Profits galore
Whisky prices have been rocketing by 7 per cent a year for a decade. So could investing instead of drinking it bring...
AWEE dram of whisky can help keep out the cold on a long winter’s night. It can also warm the cockles of your heart as an investment. The value of whisky maturing in the barrel has been rising 7 per cent a year in the last decade and bottles have been selling for record-breaking sums.
In August, at the McTear’s Rare and Collectable Whisky Auction in Glasgow, a bottle of 50-yearold Dalmore 1926 sold for £14,600 while a Black Bowman 1964 went under the hammer for £11,400.
Laurie Black, a whisky expert at McTear’s, says: ‘In the 1990s you could buy a bottle of old Black Bowman for £70. It now changes hands for more than 150 times this amount. By anyone’s standards these are pretty impressive returns.’
So could investing in whisky bring a windfall like Whisky Galore, the Compton Mackenzie novel and film? Black adds: ‘Because prices have risen so dramatically in recent years it is unlikely you will get the same profits in the future. Yet you might still enjoy some healthy returns if you are shrewd.’
Despite potentially tasty returns, the whisky market is not regulated by the Financial Conduct Authority and if you become a victim of a scam you cannot get help from the Financial Services Compensation Scheme. So you need to tread carefully – scams are a regular feature of the whisky market.
Black believes the best place to start is by enjoying an occasional tipple. He says: ‘You should only buy a bottle of whisky as an investment if you love the drink. That way if prices fall you have not lost everything as you can consume the contents.’
You can develop your taste buds by trying out a few distilleries that are highly regarded by connoisseurs. Bottles that could prove shrewd investments can often be purchased from as little as £50.
Distilleries such as Ardbeg, Balvenie, Bowmore, Bruichladdich, Highland Park, Glenfiddich, Macallan, Springbank and Talisker are worth considering. They often offer tasting tours and have sampling clubs.
Once whisky is bottled it should remain unchanged and taste pretty much the same whenever it is drunk – as long as it is stored out of direct sunlight. As dramlovers know, once bottled a Scotch does not age – the age on the bottle refers to the
time it has been stored in a cask. A whisky will usually be aged between three and 50 years.
As for drinking the stuff, Dalmore master distiller Richard Paterson suggests leaving it on the palate a second for every year of age – so a 30year-old whisky should be savoured for half a minute before being swallowed.
Black says: ‘When it comes to investment value, taste is not the most important factor – it is the rarity of the bottle.’
As a result, some of the most valuable whiskies are from distilleries that have closed down – such as Brora, Dallas Dhu, Glen Flagler, Rosebank and Port Ellen. For example, the Port Ellen distillery on Islay closed in 1983 and bottles now sell for £1,500.
Black adds: ‘During the 1980s whisky fell out of favour and some distilleries struggled to survive. Fortunately, their great flavours are being rediscovered again and a new market – including fans in Asia – is boosting the value of whisky as an investment.’
Although a rare limited issue or historic bottle may increase the investment appeal, this is not a guarantee it will be drinkable.
If the level of whisky in the bottle has slipped down to the shoulder – and remains unopened – it might indicate the drink has become oxidised and is flat.
However, investors can buy before it is bottled. By doing this they avoid paying any duty if it is kept in a ‘bonded’ secure warehouse and never seen.
But be wary as there are risks involved because you will not know how good the whisky will turn out to be.
Trading website Whisky-InvestDirect allows you to buy and sell whisky without ever seeing it – from distilleries such as Benrinnes, Blair Athol, Cameronbridge, Inchgower, North British and Starlaw. It charges 1.75 per cent commission for trading and a minimum storage fee of £3 a month.