Investing in liquid gold: rare whisky cask ownership
The pursuit of unique whiskies has become a growing trend for collectors
In the past ten years there has been a growing interest in whisky as an alternative investment, said Katharine Swindells in Spear’s Magazine. Whisky can be an “exciting option for those looking to diversify their portfolio” and record prices for rare and high-quality whiskies have regularly made the headlines.
Rare whisky, often described as “liquid gold”, has seen a 478% growth in value over the past decade, according to Knight Frank’s 2021 Wealth Report, and this is more than many other luxury items, including cars, wine, handbags and art.
Starting as an “exclusive hobby among the well-heeled”, rare whisky collecting has become “an industry where the rarest bottles are sold at auction and traded on the secondary market”, Bloomberg reports.
While rare bottles may be the most popular way of collecting, a recent trend has also emerged in the sector - and that’s investing in whisky casks and in single-cask varieties.
Despite the rarity of collectable bottles, it can be a relatively simple market to enter, through specialist stores, auctions or private sales. But buying whisky casks can be a “little more difficult”, says Michael Haldane on Moneyweb.
Purchasing a cask may offer a different proposition for investors, but due to whisky appreciating in price as the casks age “the asset has the ability to hold its value even in times of uncertainty”, Elite Wine & Whisky founder Steve Bishop told The CEO Magazine. “Cask values will keep on increasing, especially aged, rare and unique whisky, which will continue to outperform the standard single malts and keep meeting market expectations.”
Pursuit of rare and old whiskies
Operating from five offices around the globe, Cask 88 is an independent bottler and one such company that specialises in whole casks of whisky and single-cask varieties. Focusing on Scotch whisky, Cask 88 sources rare whiskies from renowned distilleries all across Scotland.
It was founded with the mission to “open the door to cask ownership, which would otherwise be closed to private individuals”, Cask 88 global sales director Patrick Costello told TheWeek.co.uk. From the point of purchase to becoming custodians of the cask, the company issues a cask ownership certificate, purchase agreement and also manages an investor’s portfolio.
Cask 88’s “pursuit of rare and old whisky” has seen the company launch its new “Unfiltered” series - four unique single cask whiskies bottled straight from the cask. Rare drams in the collection include the Glen Garioch 12 Year Old, Caol Ila 13 Year Old, Ledaig 14 Year Old, and the North British 32 Year Old.
The Unfiltered collection is “all about the liquid” and this has been the major focus of the firm since it started trading in 2015. With whisky cask ownership becoming ever more popular for investors, here Cask 88’s Costello gives some insight to the growing trend:
How did the idea start for Cask 88?
“We began on this journey as many people do when they embark on the pursuit of cask ownership: in awe of the fact that we could have control over the future of a whole cask of whisky, and ultimately its bottling and packaging design. A cask of whisky is far too much whisky for one person to drink, and so we sought out ways to share the experience with others.
“From a pursuit that was very much a small scale, personal endeavour when we started trading in 2015, we are now facilitating experiences for our clients on a scale that would’ve been unimaginable to us just five years ago. Each year, we have seen the number of trades across our business more than double each year; against all odds, 2020 was our best-performing year yet. As one of the very first in this emerging market, we have unique insight into the private whisky cask market, and so have begun our own analysis of the cask sales data we have collected over the last five-plus years.”
How does investment for a cask compare to a bottle or collection?
“Whole casks of whisky hold a unique property that whisky in the bottle does not benefit from: the spirit in the wood matures naturally over time. The whisky draws a complex flavour profile from the wood, which means that it grows in taste, and value, as the years pass. Anyone familiar with single malt whiskies will know that an 18-year-old whisky, on the whole, is a smoother dram, and commands a higher price point, than a 10-year-old whisky, for example.
“Once a cask is bottled, the maturation process stops. It is really only demand that can then drive up the price of that whisky bottle. Cask whisky grows in prestige and value the longer it stays in wood, in addition to the vagaries of consumer demand. Those who have the patience to wait will be rewarded with a whole cask of aged whisky, which will be highly sought after, and mostly likely, quite valuable. Whereas individual bottles of Scotch whisky are more likely to bring short-term gains, whisky by the cask can bring benefits in the long run.”
What is the process for sourcing partners and suppliers?
“There is certainly no cut-and-dry process by which we find our partners, whether that’s our suppliers in the whisky industry, or the wonderful artists and creatives that we collaborate with on our independent bottling projects. We have developed strong partnerships over a shared love of whisky, and by seeing eye-to-eye over the ‘rare and unusual’. We are also not afraid of reaching out to people who we believe share our goals and aspirations, and the pandemic has been a great opportunity to connect to people globally, as we have moved by necessity into a more online way of working. Ironically, the pandemic may have helped us become more connected with the people who we have most in common with.”
How important is the history and provenance of a cask?
“The origins of a cask are vitally important, as every cask of whisky is entirely unique. There are many parts of the production process where a small change can yield a large effect. We aim to tell the stories of the casks, and distilleries, that we feel deserve a bigger share of the limelight than they currently have. If a distillery has a particular production method, or a great historical background, then we seek to unearth that, and tell our clients about what makes their cask unique.
“We tell these stories in detail with every independent bottling we release, and we also aim to tell a story about each cask that passes through our auction. At the moment, the casks on our weekly cask list rarely stay long enough for us to tell their story in depth, but our sales team are knowledgeable, and should be able to spot any hidden gems, and explain why they’re regarded so.”
What is the portfolio management process once a client has bought a cask?
“Our clients have ultimate control over the future of their cask, and can visit their cask in the bonded warehouse in Scotland, request samples, and work with our in-house team to design packaging and bottle the whisky to their unique specification, should they choose to bottle. We aim to make the process as simple as possible, and all our team are great whisky enthusiasts, who will be able to advise on the various stages of the cask ownership journey.”
Scotland is obviously the home of whisky. But does Cask 88 source from outside of Scotland?
“Our main focus is whole casks of Scottish whisky, but we do occasionally come across casks from other parts of the globe, including the US, Ireland, and even Japan. We’ll certainly never say ‘no’ to a cask that we like!”
How much does it cost to invest in a cask of whisky?
“A cask of a young age from a little-known distillery can be found for as little as a couple of thousand pounds; at the other end of the scale, we have sold decades-old casks from the top names in the industry for seven-figure sums. The majority of casks that pass through our hands sit between a few to a dozen years of age, and would typically cost in the region of £5,000-£15,000.”