Whisky Investment
A fine bottle of whisky could last a lot longer than a mere indulgence for the afternoon. melainne chiew learns about investing in single malts
more than a style symbol in the cigar lounge, whisky can also rake in particularly lucrative returns. In April 2017, a rare, complete set of six crystal decanters containing The Macallan’s single malts aged 50-65 years fetched a jaw-dropping US$993,000 at a Sotheby’s Hong Kong auction. More recently, in January, a bottle of 50-year-old Yamazaki sold for HK$2.3 million at a Sotheby’s Hong Kong auction. Originally bottled in 2011, the Japanese whisky barrelled past its estimate by more than twofold.
David Robertson, former Master Distiller at The Macallan, sees whisky investment as a trend to stay. “Many bottles are doing well now but many bottles are also falling in price. It is critical for all buyers of rare whisky to know the market; do your research and buy wisely.”
Robertson adds that there is no ideal age for investing in whisky. “Some young bottles appreciate in value more in percentage terms than older bottles. Rarity and quality are crucial, however. Ideally, you want to track down terrific whiskies that will appeal to connoisseurs and collectors. What sets apart a collector from an investor is that the smart investor is always thinking about the exit value. A collector often just wants to have the bottle, covets it, and may never even sell.”
Whisky collector Nathaniel Chan agrees. He avoids opening bottles that are rare or of high investment value — unless their investment value disappoints. Besides whisky, Chan’s investments have been fairly traditional, ranging from properties to equity. “The beauty of investing in whisky is that I personally love drinking it, so I can always consume a bottle that doesn’t go up in value as expected. This is probably the only investment I have that provides monetary value as well as personal satisfaction,” he says.
Chan lists the now-discontinued Laphroaig 18 as one of his more disappointing investments. “It hasn’t appreciated as much as I thought, but thankfully the purchase price was fairly low so I have been enjoying it myself.” On the flip side, Chan regales about The Macallan
Gran Reserve 15 Years Old, which he landed in 2017 through a ballot He shares, “Only 1,500 bottles were released at £500 and after a month, people were offering me almost £1,500 for my bottle.”
Of course, collecting whisky does not need to be an entirely individual experience. For example, the Whisky Investment Fund launched in June 2014 as a private investment vehicle, exclusively focuses on single malt whisky investments. It closed in June last year, exceeding its initial target with US$12 million raised in commitments from 50 private investors. The Fund’s collection includes particularly rare bottles, including a Macallan 1926 60 year old Valerio Adami (numbered 8 of 12), with a specially designed label by Italian artist Valerio Adami. The Fund also managed to acquire the Glenfiddich 1937 64 Year Old, a 61-bottle whisky distilled in 1937 and bottled in 2001 as part of Glenfiddich’s Rare Collection series. The single cask whisky has a 40 percent ABV (alcohol by volume), considered high for a whisky of this age.
“We expect the total collection to have a retail value of over US$20 million as we wind down the fund over the next four years,” said Rickesh Kishnani, Chief Executive Officer of Whisky Investment Fund. The Fund has since sold US$3 million retail value of rare whisky at a 65 percent net profit for the investors. The remaining investment portfolio will be monetised over the next four years, through a distribution agreement with luxury concierge service Quintessentially.
“Like any investment, there are broad market risks to consider,” says Kishnani. “Fraud is a bigger part of the industry each year with several fake bottles appearing across the secondary market in 2017. Buyers need to make sure they are purchasing bottles — particularly older bottles — from reputable merchants or ask for proof of authentication from an expert.”
Martin Green, a Whisky Specialist at Bonhams with over 25 years’ experience in whisky auctioneering, concurs. “Now, many whisky magazines and blogs offer statistics and advice. Studying the movement of prices over a period and talking to specialist collectors can provide some idea of how your whisky portfolio may perform if brought to market. Most auction houses, however, are usually careful to stick to the facts and not make specific investment recommendations — that has to be for the judgement of the collector. Like any luxury product, a single malt whisky’s reputation for quality, scarcity and exclusivity is very important.”
As for those who are simply satisfied enjoying whisky as is, Robertson says it all boils down to personal experience. The former Master Distiller at The Macallan and now the Whisky Investment Fund’s Chief Investment Office singles out the classic sherry oak style by The Macallan as “rich, resinous, aromatic and spicy; full of dried fruits, citrus orange and oaky dryness.”
He explains, “It was the style I knew and loved when I joined The Macallan in 1994 and the style I was responsible for recreating time and again. I fear that the single malt industry is becoming very homogenous and very ‘vanilla’ in style owing to the huge use of ex-american oak bourbon barrels in Scotland.”