News - 04 Aug. 22
Biggest Interest Rate Hike In 25 Years, Here’s How Casks Can Help
Biggest Interest Rate Hike In 25 Years, Here’s How Casks Can Help
Today the Bank of England increased Interest Rates by 50 base points, the highest jump seen in twenty-seven years. Creating a challenging financial landscape for those looking to protect their investments.

Even seasoned investors are facing consequences as a result of today’s announcement. The recent combination of high inflation combined with relatively stagnant consumer price index has been a major problem to many, with wild fluctuations now expected within the stock markets. 

In times of financial uncertainty, many turn to alternative investments in order to make their portfolio as resistant to inflation as possible. Loosely defined as assets that don’t fall into conventional categories such as stocks or shares, alternative investments are usually physical items that appreciate over time, free from the influence of financial markets. 

As Whisky Investment Partner’s Louise Robinson explains: “In these uncertain times, investors traditionally turn to tangible assets, such as properties, watches, and classic cars in order to avoid the external market influences. 

With high entry points and a good level of knowledge required, these investments can be daunting for most. Thankfully, maturing alcohol casks offer the same benefits but without many of the drawbacks. It was the mid-nineties when we last saw the Bank Of England increase interest rates so drastically. At the same time, our client Roger Parfitt purchased two whisky casks. When he sold them in 2021, his investment had appreciated an incredible 4600%.

Although these levels of returns aren’t guaranteed, the spirit business is performing very well at the moment. With Whisky exports growing at 19% last year and premium Rum sales increasing an incredible 85% in the last quarter, cask alcohol is bucking the trend and showing real potential as the stand-out alternative investment class.”

With inflation now expected to reach 13% and the Bank of England not ruling out further interest increases, the situation is only expected to get worse with a recession predicted to hit the United Kingdom by the end of the year. 

Amidst the soaring inflation, the spirit market is continuing to perform well. Whisky has continued to sell for record-breaking figures, with the world’s most expensive cask selling for £16m just last month. We’re also starting to see the rise of Rum within the premium market, with the spirit recently reaching £1Bn sales in the UK for the first time.

If you would like to speak to one of our dedicated portfolio managers about investing in Whisky or Rum casks, please click here for further information.

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