Whisky as an investment has been growing in popularity over the past decade. Like wine before it, people have recognised the opportunities around whisky.
But which is the best investment, whisky bottles or whisky casks? Well, as with many things in life, there are advantages to each, and considerations to keep in mind for each. In this article, we're going to look at a few pros and cons of bottles and casks as whisky investments.
The Advantages of Whisky Bottles as an Investment
Whisky bottles are easier to get hold of than casks. Let's face it, you can't walk into your local supermarket and buy a cask. And, the majority of bottles will of course be cheaper than buying a cask. When you're ready to sell, there are several exit strategies. You could sell to another collector, to a specialist retailer, or through an auction. And last but not least, if all else fails you can simply pop the cork and enjoy your whisky.
The Disadvantages of Bottles as Whisky Investments
But, there are disadvantages too. The bottles that perform best, those that you're likely to read about in the news, are rare. Often very rare. So getting your hands on one may be far harder than you'd expect. At best it may be the 'fastest finger first' when a limited edition is first released. Or, it may be 'luck of the draw' through an allocation. Worst case, it may be private 'invite-only' for the ultra-exclusive editions. And of course, as well as being rare, the best investment grade bottles could be expensive. A rare Macallan bottle could cost you the same as an entire cask of maturing whisky.
The Limitations of Investing in Whisky Bottles
The final point to note is that the whisky won't change while it's in the bottle. If you buy a bottle of whisky and hold it for 10 years, the whisky is still the same. So, to realise a return, you're betting that supply and demand will work in your favour. You're hoping the bottle will have become rare, more desirable, or more exclusive - and so more valuable.
The Advantages of Investing in Whisky Casks
First, let's start with some basics. While you can't buy a cask quite as easily as a bottle, it is now relatively straightforward to invest in a whisky cask through a cask broker. And, casks may not be as expensive as you think. While a cask of Macallan could set you back tens or even hundreds of thousands, you can pick up a cask of quality maturing scotch for, say, £5,000-£15,000.
When you're ready to sell, you do have a range of exit strategies. You could sell to another private collector. You could sell to a business, like an independent bottler. Or good cask brokers will help you sell a cask; they can lean on the power of their client network to find the right buyer.
The Disadvantages of Investing in Whisky Casks
Clearly there are some disadvantages. You can't buy a whisky cask for £100. You can't pop to the shops for one. And you can't store it at home. You'll have to keep your whisky cask in a bonded warehouse - if it's Scotch, that warehouse has to be in Scotland. Perhaps most notably, you need to bear in mind that every year a small percentage (say, 2 to 3%) will evaporate. So if you hold your cask for 10 years you will be left with less liquid than you started. But that leads us to the final point.
The Key Difference Between Investing in Whisky Bottles Versus Whisky Casks
There is one really significant difference between casks and bottles. As we said previously, whisky won't change once it's in a glass bottle. But, the same is not true of whisky casks. As the whisky ages in the oak barrel, its flavour will develop. It will improve. And because the flavour develops and improves over time, the whisky becomes more desirable. And if it's more desirable, it's more valuable. So besides any market forces (supply and demand and so forth), your asset is intrinsically improving in value. This is a key difference between casks, versus bottles.
Should I Invest in Whisky Casks or Bottles?
This answer will vary for everyone, depending on your personal circumstances. You should consider affordability, ensuring you can keep the money locked away for five years. You should reflect on your goals, and weigh up the advantages and disadvantages of each approach. And you should do careful research.
If you conclude that whisky cask investment is for you, Spiritfilled can help. Spiritfilled is an expert cask broker. They help their customers buy, invest and sell whisky casks every day. You can contact Spiritfilled here today, for an obligation-free conversation with one of their experts.