Whisky is growing in popularity as an asset class, but it’s less than straightforward. It’s also downright iffy.
“As an asset class, it’s really quite complicated,” said Jonathan Driver, Rare Whisky Director of Whyte and McKay. “It’s quite unpredictable in the short term. In a two to three year horizon, I think it’s quite risky.”
But in the mid to long term, he argues, “you can be pretty safe if you’ve done your background research because there’s absolute rarity. There are distilleries that no longer exist. As long as they have a reputation with the quality of the spirits and they don’t exist then there’s sort of an algorithm that gets into quite a safe mid to long-term investment.”
One of the brands under the Whyte and McKay brand is The Dalmore, which Driver is responsible for. The Dalmore 62 sold earlier this year in Singapore for just over $250,000. But one of the most expensive bottles ever sold is a 64-year-old Macallan, which was bought at auction for $922,858.
It’s just an example of the astronomical prices some of these bottles can fetch on the market, uncorking whisky in the minds of investors as a rising asset class. In fact, during the first half of the year in the UK, record numbers of bottles of rare whisky were sold at auction, according to the consultancy Rare Whisky 101, which compiles a range of indices on the secondary market for Scotch.
For advisors thinking that this trend will leave them in the cold they need only look at the World Whisky Index and Whisky Invest Direct as examples of the alcohol’s growing acceptance as an equity to hold. Also, as the industry moves more in the direction of fee-based advice, wealth professionals can also play a part in vetting these products as good investments.
But really the luxury whisky market is still in its infancy and there’s much the industry is still trying to figure out.
With a growing upper class in Asia, whisky has the potential to grow exponentially.
“Of course should the Chinese collecting class develop as it will in a 10 year period, there will be millionaires and billionaires,” said Driver. “Also, what do boys collect? There’s not much, there’s wine. Fine wine is a zero sum game because there’s not that much of it around. Whisky as an asset class has the prospect of a growing interest in the future because it’s what we all do.”