WHY IS WHISKY A GOOD INVESTMENT?

Question 1

Give an example of why whisky is seen by many to be a good investment?

Answer 1

The principal reason people invest in whisky is because it’s a tangible asset that usually increases in value over time. Aged whiskeys from reputable distilleries command high prices, and appear to retain value even during recessions and inflationary periods.

Question 2

List the UPSIDES from Knight Frank Luxury Investment Index update (2020)

Answer 2

A number of rare whisky auctioneers have indefinitely postponed their current/future auctions. This will remove a significant amount of supply

Sterling remains relatively weak, which could increase appetite from buyers outside the UK

Buyers will potentially have more time on their hands. This could result in the increased time-ability to bid online for bottles

Operational auctioneers are still physically sending bottles to their global customers. The ability for a buyer to take delivery of a prized bottle is still very much possible

The possibility of many ultra-rarities being opened and fittingly consumed when the crisis is over could remove a significant pool of stock from the future market

Question 3

List the DOWNSIDES from Knight Frank Luxury Investment Index update (2020)

Answer 3

It can be assumed that a number of buyers will have less disposable income and their propensity to spend on collectable bottles could be severely impacted

When life starts to return to normal, there is the risk of over-supply. Investments and collections could be liquidated in significant volumes where there is a requirement for cash by the owners

Bars, pubs, restaurants and clubs are now closed. We know many of these establishments who sell rare whisky by the dram would buy at auction. As preservation of cash has become important, this buyer-type can be assumed to be a far smaller pool.

Question 4

Insights from Andy Simpson, Rare Whisky 101 co-founder, now running boutique private client/rare whisky business Simpson Reserved Ltd.

Answer 4

Bottles of rare whisky have had a far more sedate time from a performance perspective over the past three years. Bottles valued over £5,000 have recently undergone a price modification due to a range of geopolitical, societal, and financial influences.

Certain brands have still performed well, while the market leader (from a sheer volume of market perspective), Macallan, has seen particularly punishing losses with its index re-tracing 11.7% over the past twelve months.

The broader market (according to the Rare Whisky 101 Apex 1000 Index) is down just 1.5% over the last twelve months, so while certain brands and higher value bottles are having a harder time, the market as a whole is relatively resilient, albeit currently underperforming traditional bank savings rates.