Mark Littler - How To Make An Informed Whisky Cask Investment – 7 Simple Steps Flashcards
How To Make An Informed Whisky Cask Investment – 7 Simple Steps
7 Steps to Making A Sound Whisky Cask Investment
- Establish the facts: Know the basics of cask maturation
- Understand the The Knight Frank Index and how it isn’t relevant to casks
- Check for good (verified) reviews
- Ask for proof where return rates are advertised
- Do you know how to check a cask’s value?
- Become a detective – How legitimate is the company?
- Don’t trade in whisky casks
- Fact Or Fiction: Are you fully informed about cask investment?
It is the nature of business that companies are there to make money; that is the nature of capitalism. However some companies are interested in making themselves money at the expense of their customers, which matters when you are looking at investments.
In an unregulated markets such as cask investment you may find that the majority of ‘investment guides’ from whisky companies read more like a sales pitch than like genuine investment guidance.
Listing all the positives of cask investment and neglecting to mention the potential negatives is misleading for you as a buyer and doesn’t let you make an informed decision.
For example, if a company is telling you that you can bottle your cask after 10 years, but does not mention the costs of bottling your cask, then they are misrepresenting the sale.
We at Mark Littler LTD believe that you should be equipped with all of the facts before you choose to invest. That is why we have written our free, downloadable PDF cask buying guide as well as the online content available on our blog, cask investment video guides, and cask calculator.
Our content offers comprehensive and balanced information about the experience of owning a cask and the realistic expectations, costs and risks so that you can make a decision that is best for you.
We do not skim over the potential negatives. We would rather you had all the information and didn’t buy a cask, than buy one based on ‘fake news’.
- Comparing Apples to Pineapples: The Knight Frank Index and how it isn’t relevant to casks
The Knight Frank Luxury Investment Index is a system that tracks the value of luxury assets such as cars, antiques, and jewellery. It also tracks the value of 100 ultra rare bottles of whisky. Bottles being the key word.
Bottles of whisky first appeared as part of the Knight Frank Luxury Investment Index in 2019, showing 2018 data. The use of the Knight Frank Index to demonstrate the potential of whisky casks has now been banned by the ASA as it is misleading; The Knight Frank Rare Whisky Index looks at a very specific section of the bottle market pitched at ultra high net worth individuals. Knight Frank data is barely relevant for the general whisky market and even less so for an indication of the potential performance of the cask market.
The bottles of whisky tracked by the Knight Frank Index are ultra-rare, ultra-high value collectable bottles. These are bottles that are no longer in production and are usually scarce, high age-statement, official distillery bottlings. First of all the issues, an official distillery released bottle will sell for considerably more than the equivalent whisky from a private cask because of consumer loyalty and branding. However you also need to consider that your cask is the raw material of a bottle, getting the whisky from a cask and into a bottle has costs, so you should not use any bottle index to indicate the potential of casks.
- Check and verify reviews
At Mark Littler LTD we are very proud of our customer service, after all, the customers are at the heart of what we do. At the time of writing we have over 340 verified five-star reviews of our service on Google Reviews (updated November 2023). We also another 200+ reviews across Facebook, and Yell.com.
Reviews are a great place to start when deciding which company to work with, but reviews should not be taken at face value. It is important to look for verified reviews.
A few ways to spot fake reviews include; accounts that have no profile picture, have only left one review on the platform, or have generic profile names. Paid for reviews are often dated around the same time and have nothing to do with the company, seeming to review a different product, or will be very vague, e.g. “Great customer service! Thank you”.
There is also a small issue with reviews of cask investment companies that have only been running a few years – many of them will not have helped customers exit their investments. In that case you are buying from a company that has good customer service rather than one with a track record of helping people exit their investments. At Mark Littler Ltd we have been helping people exit their cask investments for as long as we have been selling casks, which means we know what works, and what doesn’t. Importantly our reviews reflect that.
- Ask for proof
Any company promising fixed or guaranteed annual returns that cannot be backed up by their own data are now breaking guidelines set out by the ASA in 2023. So if someone is promising a particular return, ask for the source of the data.
The reality is that per annum returns are simply not realistic. They are potentially misleading and also do not properly reflect the nature of casks as an investment.
Firstly, whisky does not produce annual returns! Your cask will sit in a warehouse gaining value, but you cannot release any money from your cask on an annual basis.
Secondly, whisky casks are a long-term investment. When you buy a young cask of whisky you must ideally leave that cask to mature for at least 10 years before it has matured enough for you to sell it on for profit.
Thirdly, if that were possible, why are companies not taking a small business loan at 5% and keeping those profits for themselves? Or for that matter, why are pensions and investment firms not widely invested in casks?
It is possible to make returns on a short-term investment when buying an older cask, but this is a much higher risk investment, and you are just as likely to lose value in your cask due to high evaporation and lowering of ABV – especially if you overpay (see the next section). Long-term investment is the best way to see a return, but I am afraid you will have to wait for it.
If a company or sales person is promising you head-turning annual returns, consider doing a thorough background check and asking for evidence of what the claims are based from. If they cannot provide any, we would suggest you walk away!
- Do you know how to check a cask’s value?
Overpaying for a cask is one of the easiest ways to lose money on a cask investment. When it comes to cask buying, our ethos is “buy young, sell old.”
Buying young gives you the best value starting point for a cask, but just as importantly, it is also more straightforward to verify the price of a young cask of whisky.
Cask investment is an asymmetric market, which means the buyers know significantly less about the product they are purchasing compared to the seller. The new ASA rulings aim to bring some protection to consumers in this respect, however it is still difficult to verify a cask value, because there is no open source information on cask prices.
There is no publicly available information surrounding the value of whisky casks because the value depends on so many factors. There are a limited number of records of cask sales at auction, however these are difficult to compare to your cask due to the likely variation in cask size, fill details and also the issues with transferring ownership where casks are stored in warehouses that will not allow new client accounts.
There are three ways to do some basic checks on the price being offered:
Use our Cask Calculator to create an accurate per bottle cost price for the cask, which you can then compare to more widely available bottle prices. It is very important not to simply divide the cask cost by the number of bottles in the cask, as this misses taxes and other costs due on bottling and creates a misleading number.
Compare the price to publicly available casks being sold direct by distilleries. This comparison is not perfect as many distilleries offer casks as a way to support their venture, rather than as an investment, but it can be used as a guideline.
Getting a second opinion is another way to check prices, but obviously relies on trusting the expertise and reputation of the company you contact.
Cask auctions are not the best check, as often they tend to be significantly above or below the true market price. This tends to be because either the people bidding don’t understand the actual market value and overbid, or because they are stored in a warehouse that won’t open new accounts, which limits the scope of bidders. There are also issues with comparing different cask sizes or ages, so if you do decide to look at cask auctions then consider using results in conjunction with the Cask Calculator.
- Become A Detective: Check before you trust
Mark Littler LTD was established in 2016 and became a limited company in 2018. You can verify this information on a page called Companies House on the GOV.UK website.
This page allows you to search for the name of a company so that you can check how long they have been around, if they sprang up from nowhere, or if they are even registered at all. This tool is a useful way to establish whether or not the company that you are considering buying from is worthy of your trust.
You can also Google the names of the directors with the word ‘scam’ as an additional check.
At Mark Littler LTD we are transparent from the word go. We are a fully licenced and registered company with offices in Congleton, Cheshire. Prefer to meet face to face? You can make an appointment to come and visit us and see what we are all about, we can also do online video conferences if you cannot reach us in person.
- Become A Detective: Check before you trust
Mark Littler LTD was established in 2016 and became a limited company in 2018. You can verify this information on a page called Companies House on the GOV.UK website.
This page allows you to search for the name of a company so that you can check how long they have been around, if they sprang up from nowhere, or if they are even registered at all. This tool is a useful way to establish whether or not the company that you are considering buying from is worthy of your trust.
You can also Google the names of the directors with the word ‘scam’ as an additional check.
At Mark Littler LTD we are transparent from the word go. We are a fully licenced and registered company with offices in Congleton, Cheshire. Prefer to meet face to face? You can make an appointment to come and visit us and see what we are all about, we can also do online video conferences if you cannot reach us in person.
- Can you trade in whisky casks?
Private individuals can own up to five whisky casks (in their name, with a delivery order) without needing to apply for specific licences. However you cannot trade in whisky casks as a private individual. Anyone who regularly buys and trades casks is classed as a Revue Trader and you must apply for the correct licences.
The definition of a revenue trader can be seen in Excise Notice 196: “anyone carrying on a trade or business concerned with the buying, selling, importation, exportation, dealing in, or handling of excise goods, and the financing or facilitation of any such transactions or activities.”
Revenue traders must apply to register under WOWGR (Warehousekeepers and Owners of Warehoused Goods Regulations).
As a private individual you can own a cask of whisky and sell it on for a profit at a later date, but you cannot regularly trade in casks of whisky.
If a company is offering you more than five casks, or is advising that you can trade in whisky casks without additional licences, it is likely an indicator that you do not own your cask at the warehouse level.
