Whisky cask investment is becoming a much more accessible and accepted form of alternative investment for many people today.
In the second blog of our investor spotlight series, we meet Allan Bell to find out why he decided to embark upon whisky cask investment.
Many grandparents like to put money aside for their grandchildren’s future via savings accounts, junior ISAs, or Premium Bonds. But Aberdeenshire-based Allan Bell, aged 57, tapped into one of his greatest passions when deciding upon an alternative, and potentially more lucrative, investment plan for his new grandson Hugo, born in February 2023 to his daughter in Spain.
A former military vet and restauranteur turned HGV driver, Allan has a long-standing family connection to Scotch whisky – his own grandfather was head of security for the prestigious Black & White distillery. When he passed away, Allan inherited a rare bottle collection which first sparked his enthusiasm for the spirit. His own father passed on his bottled whisky too. Now an avid whisky collector himself, Allan recognises the enduring value of what is often referred to as ‘liquid gold’, both bottled and barrelled.
Allan’s ultimate investment goal is to provide his first grandchild, and any subsequent grandchildren born to either his son or daughter, with money for their future, whether that’s to help with university fees or pay for a deposit for a house in the future.
He knew 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.
“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,” explains Allan.
Whisky casks also compare favourably to other types of investment. The latest BC20 Index suggests that a £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.
After several months of researching his options and due diligence, Allan chose to invest in barrelled Scotch in January 2022 via whisky cask investment partner Whisky 1901.
His portfolio now includes whisky casks from Bunnahabhain, Aultmore and Glentauchers, with a total value of around £24,000 (worth around £13,500, £6,500 and £4,000 respectively). Ranging in age from five to 13 years old, these casks are expected to increase in value with maturity.
Unlike many alternative investments, the value of whisky casks is not driven by economics alone, but by maturation. So, generally speaking, a cask purchased today will become a different, more desirable, and therefore more valuable, asset with each year that passes.
When first exploring whisky cask investment, Allan was approached by several companies, but he quickly discovered that many of them could not provide the appropriate and legally binding paperwork needed to give him the peace of mind he sought. Many third-party whisky brokers only provide a Certificate of Purchase, which alone does not constitute legal proof of ownership.
Understanding the importance of this in the unregulated whisky cask market, Allan was determined to find a solution that would provide him with confidence in his investment.
One of the main deciding factors when selecting Whisky 1901 was the company’s ability to issue a Bailment Contract via its legal partner. A legally binding common law agreement, this ensures that investors have peace of mind that they are the legal owner of their whisky casks, rather than the third-party whisky investment partner. The contract includes essential details such as the Unique Cask Number, a Declaration of Ownership, and the signatures of both parties.
Impressed by the transparency and trust instilled by Whisky 1901, Allan not only invested his own savings, but he also recommended Whisky 1901 to his brother, who has since joined the Whisky 1901 family of investors. He has also suggested Whisky 1901 to other family members and friends.
“I’ve invested a sizeable amount that would otherwise be sat in the bank, so trust is a big issue when it comes to whisky investment. Whisky 1901 provides peace of mind via the legal contract, which gives me the confidence that I am the rightful owner of my casks, but I also value Whisky 1901’s expertise when it comes to which casks to invest in and welcome the bi-annual report, they send which tracks the performance of my portfolio. And then there’s the all-important personal touches – I often get a phone call to catch-up and I know that their consultants are always available to answer any questions.”
“Whisky has always been an important part of my family’s history and I’m proud to pass that baton on to my new grandson and any subsequent grandchildren. Investing in whisky, both bottled and casks, is not only a passion of mine but allows me to help preserve and build a legacy for future generations of the family. My brother and other family members have also seen the potential and are keen to join me on this cask investment journey,” he added.
