The appreciation of its distinctive flavours and deep aromas is highly personal. But when it comes to investment, there are some common markers that individuals should consider carefully to give themselves the best chance of generating an attractive return. Let’s look at these in turn.
Ownership matters because the biggest international drinks companies have the infrastructure, financial wherewithal and marketing expertise to support their distilleries.
They invest in tourism initiatives, develop distillery facilities and put money into brand awareness campaigns. This underpins existing demand as well as increasing the size of their potential audience in the future.
Smaller distilleries without this corporate backing can’t create the same buzz around their brand or promote it to such a wide, international customer base.
For example, Glenturret is now regarded as the oldest working distillery in Scotland (1763) but this was only widely publicised after the Lalique Group acquired it in 2018. There’s now a Michelin-starred restaurant on the site and the brand has gone from strength to strength – increasing sales and underpinning its value.
Whisky is distilled in many countries around the world, but Scotland is the most established and well-regarded market. Buyers, connoisseurs and investors from around the world put great store in a distillery’s pedigree – in addition to the actual taste of the whisky, the heritage adds colour, dimension and depth to its lasting demand.
This isn’t a romantic notion, but an important analytical point. Some of Scotland’s oldest distilleries have been in operation since the late 1700s. That’s 250 years of proven excellence.
There’s a lot of data available on who buys the whisky, how much they buy and for what price. It’s possible to build a detailed picture of the historical trends for the whisky from these distilleries and how they’ve performed in different markets, economic cycles and trading environments.
Whisky from marquee brands has built up a loyal base of repeat customers and investors. Newcomers to the market are also attracted to these blue riband distilleries and so international demand for their product is both high and sustained.
Demonstrated demand over many years is an important marker when thinking about an investment in whisky.
The balance of supply and demand affects any commodity and whisky is no different. The average distillery produces two or three million barrels of alcohol and the majority – 90%+ tends to go to the blended market.
That leaves a small amount for the single malt market and it’s important to understand how that fluctuates from year to year. The finite nature of the whisky from any particular year means that as time passes and there’s less of it available, there’s generally an upward pressure put on its price.
Quality is a central factor in any whisky investment decision. Its importance recently hit the headlines when an unscrupulous broker sold whisky that didn’t have any depth of pedigree.
The unrecognised whiskies performed poorly and investors were left out of pocket.
You can never guarantee returns, but making strict assessments on distillery ownership, heritage, demand and rarity will go a long way to mitigating any downside risks, in what is a very buoyant market.
