Ian Buxton returns to one of his favourite topics this week, the rapidly-expanding whisky investment market. It can’t keep going up forever, he warns, and there are signs that the bust is coming soon. Are you looking to invest in whisky? You have been warned!

There’s an old story, probably apocryphal but containing a great truth, about the Great Depression of the 1930s which was triggered by the crash of the New York Stock Exchange.  Offered advice by a shoeshine boy on a share to buy Joe Kennedy began selling his portfolio. “You know it’s time to sell when shoeshine boys give you stock tips,” he’s said to have observed.

A stuck record?

Now I realise that I’m in danger of sounding like a stuck record, having criticised the whisky ‘investment’ craze for a number of years now. And it’s certainly true that, even relatively recently, had I bought some whiskies for future sale that I preferred to drink I would be sitting on some handsome capital gains. The recent appreciation in the prices of the most sought-after bottles have been truly spectacular. Undoubtedly some people have made a great deal of money.

But if you’re expecting a mea culpa or tearful confessional, please look away now. As far as I can see the inflationary trend in whisky collecting and investment is silly and getting sillier, egged on by a group of advisers, auctioneers and, sadly, even distillers who have a clear vested interest in seeing the whole mad circus continue indefinitely. Call me cynical if you will but I fear that what are seeing are prices driven ever upwards by the Greater Fool theory of investment.

On The Nightcap this week we've got fancy Macallan!

Elaborate packing on the latest release from Macallan

Whisky is for drinking

Three points then:

Firstly, whisky is for drinking, not locking away in a vault. That’s not to say that a very special or rare whisky shouldn’t be reserved for a suitably special occasion but, eventually, all whiskies should be drunk. That is why they were made and to hoard them in the pursuit of monetary gain disrespects the people who made it and the convivial spirit of whisky itself.

Secondly, all that glisters is not gold. Great whisky does not need lavish packaging. It’s expensive and wasteful. Consider for a moment some of the most expensive wines in the world – the Burgundy grand cru Domaine de la Romanée-Conti or Château Cheval-Blanc from Bordeaux for example. They’re packed in essentially the same style as their everyday supermarket own-label equivalent – slightly nicer label, much better cork and heavier glass to be sure – but the bottles will be visually identical and the differences are marginal when the relative retail prices are considered. They don’t need a crystal decanter, silver stopper, hand-crafted oak box or leather-bound journal because the wine speaks for itself. The informed buyer has no need of the superfluous trappings that increasingly surround high-priced whiskies.

And finally, I maintain that this will end in tears. Rather like Joe Kennedy’s shoeshine boy the boom in prices is drawing in all kinds of speculators and ‘investment’ funds promising advice for a fee on what whisky to buy. I’ve been around this industry for longer than I care to mention yet almost every week now I’m seeing new firms that I’ve never heard of fronted up by slick ‘Loadsamoney’ City types offering alluring returns on whisky. They, of course, make money whether you win or lose. Beware of people contacting you out of the blue with apparently generous offers. If it seems too good to be true it almost certainly is. Question their motives in offering to cut you in – if it was that easy they’d certainly keep it to themselves.

On The Nightcap this week we learn the youths are investing in casks!

Pssst, wanna buy a cask of whisky?

What goes up, must come down

Whisky is now a traded commodity on the London International Vintners Exchange (Liv-ex). The purchase of single casks is once again booming but prices bear increasingly little resemblance to trade filling prices, suggesting that should the private buyer wish to liquidate their investment by selling into the blending market an unpleasant surprise awaits.

Having no wish to be sued I name no names but suggest you proceed with caution. There have been scandals and short-lived booms before. History teaches us to beware whenever whisky and investment occur in the same sentence. Be it the distillery investment boom of the 1880s and 90s, the Pattison scandal or, more recently, the Cavendish Hamilton Spirit Management cask sales fiasco, the end is the same – the unlucky small investor limps away nursing a substantial loss.

Don’t let it be you!