It’s been a turbulent time for all of us over the last 14 months and we’re still a long way from being back to normal. A global pandemic has inevitably had an effect on investments as people have been more risk-averse, looking for safer bets to put their money into. One of those safe ports in a storm has been Scotch whisky.
Whisky may have originated in illegal stills hidden in the Scottish Highlands and coastal areas, but it’s a global passion now and much of the investment comes from ultra high net worth individuals from China and the Asia Pacific regions. This helped it rise to the top of the Knight Frank Investment Index in 2020 thanks to a remarkable 564% growth over a 10-year period and a 5% growth that year alone.
The above stats reflect the market before Covid-19 of course, but Knight Frank’s Rare Whisky 101 Apex 1000 Index increased by 8% in 2020, despite the impact of global restrictions. However, the Knight Frank Whisky Index itself fell in value by 3.5% last year, a rare dip and a sign that investments in the ultra rare bottles of Scotch that had driven so much of the value up had stalled slightly in 2020.
“Most of the 100 single malts within the KFWI are ultra-rare luxury bottles and this part of the market saw more stress in 2020. Bottles selling at auction in the UK for more than £5,000 have generally seen less demand and static prices compared with other segments of the market,” said Knight Frank director Andy Simpson.
However, this may well be good news for potential investors, he went on to say: “Harder economic times show the Index underperforming the broader asset class. But in 2018 when the global economy was buoyant, the Index outperformed. These ultra-high-end bottles would appear to be a useful exaggeration of the holistic market. With that in mind, maybe now is a good time to buy.”
There are plenty more reasons for Covid-related optimism in the world of whisky investments. The interruption in production of whisky that was caused by lockdowns in Scotland means that there will be a shortage of supply that will have a lasting impact on the value of whisky from this time period for years to come.
That’s why cask whisky investments make so much sense right now. According to the Scotch Whisky Association, there are 22 million casks maturing in warehouses currently, while Scotch is as popular as it has ever been and is only continuing to grow around the world.
It has weathered the storms of Covid-19 and lockdowns and the new whisky that has been produced through this crisis has the advantage of being less plentiful than in other years because of those shutdowns.
Another boost this year came with the suspension of the damaging US trade tariffs that had been imposed in October 2019 and had caused a drop in Scotch trade of 30% (worth over half a billion pounds).
Cask whisky investment is already on the up, according to the IWSR, which has valued it at $40m and growing rapidly. Of course, casks mean a long-term investment, so any casks you buy now will be maturing at a time when the world will (hopefully) look like a very different place, especially given that maturing casks have shown an average return of 12% per annum over the past decade.
If you’ve never invested in whisky casks before, Whisky Investment Partners are here to help you on every step of the journey. It’s an investment that requires very little effort on your part, because once you’ve done your research and made your selection, you can leave the cask to mature in one of our secure warehouses until you’re ready to sell.
Then you have several options for how to cash in on your cask, from selling to other investors or collectors, or to independent bottlers, or even bottling it yourself. With all of these options available and such a bright future ahead in the marketplace, it’s no wonder investors are turning back to investing in Scotch whisky casks.