Colin Ham­p­den-white, ed­i­tor of Whisky Quar­terly mag­a­zine gazes into the crys­tal ball of whisky in­vest­ment.

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Colin Ham­p­den-white, ed­i­tor of Whisky Quar­terly mag­a­zine, gazes into the crys­tal ball of whisky in­vest­ment.

AS WE DIVE into the Christ­mas sea­son and the colder weather, there is a par­al­lel with the chilly in­vest­ment mar­ket. Whisky warms not only the cock­les on a cold day, but as the mar­ket for al­ter­na­tive in­vest­ments has heated up, whisky of­fers po­ten­tial in this arena too. There are two prin­ci­ple ways to in­vest in whisky; one is to in­vest in bot­tles. Th­ese can be old or new bot­tles, and the brand or dis­tillery of bot­tle is im­por­tant. Then come casks of whisky. In the case of casks, the dis­tillery from which the whisky comes is of lesser im­por­tance. A good re­turn, be­tween 10% - 15%, can be made from whisky casks from al­most any dis­tillery, as the blended whisky mar­ket al­ways needs them. The chal­lenge with bot­tles is that it’s dif­fi­cult to in­vest se­ri­ous money as you need an aw­ful lot of them to make it worth in­vest­ing at all. Find­ing the right bot­tles, at auc­tion or new re­leases, takes time and ex­per­tise, even then, a re­turn is not guar­an­teed and you re­ally need to know your shal­lots from your onions. Casks are a dif­fer­ent prospect. As blenders will al­ways need whisky there is a stronger mar­ket for casks. Scotch whisky casks are a sim­ple as­set, held in bond in Scot­land and no duty is levied whilst it stays in bond. As whisky is con­sid­ered a de­pre­ci­at­ing as­set, there is no cap­i­tal gains payable on its sale. So how does one buy the right casks? Di­ver­sity is the key to a good in­vest­ment port­fo­lio. Casks can be bought

freshly-filled to well-aged. A cask at zero age is called a new fill cask. The liq­uid is called new make spirit and will legally be­come whisky af­ter three years and a day. Casks can also be bought at any age be­yond. The casks be­come more ex­pen­sive as they gain ma­tu­rity and the rate of re­turn grows ex­po­nen­tially the older it gets. An­other con­sid­er­a­tion is the type of oak the whisky is stored in. Whisky can be stored in what is known as a first fill a re­fill or a re­ju­ve­nated cask. Think of the cask like a tea bag. The first fill is like an un­used teabag which gives out lots of flavour. The re­fill is a lightly-dunked tea bag. This takes longer to im­part flavour to the whisky. Whisky in a first fill cask may be very good for a re­turn on a young whisky, say up to twelve years old. When buy­ing an older cask, a re­fill will be much bet­ter. An old first fill cask may make the whisky taste too woody. There are blended whiskies that like to have a good per­cent­age of re­ju­ve­nated casks. Th­ese are much-used casks whose sur­face wood has lit­tle flavour left, so a cou­ple of mil­lime­tres are shaved off the in­side to ex­pose ac­tive wood, ready for re­use. They have a dif­fer­ent flavour pro­file, im­part flavour at a sim­i­lar rate to a first fill cask, so blenders can use the whisky ear­lier, and they are less ex­pen­sive. Lastly there are two types of oak cask: Euro­pean oak and Amer­i­can oak, pro­vid­ing the whisky with dif­fer­ent flavours. Amer­i­can oak gives vanilla, co­conut and sweeter flavours whilst Euro­pean oak gives spicy and nutty flavours. Euro­pean oak casks are much rarer in the in­dus­try and are more sought af­ter. They are more ex­pen­sive, but can give a great rate of re­turn. Around 90% of the Scotch mar­ket uses Amer­i­can oak casks and 90% of Scotch sold around the world is blended whisky. So whisky from a Euro­pean oak cask (exSherry for ex­am­ple) is a sound bet. If the whisky is sold to an in­de­pen­dent bot­tler rather than for blend­ing, and per­haps fur­ther ma­tur­ing be­fore bot­tling, then a first fill Euro­pean oak cask would be more de­sir­able. In gen­eral terms, the best in­vest­ment would be a range of casks in­clud­ing new make and aged casks in a mix­ture of Amer­i­can and Euro­pean oak. If you’re buy­ing a very old cask or want­ing a longer term in­vest­ment, I would sug­gest a re­fill cask. So how and where do you find and buy casks? You can’t just rock up to a dis­tillery and pop a cask in the boot. Whisky bro­kers only deal with the in­dus­try; how­ever there are com­pa­nies who can buy from bro­kers and do deal with pri­vate in­vestors. Of course, you can find bro­kers on the in­ter­net. But for re­li­a­bil­ity of ser­vice and qual­ity of prod­uct, you might look at The Whisky Mar­ket Ltd (the­whisky­mar­ket.com). I have been in the whisky in­dus­try for many years and have con­sulted to them for over five years, so they un­der­stand the mar­ket well. So set­tle down one evening with a dram that’s old enough to vote and con­tem­plate own­ing more than just a bot­tle or two!

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