Coronavirus and the global pandemic has been the biggest shock to the financial system since the 2008 crisis. Investors have been looking for alternative investments to hedge against inflation and economic uncertainly. We have seen an increased interest in whisky casks from private investors and funds.
Whisky casks are an asset-backed investment. Private investors and funds invest in whisky to diversify their portfolios.
Whisky sales have been rising around the world. Despite the dip in 2020, we expect the revenue from whisky to increase over the next five years.
While whisky sales have grown worldwide, whisky as an investment asset has had strong investment returns. Maturing casks have shown an average return of 8-9% per annum over the past decade.* There are few other tangible assets where you can expect that kind of growth.
With its track record, whisky casks are a popular alternative asset for private investors and funds in the wake of the global pandemic.
Whisky Is an Asset-Backed Alternative Investment
A whisky cask is an asset-based investment; it does not rely on financial markets. They are an attractive alternative investment because casks of whisky are not susceptible to macroeconomic shocks like traditional markets.
There is limited downside risk to investing in whisky because it’s a physical asset with intrinsic value. Furthermore, insurance protects your investment while it’s in storage.
How Secure Is A Whisky Investment?
The whisky industry has faced challenges before. The First World War, American Prohibition and the Second World War all affected consumption. We’ve saw shrinkage of 20% revenue for whisky sold out of home (on-trade). This is not surprising considering. Bars and restaurants were closed for much of 2020.
Our research partner projects revenue from whisky consumed out of home will increase by 16.6% in 2021. Like other global challenges, whisky will remain resilient. Consumers’ growing demand for whisky will continue to see high returns for investors.
Opportunities to Invest In Whisky Have Changed
Whisky investment was traditionally focused on private collections for rare bottles. Investing in bottles required skill and timing. Most bottle investors tended to be high and ultra-high net worth individuals. Investors who purchased casks directly from distilleries also tended to be sophisticated with substantial portfolios and expertise.
Investing in casks through a broker has made whisky investing accessible. Investing in casks involves less speculation, luck and timing than investing in bottles. It is a straightforward asset that appreciates over time.
We have discussed the difference between investing in casks and bottles in this blog.
Casks Are One of The Most Secure Alternative Investments On The Market
The demand for whisky is increasing around the world. As the whisky market is liquid, investing in whisky suits different investment strategies. There will always be buyers looking to secure already mature stock, whether fellow investors or independent bottlers.
Whisky is one of the most secure alternative investments on the market. Whisky casks have an important role in a diversified investment portfolio.
Want To Learn More About Cask Investment?
If you'd like to learn more about investing in whisky, complete this form and we'll email our Ultimate Guide to Whisky Cask Investment.
* The Scotch Whisky Industry Review (Alan S. Gray)