\u201cThe reason people invest in whisky is because you get a personal touch,\u201d <\/span>explains Elliot Wynn-Higgins, cask custodian at Lindores Abbey Distillery<\/a> in Scotland.<\/span> \u201cYou don\u2019t tend to get the same welcome from banks or investment advisors. Whisky is a fun investment, it\u2019s not an ISA that sweats cash \u2013 it\u2019s a journey in spirits maturation and an ongoing project. You can even taste it.\u201d\u00a0<\/span><\/p>\n The stills at Lindores Abbey<\/p><\/div>\n Interest rate averages for whisky, he continues, can be higher than gold and vintage sports cars, with an average of around 6% return every year. But dollar signs aside, there are a number of motivations to invest, whether it\u2019s marking an important milestone like a wedding or a newborn, creating your own independent whisky bottling, or fulfilling a lifelong dream to participate in whisky-making history.<\/span><\/p>\n After all, maturing whisky evolves in a way that a bottle of whisky just won\u2019t. Each cask is patently unique \u2013 even when two identical casks are filled at the same time with the same spirit, they\u2019ll taste different. It\u2019s a limited commodity, observes Simon Aron, co-founder of Cask Trade, \u201cif a particular cask yields 250 bottles, after they\u2019re gone, they\u2019re gone, that\u2019s it. There will never be another cask like it.\u201d\u00a0<\/span><\/p>\n So with that in mind, what should a would-be investor bear in mind? \u201cBuying at the lowest price you can is obviously the smartest, but make sure that it’s a branded facility,\u201d says Whiskey & Wealth Club<\/a> co-founder Jay Bradley<\/a>. \u201cIt\u2019s quite easy to buy whisky in Scotland and Ireland from a commercial facility \u2013\u00a0you can buy it at a decent enough price, and that’s great for blending and whatnot.\u201d\u00a0<\/span><\/p>\n If if it\u2019s return on investment you\u2019re chasing, he says, stick with known brands. \u201cFor example, a five-year-old Macallan<\/a> cask is worth more than five-year-old cask of no-name whiskey. Making sure it\u2019s a solid distillery with a good master distiller behind it is very important as well \u2013 the more they build their brand, the more the cask of whisky will go up in value.\u201d<\/span><\/p>\n Jay Bradley from Whisky and Wealth<\/p><\/div>\n And make sure you do your maths, first. \u201cLook at your budget and your targets,\u201d suggests Aron, who says the youngest whisky on Cask Trade\u2019s list is three years old and comes in at \u00a31,500, while the oldest, at the ripe old age of 50, is north of \u00a3300,000. \u201cThe budget would be personal to that individual and the target would be: do you want to see a return in three years, five years, 10 years? Do you want to buy one cask and sit on it, or would you rather a portfolio of different ages? Do you want a portfolio where you can cash in at different dates?\u201d<\/span><\/p>\n Just as there are a few reasons to consider trading your hard-earned cash for amber nectar, there are several means to go about doing so. Before you commit, remember to ask about any extra costs associated with warehouse storage, insurance and bottling, including HMRC duty and VAT. Here, we run through your options\u2026<\/span><\/p>\n Plenty of distilleries now offer their own private cask purchase programmes. The benefits are two-fold: buyers have the chance to own a piece of whisky history, while distilleries receive a cash injection \u2013 often, in the case of younger producers, precisely when their overheads are steepest and they perhaps. need it the most.\u00a0<\/span><\/p>\n \u201cAs a potential buyers comes to me, I suss out why they want to buy a cask,\u201d says Wynn-Higgins. \u201cFrom there, I help them select the perfect cask with their budget in mind, and they come along to fill it with me where they can. Casks typically aren\u2019t cheap things to buy, so when we make a sale of a cask it helps us out financially very strongly. It also helps us build great customer rapport from a very early stage.\u201d\u00a0<\/span><\/p>\n While the small-print surrounding your purchase will vary from producer to producer \u2013 \u201csome distilleries won\u2019t allow you to sell to private brokers, whereas some do,\u201d he says \u2013 there are a few common rules. \u201cTypically, you can\u2019t take your cask home with you as it needs to mature in a bonded warehouse. Unless you have a rather large shed in your garden.\u201d<\/span><\/p>\n Whisky slowly maturing, with any luck, becoming more valuable<\/p><\/div>\n Cask brokerage company Rare Whisky 101<\/a> essentially acts as the middle-man that links serious cask buyers with genuine cask sellers. The team screens potential interested parties to make sure they have sufficient funds to complete the acquisition process and take a 100ml sample from each cask to assess the quality according to a ten-point rating scale \u2013 providing reassurance for both the buyer and the seller. After all, maturing whisky has a time limit. For sellers, particularly those new to the world of whisky investment, prospective buyers can be hard to find.<\/span><\/p>\n \u201cMany people would assume that as long as their whisky is stored in cask in a bonded warehouse, no harm can come to it,\u201d says RW101 co-founder, David Robertson. \u201cHowever, that couldn\u2019t be further from the truth. There is most definitely a finite time in which to sell a cask. We recently saw a 50-year-old cask that had dropped below the legal minimum of 40% alcohol to 28% and was subsequently deemed worthless. I\u2019d encourage any owners, even if they don\u2019t want to sell, to get their casks regauged and sampled. Casks can also leak and become overly-woody so cask owners should ensure that their casks are checked annually.\u201d<\/span><\/p>\n Whiskey & Wealth Club (WWC) sources Irish whiskey and Scotch for investors. The distilleries sell casks of their new make spirit \u2013 usually bulk in the form of six 200-litre palates\u00a0\u2013 to private investors through WWC, which stores them in a government bonded warehouse, typically for between three and five years. Investors then decide whether to bottle for themselves, sell for a profit through WWC, or allow the contents to continue maturing.\u00a0<\/span><\/p>\n \u201cWe\u2019re bridging the gap financially between a distillery and a whiskey brand that wants to buy mature stock,\u201d explains WWC co-founder and CEO Scott Sciberras. \u201cFrom the distillery\u2019s point of view, producing whisky is a very expensive business, and you don\u2019t see a return for years down the track. And from a whisky brand\u2019s point of view, they want to buy mature stock to bottle and sell straight away.\u201d<\/span><\/p>\n With WWC\u2019s format, everyone\u2019s a winner. \u201cRather than either one of them tying the money up for maturation period, private investors bridge the gap,\u201d Scott says. \u201cWe purchase it by litres of pure alcohol, which gives us volume to sell to our clients without the overheads of running the distillery \u2013 so we can sell it for a far cheaper price. If we purchase 20% of a distillery’s fresh new make, it gives them enough working capital to run their stills.\u201d<\/span><\/p>\n Macallan cask, probably worth a bit<\/p><\/div>\n Put simply, Cask Trade<\/a> is a marketplace for trading whisky casks. Unlike a broker, it only sells whisky casks it owns, and only whole casks \u2013 no fractional sales. \u201cWe buy casks from all sorts of different places, so distilleries, warehouses, blenders, independent bottlers, investors; casks are moving around constantly between all of those groups,\u201d Aron explains. \u201cSome of the distilleries will never come up for sale because they don’t sell, full stop. Everything goes into production. But most distilleries are moving stock around Scotland all the time.\u201d<\/span><\/p>\n The casks are held in HMRC-bonded warehouses, which are regularly visited by Cask Trade whisky masters. The business offers regular sampling and re-gauging of casks, re-racking, estimates of bottles and strength in cask, the financial modelling of bottling, costings for bottling, labelling and shipping, and will arrange for buyers to receive samples of their whiskies and visit their barrel(s) in person. It also guarantees to buy the cask back from its clients should they decide to sell it.<\/span><\/p>\n \u201cIf you\u2019re got a bottle in your hand,\u00a0 it\u2019s sealed with a cork, all the information is on the label, it\u2019s pretty much a done deal,\u201d says Aron. \u201cWith a cask, it\u2019s a moving target. It needs to be checked, sampled and looked after by a safe set of hands. Because there’s no label on a cask, you need to give the details \u2013 so people can understand how many bottles it would give at 12 years, how many at 15 years, how it\u2019s expected to taste depending on the cask type, examples of bottles that have been sold in the past. It\u2019s much more of a journey, like buying a classic car. You need to know when it was made, how it was made, who looked after it, how it was looked after and whether it still runs well.\u201d<\/span><\/p>\n Testing whisky at Cask Trade<\/p><\/div>\n As of last month, Cask Trade launched an auction website aimed at private buyers and sellers. With casks going under the hammer four times a year, auctionyourcask.com<\/a> will help private owners sell their casks to independent bottlers and investors from across the globe.\u00a0<\/span><\/p>\n![\"The](\"https:\/\/www.masterofmalt.com\/blog\/wp-content\/uploads\/2019\/11\/Stills-1024x640.jpg\")
![\"Jay](\"https:\/\/www.masterofmalt.com\/blog\/wp-content\/uploads\/2019\/11\/WhiskyWealth-194-1-1024x683.jpg\")
From a distillery<\/span><\/h5>\n
![\"Cask](\"https:\/\/www.masterofmalt.com\/blog\/wp-content\/uploads\/2019\/11\/Cask-Trade-4-1024x681.jpg\")
From a broker<\/span><\/h5>\n
From an alternative investment company<\/span><\/h5>\n
![\"\"](\"https:\/\/www.masterofmalt.com\/blog\/wp-content\/uploads\/2017\/10\/macallan-30yo-sherry-auction-1024x683.jpg\")
From a dedicated marketplace\u00a0<\/span><\/h5>\n
![\"Cask](\"https:\/\/www.masterofmalt.com\/blog\/wp-content\/uploads\/2019\/11\/Cask-Trade-1-1024x576.jpg\")
Through an auction website<\/span><\/h5>\n