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« Equine equity | Main
Wednesday
Sep292010

Whisky business

WORDS SIMON BROOKE / ILLUSTRATION LUCY VIGRASS

As single malt Scotch enjoys a comeback and a generation of high-quality Irish whiskeys and bourbons matures, the water of life is gradually gaining investment vitality

Cocktails might be in fashion again and French wines are finding a new audience after the success of their brash New World cousins, but few drinks have enjoyed a comeback like that of whisky – high-end whisky, anyway. After years of decline, which saw the closure of distilleries in Scotland and Ireland, a new market is developing for luxury single malts. Such is demand that premium bottles are being seen increasingly as an investment.

‘The collectors’ market is growing as whisky enthusiasts become interested in rare bottles sold at auction,’ says David Williamson, of the Scotch Whisky Association.

According to market researchers Mintel, whereas the sales of blended whisky fell by 13.3 per cent in the UK between 2003 and 2007, the volume of deluxe whisky actually rose by 7.1 per cent over the same period. But this figure doesn’t reflect some of the truly remarkable price rises among the top end brands.

McTear’s auction house in Glasgow now holds four sales of collectable whisky a year. At last August’s sale, a bottle of Macallan Anniversary 50-year-old went for £11,750, up from around £5,800 just two-and-a-half years ago.

The Bowmore Black was released in the early Nineties selling for £90 to £130 but it now changes hands for over £2,000. Only 12 bottles of the Dalmore Sirius were released last October at £10,000 each; they sold out in just four days; but eight weeks later a bottle was resold for £16,000.

The Bowmore Black malt whisky was released in the early Ninties selling for £90 or so. It is now changing hands for over £2,000

‘The low-volume, high-value deluxe niche – encompassing vintage and limited-edition Scotch whiskies – has grown globally and in the UK on the back of consumer affluence and demand for exclusivity,’ says Jonny Forsyth, senior drinks analyst for Mintel. ‘Membership of a whisky connoisseur club is regarded as a sophisticated and social badge of status among consumers in their 30s and even 20s.’

‘It’s best to go for a well-known name,’ says Andrew Bell, whisky expert at McTear’s. However, it’s possible to make smaller investments. Bell himself bought some bottles of Ardbeg’s 17-year-old whisky for £30 each in 2006; they went at auction last year for £150 a bottle. Rarity and quality are obviously the key to the best potential returns.

The whiskies to watch, he says, are The Dalmore, Macallan, Ardbeg, Springbank, Bowmore and Highland Park. The last products of the smaller distilleries that closed during the Eighties, including Brora, Rosebank and Port Ellen of Islay, are also experiencing growing demand.

David Robertson of the Dalmore says: “There’s no exact science to predicting the return on investment for whisky because it differs greatly depending on bottle, cask, age and distillery. For example a Dalmore 50 bought in 2003 for £710 is now estimated to be worth £1,620 which is an increase in value of 128 per cent, while a bottle of Springbank 1973 Green Label bought at the same time for £500 is now valued at £800, so it’s a smaller return at 60 per cent.’

One trick, if you have the time and patience, is to buy from the distilleries themselves where you’ll find a greater range of ‘expressions’ as the different releases are known.

Scotch whisky accounts for around 90 per cent of the collectors’ and investors’ market, says Sukhinder Singh of The Whisky Exchange, but don’t dismiss Irish products. A 15-year-old bottle of Redbreast, for instance, has gone from £40 to £120 in a year. ‘Irish whisky is popular with collectors who have a connection with Ireland, especially Americans.’

In the United States, whisky collecting is an even more recent trend. ‘It was illegal to sell spirits by auction in
the state of New York until 2007,’ says Richard Pike of Bonhams in New York. But since then it’s became more and more popular – especially pre-prohibition bourbon.

Fermented grain mash must be kept in a cask for three years or more to be called whisky. This cask, usually an old sherry or bourbon butt, is what gives the spirit all its distinctive taste and colour. Some collectors are now buying casks as an investment for when the contents are later bottled, but David Williamson of the Scotch Whisky Association points out that investors should bear in mind the costs of storing the casks under bond and the further costs of bottling. 

The Amsterdam-based World Whisky Index allows investors to put their money into the spirit with advice from experts who will buy, sell and even store on their behalf, for a fee of between half a per cent and 10 per cent of the price of a bottle. 

As with any investment, putting your money into whisky, whatever the quality, is a risk and there is no secret formula. The well-known rules apply – do your research and don’t put all your eggs in one basket. But perhaps the best advice comes from Andrew Bell of McTear’s: ‘It’s really all about passion and patience.’


 

Dram kit


 

McTEAR'S

The auction house’s next whisky auction is in November in Glasgow.

mctears.co.uk

BONHAMS

The Edinburgh office has hosted a whisky sales.

bonhams.com

WORLD WHISKY INDEX

Advice on investing is available from the World Whisky Index

worldwhiskyindex.com

THE WHISKY EXCHANGE

A huge range of whiskies from around the world with expert advice and regular events.  

thewhiskyexchange.com

THE WHISKY SHOW 2010

This consumer show takes place on 29-30 October 2010 and includes tastings, advice and masterclasses.

thewhiskyshow.com