What does the Autumn Statement mean for whisky cask investment?

by Aaron Damiano Sparkes
Founder of Whisky 1901

Following Chancellor Jeremy Hunt’s autumn statement released yesterday, we join consumers and the hospitality industry in celebrating the news that alcohol duties will not be increased ahead of the festive season.

While this does not address the issue of tax discrepancies between alcohol beverage categories, it does mean that the whisky industry is not disadvantaged further.

And these measures don’t just affect consumers and the hospitality industry, but spirits brands and distilleries, as well as the growing whisky cask investment market.

In the spring budget, the UK government imposed an alcohol duty rise of 10.1% on spirits, including bottled whisky – representing the largest hike in excise duty in 40 years and placing an additional £100 million tax burden on the industry.

Here at Whisky 1901, we joined the Scotch Whisky Association, UK Spirits Alliance (UKSA), English Whisky Guild, and the Wine and Spirit Trade Association (WSTA) in calling for a duty freeze and fairer taxation on spirits.

As mentioned, the biggest issue is that the current system discriminates between alcohol beverage categories, with consumers who drink 14 units of cider a week being taxed £1.23 versus those who drink Scotch being taxed £4.42.

Scotch is already the highest-taxed alcoholic product in the UK and a staggering three quarters, or 75%, of a bottle of whisky is claimed in tax. This contradicts the UK government’s pledge to support Scottish Whisky – an industry that contributes £6.2 billion in exports to the UK economy and supports more than 42,000 jobs across the UK.

Scottish distilleries are popular tourist attractions and generate crucial income for other businesses in their local communities. A recent Survation poll for the SWA highlighted that more than half of Scots believe the Conservative Government is not doing enough to support the Scotch whisky industry, with 86% acknowledging that the industry is important to the Scottish economy.

A robust whisky cask investment sector

While yesterday’s announcement is a small victory, there is more to be done to redress the balance and we urge the UK government to invest and protect the long-term future of the industry.

As we’ve previously pointed out that rising taxes don’t just affect producers or consumers of the spirit, but also impact the growing whisky cask investment market – those wishing to explore alternatives to traditional savings accounts and stocks and shares. Increased duties means it is more expensive for distilleries to produce the alcohol, it costs more to purchase the whisky whether bottled or barrelled.

Fortunately, whisky cask investment consistently outperforms traditional investment options and, unlike other asset classes, the value is not driven by economics alone, but by maturation of the product.

The whisky industry is also seeing unprecedented global growth, with the demand for premium products in particular continuing to rise as enthusiasts and collectors look to purchase quality over quantity.

As prices rise consumers are more likely to stick with the brands they know and love rather than being more adventurous. This means that well-established brands such as Macallan and Dalmore will continue to gain in popularity versus the smaller or newer distilleries.

Similarly, larger distilleries are also seen as a safer option for whisky cask investment. Working with only the most established brands is a really important factor when it comes to investment, and even more so now.

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