The rare whisky market is a competitive place. Across
countless auctions houses, online retailers, and secondary trading groups,
collectors the world over close deals each day. Well-aged, limited bottles are
at the forefront of the rare whisky market, however, there is another branch of
whisky to invest in and enjoy that remains quite undiscovered when compared to
bottles. We’re talking about casks, and luckily, most of the world hasn’t heard
of them yet.
For some, the returns of cask ownership has been staggering.
Record breaking sales of privately owned Macallan casks are amongst the
greatest success stories. For others, the appeal is selecting and owning your
very own privately bottled cask. Some of the quality of whisky reserved for Diageo’s
Casks of Distinction programme is remarkable.
Sales are often tailored to a private buyer so there is
little visibility meaning even connoisseurs are not yet aware of the process
and benefits of owning their own casks. But worry not, here’s a full guide to
buying your first cask of whisky.
While not yet at the level of bottle trading, the cask
trading market is expanding. Owning your very own cask of whisky, which is
stored in a distillery or warehouse in Scotland, is hugely appealing and
(usually more so than bottles) the potential returns are huge. The main
difference between buying a bottle and a cask is that a cask continues to
mature. Looking at long-term investment, one can buy a newly filled cask of
spirit today, and in 10 years from now this will have become a 10-year-old cask
of whisky, containing over 300 bottles within. If bought at the right price,
the potential profit is huge. A 50-year-old bottle of whisky bought today, will
still be a 50-year-old bottle years from now.
Cask trading is also free of many hindrances found in bottle
How It Works
The process of purchasing a cask is also quite simple:
However There are many small points that come into play,
such as annual storage fees, insurance, bottling specifications for the cask,
moving the cask to another warehouse if the buyer chooses. However, all this is
easily managed if you follow one point, the most important one in the entire
Know who you are buying from!
Because of the lack of knowledge surrounding the category
and the large profits to be made, there are countless cask traders out there
that take advantage of new buyers, trade low quality casks, hide information,
and lack transparency. Countless buyers have been scammed, so be careful! Do
not be fooled by sleek websites and salespeople. Ask around about the company
you are buying from, look for reviews, check their history. It’s an unpleasant
feeling to purchase a cask with a 10-year plan in mind, only to find the
company you bought it from shut down a few years after your purchase.
As we do here at F+R, you need to be given a full plan for
your cask, not only encompassing the purchase, but also the years ahead and the
final exit strategy.
Exit Strategies Explained
We’ve discussed the benefits and steps to buying your first
cask, but what of the steps that follow? In what ways can you profit from your
cask after you’ve allowed it to mature?
Sell On: The first exit strategy is the simplest
– Re-sell your cask. This is where the company you bought from can help you
find a new buyer or company to take on your casks. These can go to a new
investor, collector, to an independent bottling company that plans to make a
release out of it, or to a number of bars. After a consultation, you’ll know
what your cask portfolio’s new value is and the profit that stands to be made.
Bottle It: If you’re a company owner, bar owner,
or do business in whisky you may choose to create your own bottle and label
design, and bottle your cask. Once again – your supplier should help you with
each step of this process, right down to the delivery of the bottles. This,
again goes back to the company you initially choose to work with.
Of course, as with any investment there are certain risks to
consider. Firstly, the product is a wooden container of liquid and is prone to
leaking. This is monitored by the warehouse team, however, sometimes there may
be loss. It’s not a common occurrence, but a possibility nonetheless. When
moving the casks the may drop, break, a number or situations can occur.
Therefore, the contract must be full-proof before signing.
As with other investments, the growth of casks is hard to
monitor especially as more time passes. The brand buyers invest in may grow
more or less popular, and this point falls into bottle as well. At the very
least, brand aside, an older whisky will command a higher price that a younger
one so your cask will rise in value no matter the state of the whisky market
when you decide to sell.
Beyond stocks and cryptocurrency, whisky is an investment to
both enjoy and profit from. Purchasing a cask is, above all else, an exciting
Perhaps you’ve decided to support the cask selling program
of a brand new, up-and-coming distillery, and alongside the cask you can follow
them on their journey. Perhaps you managed to buy a cask from the distillery
you’ve loved for years but never knew how to become a part of it until now.
Maybe you want to open your own independent bottling brand
or bar, and need some casks to make that a reality. Or, you simply want to make
some investments you actually enjoy, and wouldn’t mind an annual trip to
Scotland to sample the progress your cask portfolio is making.
There are many reasons to enter the world of whisky casks,
with countless benefits along the way. The important part is to be safe, deal
with trustworthy sources, and educate yourself along the way. Have fun!