Whisky investment was once a rare commodity, limited to industry insiders, private and corporate investors but, with expert advice available from reputable companies and prices starting at just £5,000, more people can now easily add whisky cask investments to their portfolios.
At Whisky 1901, we make it our mission to connect our investors with the right whisky cask based on their unique circumstances, including investment goals, budget, timelines, and risk appetite.
2. Growing demand for whisky
The price of barrelled whisky is inherently linked to the prices of bottles purchased and the growing popularity of the drink across international markets has a positive impact on returns of whisky cask investments. According to the Scotch Whisky Association, 53 bottles of Scotch Whisky are exported every second to 180 markets around the world and exports of Scotch surpassed £6 billion for the first time in 2022.
That said, you don’t have to be whisky drinker to appreciate its value according to Whisky 1901 investor, accountant Nigel Kippax from Greater Manchester. Although not an avid consumer of Scotch, Nigel recognises its potential for financial benefit – with expected whisky investment returns of 10% on the £18,000 he’s invested in Ardmore, Aultmore and Deanston casks he’s on a clear path to early retirement.
3. Market stability
Whisky cask investments have significantly outperformed alternative asset classes – while gold dropped and markets finished 2022 at similar levels to the beginning of the year, the value of whisky casks continued to show double-digit growth.
Stability remains an enduring characteristic of whisky casks even in unpredictable financial markets, despite market fluctuations, underlining the consistency of this investment compared to alternative asset classes.
When it comes to cask investment returns, according to the BC20 Index, £100,000 investment in cask whisky in July 2018 would have been worth £214,113 in December 2022. The same investment in gold would be worth £150,864 and an investment in the best performing stock index, the SP500, would have been worth £132,327.
And, unlike many alternative asset classes, the value of whisky casks is not driven by economics alone, but by maturation. A cask purchased today will become a different, more desirable, and therefore more valuable, asset with each year that passes.
Another of Whisky 1901’s investors, bottled whisky collector Allan Bell felt that any money invested in a savings account would not significantly increase in value, whereas a long-term investment in whisky casks would not only help save for his own retirement but leave a long-lasting legacy for his grandchildren. His portfolio includes whisky casks from Bunnahabhain, Aultmore and Glentauchers, with a total value of around £24,000. Ranging in age from five to 13 years old, these casks are expected to increase in value with maturity. Allan said: “In today’s market there’s little point in having a savings account. The interest rates are terrible, so I’d be making a pittance. I’d rather invest where I know I’ll make a return”.
4. A hedge against inflation
As a result of the current inflationary environment, 2022 saw an increase in interest in tangible assets such as whisky casks. Often referred to as ‘liquid gold’, investors are turning to alternative asset classes to diversify their investment portfolios and grow wealth in an uncertain financial climate.
This is supported by a third Whisky 1901 client, London based property consultant Harry Watts who invested over £30,000 in casks from Ardmore, Miltonduff and Benriach distilleries. On why he chose cask investments, he said: “I liked the idea of investing in something tangible rather than regular savings accounts or stocks and shares. As a property consultant one might imagine I’d invest in bricks and mortar, but the buy-to-let market has become increasingly challenging for those looking to make a profit from rentals in recent years, making this type of passion investment for more appealing.”
When selling his Ardmore cask just 18 months after purchasing it, Harry benefitted from a 19% whisky investment return.
5. Tax relief
All cask whisky held under bond in Scotland is exempt from VAT and exercise duty. These are only applied when whisky is bottled, so, if you sell your cask while it’s still in bond, you can avoid ever having to pay these taxes. And, for UK investors, Capital Gains Tax is not applicable on sales of cask whisky as the product is classed as ‘wasting chattel’ due to the evaporation that occurs during maturation – known as the ‘angels share’.
6. Regulated by HMRC
Scotch whisky distilleries are some of the most heavily protected buildings in the UK and HMRC diligently police the regulation and care of stored casks. Casks must be kept in a HMRC regulated, bonded warehouse and they are given a unique cask identification code.
When you purchase a cask, you will receive a Delivery Order including this number, which confirms legal transfer of ownership.
As a WOWGR licence holder, Whisky 1901 has permission to own, buy and sell goods in duty suspension in a bonded warehouse. Investing with us means you will work with a company that has been audited and approved by HMRC.