The rise in wine prices over the last ten years has made investing in fine wine (rather than just drinking it) much more mainstream. It has also helped to ignite interest in a related asset class: fine whisky. As with many other trophy assets, prices for rare whiskies can now reach astonishing levels – the current record sits at $460,000 for a 64-year-old Macallan.
Of course, like fine wine, art and classic cars, investing in whisky is something you should only do if you are actively interested in whisky. If the investment doesn’t work out, you still have the pleasure of ownership (and possibly consumption). If you are a hobbyist, one way to invest is through individual bottles. Whisky has a big advantage over wine in that it’s far easier to store. You don’t need a climate-controlled cellar – whisky’s high alcohol content means an unopened bottle should last indefinitely, as long as you don’t place it in direct sunlight.
You can buy investment-grade whisky from a wine merchant for as little as £150 (the original price of the 2011 Macallan Royal Marriage, now worth £900), though prices for rarer bottles run into hundreds or thousands of pounds.
Again, like many trophy assets, there is little data on whisky as an asset class. Several of the main indices only look at the performance of the fastest-rising bottles, which, by their very nature, exclude bottles that have stayed the same or fallen in value. Some indices try to be objective by measuring the performance of “vintage” or “rare” whisky, but many of these bottles are so infrequently traded that they may be hard to value. Transaction costs can also eat into returns. The spread between the buying and selling price could be very high, especially for more obscure bottles.
An alternative – if you believe whisky demand will keep growing as more emerging markets develop the taste – is to buy it in the barrel from the distiller. You let it mature for several years, then sell it on to a third party. In the past this has only been for seriously committed whisky investors, but a new online platform – WhiskyInvestDirect – allows you to buy shares in a barrel for as little as £2 a litre. You open an account online, and there is no minimum investment or holding period.
The whisky is stored on your behalf in bonded warehouses, and as it matures, it should gain in value, assuming demand remains solid. Clearly this is a risky, alternative investment and it’s not cheap – it costs 1.75% to buy and sell, and there’s a £36 a year minimum storage fee – but it is an intriguing way to get involved in the whisky business. The catch, of course, is that you don’t get the pleasure of looking at the bottles lined up in your store room.