Investing in Whisky: No Guarantees

by Aaron Damiano Sparkes
Founder of Whisky 1901

Interest in whisky

as an alternative investment option is continuing to grow in 2024, as investors look for new opportunities.

But, despite the potential profits that can be made from investing in whisky, the rate of return can never be guaranteed. Much like stocks and shares or gold – performance levels can go up as well as down.

So, before you begin on your investment journey, it’s worth understanding the risks, as well as the potential returns. Only then can you ensure that your foray into this alternative asset market is as successful as possible.

Five risks to consider

To help make an informed decision about investing in whisky casks, there are six key areas to understand about the market that could impact your return.

1. Market volatility

The value of whisky can fluctuate based on demand, brand popularity and economic conditions. There are no guarantees on what return you will get, and whisky can depreciate over time.

In fact, turbulence in the rare whisky bottle market contributed to a 1% drop in the Knight Frank Luxury Investment Index in 2023. However, despite being the worst performing category, data published in the 2024 Wealth Report suggests that some bottles rose in price and interest from wealthy collectors continues to grow.

Other figures suggest that when it comes to depreciation, whisky depreciated by 9% in the last 12 months. But over a longer period of 10 years, rare whisky continued to command a premium – registering 280% returns.

2. Lack of liquidity

Whisky investment is not a short-term proposition. It can take time to realise your investment, as the above figures demonstrate.

It’s also worth remembering that the volume of spirit will decrease over time due to evaporation (known as ‘the Angels’ share’). Whereas ‘New Make’ spirit must be matured for three years. But for a product to be classed as ‘whisky’ it must retain a minimum strength of 40% ABV.

3. Storage costs and cask integrity

To maintain the value and integrity of whisky casks, they need to be stored and maintained properly. If not done right, these costs can mount up and your investment could be at risk.

To remain classed as ‘Scotch’ whisky, the law requires that casks are kept in Scotland in warehouses ‘bonded’ by HMRC, the UK tax authority. Conditions in these warehouses are maintained at optimum levels for whisky maturation and the condition, content and value of casks are checked regularly. At Whisky 1901, we cover our clients’ storage costs for the first five years.

Any reputable whisky broker will also let you see and even ‘experience’ your investment, so you can have confidence in your choices. We recently took some of our investment clients to the Lowland Bond facility in Fife, where we are moving the majority of our casks.

4. Counterfeit products

The industry and non-savvy investors can be targets for counterfeit whisky, especially when it comes to older and more valuable bottles or casks.

 You need to be confident in the legitimacy of your investment and proof of product and ownership. At Whisky 1901, we collaborate with a legal firm in London who specialise in commercial law to protect and facilitate the transfer of ownership of every cask purchase made by our clients and suppliers.

5. Lack of regulation

As an unregulated market there is an inherent risk with investing in whisky which could affect the value of your investment unless safeguards are in place.

Other than HMRC duty and VAT, no other regulator oversees whisky cask investment. With that in mind, potential investors should avoid firms that make extravagant claims about returns, those not on the WOWGR register, and those unwilling to provide a delivery order. You should also seek your own, independent financial and legal advice before proceeding with a purchase.

The lack of regulation is also one of the key reasons why the Advertising Standards Authority (ASA) issued an enforcement notice for whisky cask investment companies which came into force in January 2024.


Steps to success

Despite the risks, there are several key steps you can take to mitigate them and lay the foundations for a return on your investment.

  • Research and due diligence: Understand the whisky market, brands, and distilleries. Research historical prices, demand trends, and market dynamics.
  • Diversification: Invest in a variety of casks from different distilleries and regions to spread risk.
  • Professional storage: Use reputable bonded warehouses that specialise in whisky storage to ensure optimal conditions and minimise the risk of damage or theft.
  • Insurance: Insure your casks against damage, loss, or theft to protect your investment.
  • Authentication: Verify the authenticity of the whisky and its provenance to avoid counterfeit products.
  • Stay informed: Keep up-to-date with industry news, market trends, and regulatory changes that could affect the whisky market.
  • Exit strategy: Have a clear exit strategy and be prepared to hold onto your investment for the long-term if necessary to maximise returns.
  • Professional advice: Consider seeking advice from financial advisors or whisky investment experts who can provide guidance tailored to your investment goals and risk tolerance.
  • Legal considerations: Understand the legal aspects of whisky investment, including contracts, ownership rights, and tax implications.


Our commitment to clients

At Whisky 1901, we work with our clients to help them understand every aspect of their investment so they can make the right choice for them – from initial investment to exiting the market.

Our brokers are fully trained with the relevant industry accreditations and certifications.

Along with our warehousing partners, we hold WOWGR licences, which means we take responsibility for the payment of any duty to HMRC.

We supply regular regauge reports to investors which provide up-to-date data regarding ABV and liquid level, giving a true value of your cask as well as a health check.

As with any investment, it’s crucial to do your homework, seek professional advice when needed, and be prepared to monitor and adjust your investment strategy as market conditions evolve.


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