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Investing in whisky, it’s not as crazy as it sounds

October 21, 2015

lifestyle

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We’re always looking for ways to make an extra buck, scouring the attic for anything we can shove into a car boot sale, or into an online auction. These are good for a short-term boost to your income, but if you can be patient, whisky is a pretty safe (not bullet-proof, nothing is) long-term investment.

Rare and collectable whiskies are becoming increasingly popular, and as an alternative investment, it can be recession-proof. They are only worth as much as somebody is willing to pay, so, on the down side at auction you might not get as much as you hope for a bottle, but on the up-side, if you hang onto it, the value will go up.

So, if you’re planning of squirrelling away some bottles for that boost to your retirement, what should you do first?

Go back to school, well, not really, but you do have to do lots of research. I’ll say it again, research! I cannot stress the importance of getting out there and learning as much as you can about what makes a whisky collectable, and what the collectors are looking for.
You can learn a fair amount by time spent on the internet, looking at auction websites, and reading articles about collecting, but you should also speak to the professionals.
Any major auction house that deals in wine, spirits, and the sometimes gaudy tat that goes along with it, will have an expert dedicated to valuing bottles and paraphernalia.

One way of getting started (as I did) is to look at what’s on the retail market, and get a heads-up on future releases. Once you’ve found sometting that you think you’ll get a return on don’t waste time getting it, there will be a lot of other people looking for the same thing, especially if it’s a limited run – bottle numbering is common on special releases, but don’t go looking for number one, you won’t find it as it rarely leaves the distillery.

As I said, you have to be patient. Once you’ve done your homework and made your purchase, pack it up, keep it safe, and forget about it.

Shortly after it’s no longer available from retailers, you might see some of them popping up in auctions. You usually see a spike in the price which is targeting the collectors who are possibly looking for it as part of a series, don’t be tempted to sell it now. Once this initial flurry of interest dies down, so will the value, but it shouldn’t drop below what you paid. Then begins the gradual increase in price, it could take years, so it might also be a good idea to look at some other potential purchases. The idea is that you build a collection which some people view as their “pension”.

So, what should you buy? Well, there is a sort of top ten of collectable distilleries (which does change from time to time) with the likes of The Macallan (consistently on top), The Dalmore, Bowmore, Ardbeg, and Springbank usually occupying a spot high on the list. Many distilleries will release a limited run of a rare bottling, that, let’s be honest, are there to promote the brand. That’s ok, because if you get hold of one you’re almost guaranteed to have something of not only immediate value, but will be worth much more in the future.

Scotch whisky is a unique product, and once it is in the bottle, it can survive almost perfectly intact. In 2010 three cases of whisky were found buried in the ice at the Antarctic, the remnants of Sir Ernest Shackleton’s failed expedition to the South Pole. When one of the bottles was sampled by a lucky few, they were amazed by how “fresh” it was.
Experts estimated that if one of the 35 bottles were to find its way into an auction it would fetch tens of thousands of pounds if it went under the hammer. However, because the treasure was in New Zealand territory, its conservation laws say that the bottles have to be returned to the place where they were found, so will never again see the light of day.

A silent distillery is one which has ceased production, and often results in it being demolished. One such distillery was Port Ellen on Islay. Port Ellen was ‘silent’ from 1929 until it was briefly reopened in 1966, to be closed for good in 1983. The whisky produced in these last 17 years of its life is considered to be some of the best ever made on Islay, and is now highly prized by collectors.

A couple of years ago at Whisky Fringe (a weekend long whisky festival in Edinburgh), there was a rampant scrum around the table where the Port Ellen was waiting to be poured – I even took an elbow to the side of the head. That’s much people want to taste it, because once it’s gone, it’s gone.

Picking-up on the collector market, distilleries are punting out special releases or aged limited editions – royal weddings are a bit of a cash cow in these situations. In April 2015 The Macallan produced 1000 bottles of a special edition whisky to celebrate Prince William and Kate getting hitched. At the time a bottle would retail for around £150. Just three months later they were appearing in auctions selling for more than £500. Such a big hike in value in so short a time is unusual, but when you combine the world’s most collectable brand with the most popular royal couple in decades it’s not really surprising.

So, with investments of any sort it’s not an exact science, neither are there cast iron guarantees, but building your knowledge, and investing wisely will hopefully see you make a decent return in the future.

What advice do you have for investing? Give us your tips in the comments section below.

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  • whisky

    Hi Al

    Nice post, I enjoyed reading it very much.

    Some of the things I look for when investing in whisky are :

    . Cask strength limited editions from well known distilleries . Example would be the Earl Magnus Triology from Highland Park.

    . Inaugural releases from new distilleries. Examples would be Kilchoman, Chichibu or Abhaine Dearg.

    . Closed distilleries such as Port Ellen, Rosebank or Brora.

    I normally look to get bottles that have a limited release of under Ten thousand bottles, but the lower the better and for sure if you get a release from someone one like Macallan of only a thousand bottles ,then grab it! ( I got myself a royal wedding bottle and very happy I did).

    I recommend people to be very careful of limited releases, as a limited release could be a limited release of 100.000 bottles, which is to much, so try to always find a batch size before you buy, if you can’t find the amount of bottles that were bottled then you can be pretty sure it is a pretty large limited release and is maybe better not to invest.

    • Marmalade71

      i,ve just started my whiskey collection as a retirment fund. i only started in feb 2016. i have now acummerlated a collection that has cost nearly £5000 ,and already im seeing the price rise in 6 months. for example i bought 12 bottles of macallan 18 yr old sherry oak , each bottle cost £75 . 2 months later they are £100 each. i was also very lucky to purchase a 1975 talisker 34yr boat box whiskey . then in feburary it was £925 = only 250 bottles in the world. now in september it is worth £1750…yer ..at bit of a price hyke.but it is, what is known as a super premium whiskey. if you do your home work well with this , over a 10 yr period ..you will make 400-600% increase on your investment . oh yer…only go for whiskeys that are 17 yrs and a bove if you want to make a healthy return … look up ardbeg 17 yr old whiskey and you,ll see what i mean.