19 Oct Whiskey growth — the alternative high-flyer for young investors
In uncertain times, whiskey has proven itself to be a savvy investment. The Knight Frank Luxury Investment Index 2020, finds that rare whiskey has risen in value consistently and significantly over the past decade — up by 564%, leaving more familiar alternative options such as cars (+194%) and art (+141%) trailing in its wake.
While it is important not to confuse rare whiskey with cask whiskey, the exceptional performance of the former does suggest the direction of travel in terms of the latter. As well as some key lessons as to what to look for when purchasing cask whiskey to mature and sell on for profit.
Fundamentals: the impact of greater insight
Legendary investor, Warren Buffett, is often quoted as saying that risk should be based on sound business fundamentals, not capricious markets.
Investors appear to take this advice to heart, showing far greater interest in cask whiskey as a buying option with access to more data on the model. This significant shift, driven by greater understanding, is likely to have a real impact on future investment choices. The wholesale purchase and holding of cask whiskey for financial gain is a developing market. One that, to date, has been largely unexplored. As an industry leader we are keen to understand its drivers and motivations – and to share this insight with wider audiences.
The insight garnered from over 500 investors with capital of £100,000 or more available for investment is presented in the 2020 Cask Whiskey Buyer Report.
Looking beyond the report’s aggregated responses, the most striking differentiator amongst investors was age. The 25 to 44 age range emerging as the cask whiskey buying sweet spot.
Age — not absence — makes the heart grow fonder
One of the takeaways from overall investor attitudes was their perception of cask Scotch and Irish whiskey as an investment option.
On average, investors were more comfortable with more familiar alternatives, with antiques (28%), art (31%), watches (23%) and wine (24%) all scoring highly. With less familiar alternative Scotch and Irish whiskey coming at 19% and 12% respectively.
Age, however, has a significant impact on perceptions of cask whiskey buying.
The youngest group of investors surveyed appear to be driven to invest in areas that they enjoy. Half of all those surveyed in the 18-24 age range cited ‘interest’ as an investment motivation, higher than the average of 43%. Cars, wine and art scored highly for these investors while whiskey (perceived as a more mature drinking choice) sees lower scores for Scotch 14% and 21% for Irish whiskey.
The picture changes dramatically as potential buyers enter the 25-34 age range. The propensity to buy cask Irish whiskeys more than doubles from this group’s younger counterparts (51% v 21%) and effectively quadruples for Scotch (56% v 14%).
The 35-44 age range continues an openness to alternative investment and consideration of cask whiskey. However, the older investor age ranges (45+) rapidly leave the sweet spot. With willingness to invest in Irish or Scotch whisky falling to 14% and 19% in the 45-54 segment, interest drops further to 3% and 20% for those over 65.
These findings are supported by research from other organisations: IWSR Drinks Market Analysis records a significant change in drink preference in the US — with the 25-34 age group replacing the over 65s as the largest consumers of Single Malts.
The sweet spot: dialled in to cask whiskey
A second key take away from the research is that the provision of more information and insight on the cask whiskey buying model causes a spike in investor interest.
Here, once again, the sweet spot age groups are dialled into cask whiskey buying to a much greater extent than their younger and older counterparts. The 25-34 and 35-44 age ranges show a much better understanding of this new buying model.
Once the sweet spot age ranges receive additional information on cask whiskey, their interest grows significantly more than their peers. On average, interest increases by 54%; in the 25-34 range interest increases to 80%; and in the 35-44 range, interest increases to 81%.
These findings clearly show the cask whiskey buying ‘sweet spot’ — and it’s something Whiskey & Wealth Club will be looking at closely as we move forward and grow.
We hope that you are as excited by these findings as we are and, if nothing else, you better understand the cask whiskey market. To read more, see the full report here, or visit whiskeywealthclub.com and get in touch with the team today!