In times of trouble, investors usually turn to something that seems like a safe haven. Life in a global pandemic is difficult enough after all, without gambling away your money on an investment that goes sour because of Covid-19 restrictions or the general economic turmoil they have caused.
Historically, gold has been the safe bet, a physical asset that holds onto its value no matter what is going on around it.
But there is another investment option that has been on the up and up amidst the chaos of this year. Whisky has proven to be a reliable investment during the turbulence of Covid-19, which is no surprise given how well it has performed over the last 10 years.
Presenting a return of 40% over a 12-month period, whisky investments have soared whilst gold investments offer a mere 12%. So is it time to switch from gold to whisky?
To measure how well whisky performs as an investment it’s helpful to have something to compare it to, and the Knight Frank Luxury Investment Index demonstrates exactly that. The value of investments into classic cars, for example, rose in value by 194% over the last ten years. Fine art rose by 141% and gold by 175%.
However, whisky investments rose by 564%. When it comes to gold, whisky still comes out on top, according to the Rare Whisky 101 report, which showed that over the past five years the value has risen 182%, compared to a rise of just 28.2% for gold, while both oil (15.9%) and the FTSE 100 (14.9%) also both trail whisky.
The BC20 Whisky Cask Index has shown that if you had invested $100,000 in whisky casks in July 2018, they would have been worth nearly $160,000 by the end of June 2020.
Meanwhile, the 1,000 most sought-after Scotch whisky bottles in the Rare Whisky Apex 1000 Index have increased in value by almost seven times since 2010. That’s quite the return on investment and is exactly what whisky has to offer.
With global Scotch whisky exports growing in value by 4.4% in 2019 to be worth £4.91 billion, there’s plenty of reasons for optimism around whisky investments right now.
So how has Covid-19 impacted whisky prices? Unlike gold prices which plummeted in early March 2020, the early signs were certainly very positive. While the world went into lockdown and meltdown in March and April, investors were still buying up whisky.
So what is behind this rise in people buying whisky as an investment?
The 2020 Cask Whisky Buyer Report shows that 40% of investors are looking for alternative investments in 2020 because they want to spread and minimise the risk, which is hardly surprising as 30% say that they fear that they’ll make a loss because of the impact of Covid.
But why is whisky proving to be a safe bet during a global pandemic?
Whisky’s appeal in times like these is that it’s a physical product that will retain its value without being overly impacted by changes in the financial markets. When it comes to the classic whiskies from the most sought-after distilleries, there’s only a finite amount available because it was made decades ago.
Indeed, each cask has its own specific flavours, which only adds to the appeal and value and investing in whisky means needing to have done your research into these brands, their production methods, etc.
However, this is much easier and more straightforward than the kind of insider knowledge you can need for other types of investments, making whisky a more accessible investment. And if something does go wrong and the monetary value does drop significantly, at least you still have the whisky.
So if you’re looking for a safe investment that will grow despite the continuing impacts of Covid-19 over the next months and years, the smart move is whisky, which has been setting new records and shows no signs of slowing down anytime soon.