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07.04.21

How to Diversify your Whisky Cask Portfolio

One of the main tips new investors get from seasoned experts is the need to diversify your portfolio. The main reason for this is that diversification of investments means reducing the risks that come with any investment, effectively ensuring that you’re not putting all your eggs in one basket and then watching them get smashed.

Diversification can’t eliminate all the risk, but if you have invested in a diverse range of investments, the theory is that you’d have to be incredibly unlucky to suffer big losses across all of them at the same time. Of course, in a global pandemic, this diversification will have been all the more important for investors facing huge uncertainty as the markets tumbled.

So, if you’ve started investing in whisky casks and want to know how to diversify your cask portfolio, here’s some suggestions.

Why Diversify a Whisky Cask Portfolio?

You may be wondering why diversification is necessary for whisky investments. After all, Scotch whisky is a famously safe investment. It’s been a safe haven for investors throughout the pandemic so far while other markets and assets have seen their values taken on a rollercoaster of highs and lows.

It’s certainly true that there are far fewer risks associated with whisky investment than many of the more volatile markets, but you shouldn’t just see diversification as a way of protecting yourself from disaster.

When it comes to whisky casks, diversifying means spreading the rewards, rather than the risks. The Scotch whisky market is a diverse one with historic brands, new distilleries and a wide range of flavours and traditions, so why wouldn’t you want to build a collection of casks from across the country?

Having a diverse portfolio of brands also means that you have a good chance of one of them becoming the flavor of the month at some point. Right now, that’s certainly Macallan, but a decade from now, there could be another distillery’s whiskies getting top value in auctions. Having casks from more than one distillery increases your chances of being in the right place at the right time.

Another benefit of diversification is down to timing. Patience is a virtue with whisky investments while you wait for them to mature and gain value, but if you have a spread of older and younger casks, you will be able to cash out more at various times, with some coming along more quickly and others banked for a later date.

How to Diversify your Portfolio

There’s lots of great things about starting to diversify your whisky cask portfolio. For one thing, having started on this journey, you’re already knowledgeable about Scotch, not starting out as a  newbie in a new area of expertise, like if you were diversifying a wider portfolio of investments.

Another benefit is that the research involved is great fun, because there’s so much to learn about each distillery, as well as the potential to include some practical research by actually drinking some of their whiskies. Not many other investments allow that kind of added benefit in the name of due diligence.

How We Can Help

At Whisky Investment Partners, we have relationships with some of the most popular and beloved distilleries across Scotland, with contracts in place to purchase New Make Spirit casks at heavily discounted prices. This works out well for them and great for you as an investor too.

There are so many great stories and amazing whiskies out there for you to explore as you start your diversification journey. How about Highland Park, the northernmost single malt Scotch distillery in the world?

Founded by a descendent of actual Vikings, with a flavour profile of honey, heather, honeysuckle, orange and smoke, it’s a whisky as powerful as the Norse gods and would make a striking addition to any portfolio.

Or there’s Annandale, a distillery that dates back to 1836 but which had been closed and turned into farmland around a century ago. Brought back to life by passionate whisky fanatics with the dedication and the scientific knowledge to identify a gap in the Scotch market where their new whisky could find a niche.

Every Scotch whisky has a story and a unique flavour that ties in with that story and the historic methods of production at the distilleries that dot the Scottish landscape. This is why the whisky market offers such diversity and rewards investors who are willing to do their research and build up a portfolio of casks that embraces these stories and flavours.