The majority of people buying whisky do so because they enjoy the taste. They want to sample different flavors, varieties, or to develop a palate for a good dram.

Increasingly, though, there are those that buy whisky, not for the experience of drinking it, but because they think it can make them rich.

When it comes to buying alcohol as an investment, the first thing you’ll probably think of is fine wine. But, the investment market for whisky is booming to the point that investing in the hard stuff might bring you a better return.

As the Spectator notes, a vertical (a series of bottlings from successive years) of 18-year old vintage Macallan would have cost you £19,000 ($25,000) back in 2015. By the end of 2016, they were worth £46,000 ($61,000). That’s a 142% increase and makes the spirit a better investment bet than first-growth Bordeaux.

When you read statistics like that, investing in whisky suddenly seems like an attractive option. But, it’s not as simple as buying an old bottling and watching the money roll in.

If you want to see a return on a collectable whisky, there are a few rules to follow. That’s what this article is here for. Today, we’re talking about the fundamentals of investing in whisky; the do’s, the don’ts and the things to look out for when you’re buying.

Let’s dive in.

Why is whisky investment booming?

Today, the market for collectable whiskies is largely being driven by China. It used to be that the Chinese were buying vintage Macallan bottlings as “gifts to facilitate business” (or, what you and I would call “bribes”), but a government crackdown put that practice to bed. These days though, the boom in whisky sales in China is driven by a very different reason. As Martin Green, head of whisky at auction house Bonhams notes:

“Interest in whisky has been growing steadily for many years. One reason is the increasing wealth in the Far East where whisky is seen as a premium product and an indication of taste and sophistication.”

The rise of young High Net Worth Individuals (HNWI), a group of people with $30 million or more in liquid financial assets who are below the age of 30 are also fueling demand for rare whiskies. According to the Jing Daily, interest in whiskey among this population has grown from 15% to 22% in the past three years. According to the Hurun Research Institute’s China HNWI Whiskey Consumption Behavior Report 2017, whiskey is the third most favored alcoholic beverage among Chinese people.

But it isn’t just the Chinese who are consuming whiskies; according to Vijay Sarathi, an analyst at Technavio, who specializes in alcoholic beverages research:

“The demand for premium whiskey is increasing around the world, especially in major markets such as the UK and US. Super-premium whiskies, which are priced above USD 30, recorded close to USD 330 million worth of revenue in 2014, growing by almost 20%. This trend indicates, growth of the premium whiskey segment will significantly increase revenues for the overall market through 2020.” 

What to look for in an investment-grade whisky

If you’re buying whisky as an investment, there three things to consider when picking out a bottle:

Rarity

This one seems entirely obvious, but the rarer a whisky it is, the more collectable it will likely be. Limited runs that are in short supply or limited editions from established makers tend to be popular. Then there are bottles from so-called “silent distilleries” (distilleries that have closed down). Port Ellen in Islay, for example, shut down in 1983. Diageo, the drink conglomerate that owned it, has trickled remaining Port Ellen product on to the market every year for the past 17 years. Their 2016 offering was $3,400 a bottle.

Photo from The Whisky Exchange

Collectability

When buying a rare bottle of whisky, you have to weigh that rarity up against the recognition of the brand. As Scotsman Food and Drink notes,

“favoring an official bottle brings better value to the resale than an independent bottle, even when they have identical properties – same brand, same year of distillation.”

It’s something that Whisky Exchange owner Sukhinder Singh echoes:

“Much of the demand is driven by how good the whisky is; it’s not about packaging or rarity.”

Which is to say, just because a whisky is a collector-aimed, limited edition, doesn’t mean it’ll keep its value. There’s a reason 1980s bottles of 12-year-old Talisker only sell for just over $1000.

If you read our Scotch 101 series, you’re probably familiar with names like Macallan, Ardbeg, Bowmore, Highland Park, The Balvenie or Glenmorangie. And guess what? It’s bottling from those established brands that tend to sell consistently at auction.

Collectible Range

Remember that vertical of 18-year-old Macallan we mentioned at the beginning? Part of the reason it sold so well is that collectible ranges of whiskies are big business with whisky investors. Distilleries deliberately release series of special editions that, across the years, form a collection, and owning a full run of one of those series increases the value of the bottles exponentially.

Where do you buy whisky for investment?

If you’re looking to buy an investment grade whisky, you’ve got three options. The first is going to a whisky auction. This is where the majority of investment grade whisky ends up. But, buying at auction presents some challenges. Auctioneers may charge up to 25 per cent of the value of whiskies in order to sell them, while there are also transportation and storage costs to factor in.

Buying direct is another route, though one also has to factor in that returns can vary greatly due to the high transaction costs involved in buying and selling.

Finally, there’s the option of investing online, which has gained some traction in recent times. Using this approach, investors buy and sell whisky at wholesale prices for as little as $3 a liter using platforms like WhiskyInvestDirect.

Things to watch out for

As when investing in any collectable, the aspiring whisky investor needs to look out for forgeries. There are people out there trying to sell forged whisky bottles. Some are fairly obvious to spot – they might claim to be from a year when the distiller didn’t make whisky, for example – but others are tricky. Always do plenty of research when buying a bottle – Catawiki and Rare Whisky 101 are useful resources – and, if you get an offer that seems to good to be true, it probably is.

And of course, it goes without saying that buying an opened bottle of collectable whisky is a definite no-no. The instant that seal is broken, the value of that drink plummets and an opened whisky is essentially a non-investment. (If you want to know why, check out our guide to storing whisky).

Financial Times article: How to Spot a Fake Whisky.
Reddit: How to Spot a Fake Hibiki

Photo by Louis Smit on Unsplash

Final thoughts 

Investing in whisky might seem appealing, given the returns that you can potentially make, but it’s a challenging business and there are lots of variables that will determine your success. As Patrick Connolly (speaking to the Financial Times), adviser at Chase de Vere, puts it:

“Remember that whisky doesn’t produce any earnings or income and so price fluctuations are based solely on supply and demand. This means there can be some big upward or downward price movements if there are changes in the economic environment or as it comes in or out of favor.”

If investing is too risky for your palate, I would recommend becoming a collector. If all goes wrong and you can’t sell your whisky, at least you’ve got a spectacular drink to show and an excuse to find some good friends over for a great time!

Welcome to this week’s edition of Whiskies of the World; the series that teaches you about different nations’ whiskies and how they came to be.

In this edition, we’re taking a look at Indian whisky. Once written off in the international spirit market, India has produced some truly remarkable whisky innovations in recent years that have made more established Spirit-making nations take note.

We’ll be covering the history of Indian whisky; the unique challenges the country faced in making the spirit, how it overcame them, and why its place in the global spirit market has sometimes been controversial. And, of course, we’ll be recommending our favorite Indian whiskies for you to sample.

So, tulip glasses at the ready – let’s dive in!

History

Scotch whisky found its way to India in the 19^th century, introduced to the country’s populace by the British Raj. It was a slow import to take off – many locals viewed the drink as “foreign poison” and opposed its introduction.

As for the widespread manufacture of local Indian whisky, that came later, and after a protracted process. India’s first distillery – the Kasauli distillery – was established in the late 1820s by a British man named Richard Dyer, who brought copper pot stills from Scotland and aimed to take advantage of the abundant spring water in the Kasauli region. However, the production of alcohol from grain was hampered as food shortages in India meant that extra grain was in short supply (due to continued poverty in India, the use of grains in Alcohol production remains controversial to this day).

A solution to this problem was to make whisky using ingredients other than cereal, which many Indian whisky manufacturers did, and still do. The addition of a molasses to the spirit to bulk it out became a common practice (and, as we’ll find out momentarily, a particular source of controversy), resulting in a drink that only contained 10-12% traditional malt whisky and that many outside of India would consider closer to a rum.

India’s journey into high-end whisky production didn’t start until the 1980s, and a single distillery – Amrut – is heralded as the company that changed the game. Like its competitors, Amrut made whisky by blending a grain-based mash with molasses. But, the company’s chairman, Neelakanta Jagdale, also recognized the potential for a connoisseur’s whisky product, and began procuring barley from Indian farmers in 1982.

The Amrut Peated Cask Strength was indeed delicious

By the tail end of the decade, Amrut had made their first batch of single malt whisky, though there was little demand for the product in the domestic market. India had no culture for consuming single malts, and it was ultimately blended with sugarcane-distilled alcohol to produce MaQintosh Premium Whisky, a drink more suited to the country’s tastes.

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Welcome to this week’s edition of Whiskies of the World; the series that teaches you about different nations’ whiskies and how they came to be. In this edition, we’re delving into the world of Japanese Whisky, one of the rising stars in the international spirits market.

The Japanese have been producing whisky commercially since the 1920s, but it wasn’t until the late 1980s that it was exported, and the early 2000s before it was internationally recognized. Today, Japanese whisky is highly regarded for its unique blend of heritage and innovation, resulting in some exciting flavor combinations.

Today, we’ll be learning all about the history of Japanese whisky, what makes it unique in the spirits world, as well as recommending some choice bottles for you to sample. So, tulip glasses at the ready – let’s dive in!

Photo by Sorasak

History

20 years ago, the mention of Japanese whisky would have likely left non-native connoisseurs with blank faces. But, since the early 2000s, the rise of Japanese whisky outside of Japan has been meteoric. Japanese whisky owes a great deal to Scotch – indeed, as we’ll find out, Scotch is what it was initially modeled on – but, it quickly evolved into own beast, thanks in no small part to its distillers’ innovative production methods.

Produced in Japan since the 1800s, the commercial availability of whisky in the country came much later than in other whisky producing regions. Japan’s whisky boom began in the 1920s, with two whisky distillers at the forefront – Masataka Taketsuru and Shinjiro Torri.

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Welcome to this week’s edition of Whiskies of the World; the series that teaches you about different nations’ whiskies and how they came to be. Last week, we talked about American Bourbon. Now, in this edition, we’re going North of the border and delving into the world of Canadian whisky.

The history of Canadian whisky is fascinating, with its rise in international standing tied directly into American prohibition and the proximity of some key distilleries to the American border. In this edition, we’ll find out how they came to pass, as well as how Canadian whisky legitimized itself to American consumers in the post-prohibition years.

As well as this, we’ll explore the rules that define Canadian whisky, and how they differ in one key aspect compared to many other international whisky varieties. We’ll also be talking about the flavor characteristics of Canadian whisky, how Canadian spirits are sometimes overlooked, and how some of Canada’s best whisky options sometimes stay in Canada.

So, get your sippin’ glasses at the ready and let’s dive in! 

History

Canadian whisky history begins in 1769, when John Molson opened the first Canadian distillery in Quebec. By the mid-1800s, the Canadian whisky industry was booming, with over 200 distilleries actively producing the spirit across the country.

While Canadian whisky was well established domestically by the end of the 19^th century, it was the introduction of prohibition in America in 1920 that pushed the Canadian spirit onto the international stage. The nationwide ban on the sale of all liquor across the US, which went on until 1933, led to a boom in illegal spirit imports, and Canadian distilleries, just across the border, were primed to take advantage of this. Take the Hiram Walker distillery in Ontario, for example. Just across the river from Detroit, it became a prime site for bootleggers smuggling hooch throughout the ‘20s.

It’s not known exactly how much Canadian whisky was smuggled into the US during this period (you wouldn’t exactly expect the bootleggers to keep records of their very illegal activities!), but it’s fair to say that American prohibition bolstered Canadian whisky’s international standing. Canadian Club, for example, were shipping out 1000 cases of whisky per day during the era. They also introduced the curved “gate” bottle during this period, designed to fit in small places, specifically the high boots that smugglers used to conceal whisky (wonder no more where the name bootlegger came from!).

Image by Classic Film

Following the end of prohibition in 1933, Canadian whisky boomed once again, thanks to the Federal Alcohol Administration deciding that the spirit was similar to Tylenol – a widely used American cure-all and pain reliever at the time. As a result, the FAA imported over 3 million gallons of Canadian whisky into the US, for allocation everywhere from medical clinics, hospitals and pharmacies to public buildings like libraries (which, looking back on things from a 21^st century perspective, seems kind of crazy!). It was this that really set the stage for Canadian whisky’s recognition outside of Canada.

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