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Whisky: Why Investors May Be Turning to ‘Liquid Gold’

  • Writer: Editorial Staff
    Editorial Staff
  • 2 hours ago
  • 4 min read

When distilleries make whisky, it gets stored in barrels, casks and bottles. Whisky casks are made out of wood and help to mature the whisky, thus changing its flavour and making it more valuable. Over time, whisky companies will use various casks to make their own blends. Therefore, if you invest in whisky casks, the value is likely to increase as time progresses, as they become more valuable and will be in demand in the future. 


Whisky, along with other tangible assets like wine and art, are viewed as great alternative investment opportunities to typical stocks and shares. This article explores the history of whisky investment, its risks and rewards, and a number of useful tips for those thinking about investing in whisky. 



Whisky: Why Investors May Be Turning to ‘Liquid Gold’


A brief history of whisky as an investable asset


Although whisky investment and its notable value appears to be a relatively new phenomenon, it has been around for centuries. Historically, collectors used to find and store bottles of whisky as a hobby. There was a significant shift later on when distillers noticed that wooden barrels and casks helped to age a whisky and add to its flavour. Shortly after this discovery, followed by the continuous storage of whisky casks, an opportunity arose to invest in casks and bottles. 


Between the 19th and 20th centuries, traders began to understand the value of aging whisky and by the end of the 20th century, many older casks were sold at auctions and bought by collectors for future use. The interest in whisky as an investment opportunity has only increased since, with coverage in the media. For instance, in 2018, a 1926 rare bottle of Macallan sold at an auction for £1.2 million when it was originally bought for £5,000.


The COVID pandemic saw another increase in popularity, as people sought to diversify their portfolios, looking for alternative investment opportunities for stocks and shares. More recently, there has been interest in the market from Asia and India, which is set to change the market further over time. 


Risks vs rewards 


It is important to note that returns are not guaranteed with whisky investments. Inevitably, as the maturation of whisky has a long timeframe, investors are more vulnerable to changes in factors such as changes in regulation, price, and demand. If you buy a whisky cask, the price of this cask in the future, when it comes to being sold, may have largely increased, or it may have stayed the same. 


The process of whisky making and investment is very similar to that of wine. However, there are some differences between the two. Although wine investment has more regulation, there have been recent changes relating to the ownership of casks (WOWGR legislation), with additional plans to regulate the industry due to its benefit to the UK economy. 


With whisky offering greater returns than wine, and requiring less initial investment amounts, whisky casks and bottles are less likely to spoil in comparison to wine. Whisky casks can mature for over 50 years, largely increasing their value, whereas wine reaches its peak maturity before 50 years. 


Similar to whisky, fine art is viewed as a popular tangible asset to invest in, but has many drawbacks in comparison to whisky investments. Despite art being appreciated over a lifetime, and whisky having a finite span, art is difficult to value and has decreased in recent years due to factors such as a slow adoption of digitalisation. 


With any investment, it is important to consider the potential risks and benefits that come with an investment and have an understanding of the market to get the most out of your investment. 


How to get into whisky investing? 


As a starting point, it is important to have a basic understanding of the whisky industry and how the investment process works. Ultimately, the more knowledge you have about the industry, the more likely you are to receive its benefits. Some whisky investment companies, such as WhiskyInvestDirect have developed a platform where you can get into the asset class without having to purchase and store a physical cask. When choosing a whisky investment company, it is also important to note that returns are not guaranteed, so be wary of companies promising high returns. 


Each investment company offers something slightly different. For example, there are whisky brokers and investment platforms. Whisky brokers act as intermediaries between the buyer and seller in the whisky investment process of either bottles or casks. In contrast, whisky investment platforms are digital services that provide information and allow investors to buy and sell whisky assets in one place and are regulated. 


A diversified portfolio can help mitigate the risks involved in investing and lead to better opportunities due to the changing trends in different industries. 


Conclusion


Whisky is sometimes referred to as ‘liquid gold’ when it comes to investing, but you need to do your due diligence. If you do, it can be a great way to expand your portfolio, potentially producing higher returns than other tangible assets such as wine or fine art. If you are planning to invest in whisky, it is important to understand the risks and returns which come with the investment, have some knowledge of the market, and consider which investment company would be best for you. 




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