Why Whisky is a Rising Alternative Investment

by Ryan Fazackerley
Director of Cask Sales at Whisky 1901

Scotch whisky investment has emerged as one of the soundest alternative investments to have in your portfolio.

In addition to its growing popularity across the globe, the whisky cask market observed a double-digit growth in 2022 – a result which traditional investments can only dream of.

But how does whisky measure up against other alternative investments such as gold, fine art, and cryptocurrencies?

We look at the key factors that make investing in a whisky cask a highly attractive option for both beginners and experts alike…

a whisky cask investment contract

We are living in uncertain times. Rising interest rates, surging inflation, and a serious cost-of-living crisis have all contributed to volatile upheavals in global markets.

It’s unsurprising, then, that savvy investors are turning away from the stock exchange and looking towards alternative assets. And with good reason. Alternative investments such as Scotch whisky have been remarkably resistant to the economic downtown and continue to outperform traditional investments.

In fact, the whisky market is looking in rude health. The Global Whisky Market Overview found that whisky sales are on track to reach £99.48 billion by 2028, up from £69 billion in 2022.

But before we rush into the benefits of investing in whisky casks, it’s worth taking a closer look at the alternative investment sector.

What are alternative investments?

Essentially, an alternative investment refers to anything that doesn’t fall into the traditional investment categories of stocks, bonds, or cash.

Alternative investments are extremely varied in structure and nature. They can include real estate, commodities, and collectibles – which are often referred to as ‘passion investments’. The best-known examples of passion investments are fine art, antiques, vintage cars and, of course, Scotch.

The reasons why people invest in alternative assets are also varied. Some are looking to diversify their portfolio while others are excited about an emerging sector and keen to get their foot in the door.

Of course, everyone is hoping for strong returns – and whisky cask investors are no different. For example, in 2022, an ultra-rare cask of Ardbeg whisky sold at auction for a staggering £16 million, the highest price ever recorded for a cask of whisky.

However, while whisky is considered a long-term investment, it is important to remember two crucial factors before you invest: knowledge and experience.

At Whisky 1901, we make it our mission to connect our investors with the right whisky cask based on their unique circumstances, including investment goals, budget, timelines, and risk appetite.

How risky are alternative investments?

The sheer variety of alternative investments allows investors to shape their portfolios according to their own interests. Yet, given the current economic landscape, some investments can be riskier than others.

Gold, for instance, has seen wild fluctuations throughout the year, affecting prices almost on a daily basis. Similarly, cryptocurrencies like Bitcoin have tumbled sharply in the past 12 months, leading to extreme caution and even panic. Likewise, non-fungible tokens (or NFTs) have experienced a dramatic fall from grace since their highly reputed inception back in 2021.

Even the fine art market, which has always been a solid alternative investment for the ultra-wealthy, has witnessed erratic shifts in sentiment. Take Damien Hirst, for example. Once the most successful living artist on the planet, the price index for works by Hirst has plummeted 60% since his peak.

What is the forecast for whisky investment?

Thankfully, unlike formaldehyde-filled tanks containing dead sharks, whisky has continued an upward trajectory. Indeed, the amber dram is enjoying a remarkable surge in appreciation, especially in the Asia-Pacific region, where it is being consumed in record volumes.

The latest Knight Frank Luxury Investments Index also shows that rare bottles of whisky continue to be the 10-year leader with a 373% growth since 2012, comfortably beating fine art at 91% over the same period.

There’s more good news. The Scotch Whisky Association reports that global exports of Scotch exceeded £6 billion for the first time in 2022, which is the equivalent of 53 bottles of whisky exported every second – up from 44 per second in 2021.

True, these amazing stats refer to whisky bottle sales. However, the desire for the best and rarest Scotch is historically linked to ‘the spirit of the cask’ from which it came. In fact, the shape and size of a whisky cask has a profound effect on the whisky spirit maturing within.

Are whisky casks a good investment?

The whisky cask market has ‘significantly outperformed all the traditional investment options in recent years’ according to the BC20 Whisky Cask Index, observing a projected growth of 14.95% in 2022.

Whisky 1901 works with almost all the distilleries featured in the report’s Top 20 Distilleries of 2022. Bunnahabhain, for instance, was the third best performer of the year with a projected growth of 17.57%, while Highland Park (17%) came fourth, and Caol Ila (16.60%) fifth.

Another positive aspect of whisky cask investment is the rapidly changing demographic of investors. Gone is the outdated perception that whisky investment is for gentlemen of a certain age. Today, Millennials and Gen Z make up an impressive 36.49% of total whisky cask buyers. Female buyers also represented 7.14%, up from 6.81% in 2021.

This injection of fresh optimism, coupled with the surging popularity of Scotch around the globe, has established whisky as a top-performing alternative investment, and we expect it to become even more desirable over the next few years.

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