandeur and makes a social statement. It’s no wonder why collectors pour out cash for liters of this amber gold.