02 Dec Setting up cask whiskey investment for successful returns
Investing in cask whiskey has been around for centuries, but only to a select few. Our mission at Whiskey & Wealth Club, is to open this lucrative market to individuals interested in owning a part of rich Irish and Scottish heritage.
Amongst the most common questions we hear from new investors at Whiskey & Wealth Club is, what will the value of my whiskey be in future, and who is going to buy it? The value of a cask is largely dependent on four key factors – age, quality, brand and rarity. If you’re able to obtain a combination of all four, you will have a solid foundation for generous returns.
Top four exit strategies
When investing in a cask, we recommend holding the spirit for a minimum of three years. But the investment can be held for much longer. While whiskey will increase in value for each year of maturation, there are markets for whiskey of any age. When you’re ready to sell, there are several exit strategies to consider and with our team on hand, there is no shortage of help and advice on the best strategy for you.
1. Whiskey brands
One of the most common exit strategies is selling to whiskey brands. Many whiskey brands do not own their own distillery. As whiskey popularity grows, we expect to see many more brands looking to buy ready aged whiskey. If you are buying from a distillery who has bottles on shelves, then they’re more likely to seek out existing matured stock when they have run out and buy it back.
In addition to this, there are new and emerging high-end whiskey brands. Often when entering the market and looking to play in the high-end whiskey category, these brands will look for quality mature stock to ensure they have the best to offer.
The demand for Irish whiskey far outweighs current production, putting investors in a safe position with very little risk of competition. This is further demonstrated by the 2019 Knight Frank Luxury Investment Index, revealing rare whiskeys as the best performing collectable. Rare whiskeys grew in value by 40% over the year — easily out-performing investment options such as coins (12%), and art and wine (9%).
2. Independent bottlers
As an investor, if you’re looking for a real premium return, one of the key exit strategies is selling to independent bottlers. An independent bottler is a company that doesn’t own a distillery but buys cask whiskey to bottle and release under their own name, and co-brand it with the original distillery to leverage existing brand awareness.
One cask alone allows an independent bottler to make and distribute approximately 350 to 400 bottles of whiskey depending on age. With the ability to sell each for a large profit, based on rarity and brand, bottlers know the worth of a valuable cask. With an incredibly high-profit margin for the buyer, we’re able to get the seller a high premium return on their investment.
3. Private investors & collectors
Another common strategy is selling to private investors. These investors often wish to bypass large portions of the maturation period by purchasing mature stock. For example, a potential client hoping to own a 15-year-old whiskey will be willing to pay a premium for a five-year-old and wait a shortened ten years to see a drastic return in profits. This exit strategy is incredibly valuable when considering 97% of mature whiskey in the Irish space is sold between the age of three to eight years. If you’re able to hold onto your cask for longer than this, the profit growth could be exponential due to high demand and therefore the mature stock going to the highest bidder.
4. Auction websites
Whiskey auctions have become increasingly prominent over the last decade and are a popular exit strategy for investors. There are many whiskey auction organisations that allow you to register your cask for sale, at an agreed value, that can then be surpassed during the auction process. This strategy often requires the least effort on the part of the investor, making it an attractive strategy for quick returns.
As with any investment, a strategy for return needs to be considered from the outset. With a clear guide on investing in the most valuable whiskey, the highly trained and trusted team at Whiskey and Wealth Club are on hand to tailor each clients’ strategy to meet their specific needs.
At Whiskey & Wealth Club we pride ourselves on the service that we offer to members. If you have any questions, contact the team here and one of our team will be delighted to help.