As we head into 2024, it’s a perfect time to look at the emerging trends that will define the whisky cask investment market for the year ahead and beyond.
Here are five important factors to watch:
While inflation is slowing, the Bank of England is predicting that it won’t be back to normal levels until the end of 2025. The trend for investors to diversify their investment portfolios and explore alternatives such as tangible assets is expected to continue this year.
Despite fluctuations, market stability remains an enduring characteristic of whisky cask investment even in unpredictable financial markets. This underlines the consistency of cask investment compared to other asset classes.
Crucially, unlike many alternative investments, the value of whisky casks is not driven by economics alone, but by maturation.
Following the alcohol duty rise of 10.1% on spirits introduced in August 2023, and the subsequent alcohol duty freeze announced in the autumn budget, the industry is anticipating further increases this year.
We are hopeful the UK government takes heed of the calls from various whisky industry bodies, such as the Scotch Whisky Association, in calling for a fairer taxation on spirits, as the current system discriminates between alcohol beverage categories.
Scotch is already the highest-taxed alcoholic product in the UK. A staggering 75% of a bottle of whisky is claimed in tax. This contradicts the government’s pledge to support Scottish whisky – an industry that contributed £7.1 billion to the UK economy in 2022 and supports around 66,000 jobs across the UK.
Rising taxes don’t just affect producers or consumers of the spirit, but will also impact the growing whisky cask investment market. It will also affect people wishing to explore alternatives to traditional savings accounts or stocks and shares.
Premiumisation is expected to continue this year, albeit at a slower rate. This is because enthusiasts and collectors are looking to purchase quality over quantity.
Given the rising cost of living, and as the prices of bottled whisky increase in line with the above, 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 will be seen as a potentially safer option for whisky cask investment.
Scotland has avoided a recession, but growth remains flat. Nevertheless, forecasters are predicting continued economic growth for the Scottish economy in 2024 and beyond.
As a result, Scottish business confidence rose significantly in November 2023 to 41%. This rise is expected to continue in 2024, which will have a positive impact on the whisky cask investment market.
Last year, the Advertising Standards Authority (ASA) published an enforcement notice to protect investors from ‘misleading’ whisky cask investment adverts.
We welcome the new rules, which came into force on 2 January, and hope it marks the beginning of clearer guidelines which highlight that, like most investments, there are risks involved and the value can go up or down.
Here at whisky 1901, we have been calling for greater measures to improve the whisky cask investment industry, including a regulatory board like the Financial Conduct Authority (FCA), and an industry code of practice.
We also welcome more stringent checks that brokers or ‘experts’ hold relevant qualifications from respected institutions.
Increased regulations are a positive step towards maintaining the credibility of the whisky cask investment sector. We are hopeful that in 2024 we will see further improvements in industry standards to ensure the sector operates with integrity and clarity.
