THE LAST DROP?
Collectable whisky posted record results last year, but already there are rumblings of the bubble bursting
Could the time to stop collecting and start drinking whisky be upon us?
There is much speculation surrounding whisky’s place in the market at the moment. The general picture is that retail prices are increasing at a dramatic rate, aged whiskies seem few and far between, and non-aged whiskies are on the brink of flooding the market.
The whisky valuation, brokerage and consultancy company Rare Whisky 101 made recent headlines with the announcement that rare whisky investment outperformed both gold and the stockmarket in 2015. But this is not the first time that so-called investment grade scotch (IGS) has outperformed gold.
Rare Whisky 101’s Apex 1000 Index, which tracks valuable whiskies, closed 2015 up 14%, just a shade lower than 2014’s 15% increase. In the same period, rare wines lost 0.42% of their value, the price of gold dropped by 10% and the FTSE 100 shares index dropped by 4.93%. Even New York’s NASDAQ and Shanghai’s Composite Index, which both showed increases of more than 9% in share value, could not match Rare Whisky 101’s Apex 1000 Index.
The number of collectable bottles of whisky appearing on the UK auction market reached an all-time high of 43,458, up 27% on 2014. (The jump is even more pronounced if you look back a few years – in 2009, for example, just 4,072 bottles were sold at auction in the UK.) Furthermore, the total value of whiskies sold on the auction market reached a new record of £9.56m, an increase of 25% compared to 2014. Suddenly, every man and his dog is hunting around for old, forgotten bottles of whisky.
If you have just remembered that your late grandmother left you a Bell’s Whisky decanter and are now thinking you’ve hit the jackpot, you may prefer to drown your sorrows (responsibly) with that dusty old Bell’s. Sorry to be the bearer of bad news, but while all whisky is special, some is more special than others.
The granddaddy is The Macallan, which has maintained its dominance on the global collectable whisky scene in terms of volume and value. Sales of The Macallan accounted for nearly 10% of all bottles sold on the auction market and 23% of the total value. If you plan to start a collection that gains value, other bottles to hold onto are rare Islay malts from Ardbeg, Bowmore or Lagavulin, or those from the closed distillery of Port Ellen. Of Rare Whisky 101’s top ten most ‘investible’ distilleries, just three are from those still producing whisky – Dalmore, Mortlach and The Macallan.
However, despite all these increases in value and volume, I fear turbulent times lie ahead. At the start of 2016, for the first time since it was launched in 2012, a full collection of Dalmore Constellation was put up for sale at auction; 21 single cask whiskies, which retailed for £158,000 four years ago. Just 12 of those 21 bottles reached the reserve price and sold for £27,200, which is a loss of 40%.
The other surprise of 2015 was the sharp increase in the value of Japanese whisky. In just nine months, the value of Karuizawa rose 75%. It did dip 6% in the final three months of 2015, but it was nevertheless a fine performance.
Bonhams Whisky Auction in Hong Kong in January added to the worrying trend. Only two thirds of the lots sold on the day – a disappointing result for a major auction house.
I fear that the spirit is starting to teeter. On one hand, there is a mass of whisky appearing on the auction market, some of which is failing to reach reserve prices and not selling. Meanwhile, non-aged and no-vintage whisky is flooding the retail market. Is demand for investment whisky wavering? Are we about to see the creation of whisky loch? I suspect there is still some way to go before the whisky bubble bursts, but there is certainly a new air of uncertainty surrounding the market.
‘The other surprise of 2015 was the sharp increase in the value of Japanese whisky’