Steve Crotty guides us through the art of investing your hard earned cash in whisky and making a small profit.
Whisky as an investment
The economy lies in tatters. People riot and loot, politicians try to impose soul-destroying levies on pasties and society slowly erodes. Soon the Ironing Board Monsters from a distant galaxy will harvest our souls (you heard it here first) but before that, you might want to consider nurturing a little nest-egg for your future, what with the pension pot seemingly drier than Rich Hall.
Now whisky may not sound like the most obvious choice for a potential investment, and I’m certainly not advocating it being your only source of future income, merely that it could fit in to your overall portfolio to spread the risk across different assets (see how financial that was?). So yes, buy your house, your shares, your wife, but don’t be afraid to let whisky in on the fun.
The facts are thus; a bottle of whisky doesn’t go off, so therefore can be kept for as long as you want before you decide to sell. Secondly, whisky is highly collected; Andrew Nelstrop, Managing Director for The English Whisky Company (St. George’s) Distillery recently commented that he thought 50% of his company’s output to date is currently sitting in a collection somewhere rather than being drunk. The market is there and there’s no reason why anyone can’t take advantage of it. That doesn’t just mean going down to the supermarket, buying a bottle of Famous Grouse and hanging on to it for 40 years. That’s just silly. Before I offer my own tips, let me give you some insight of my initial failures so that you don’t make the same mistake.
Failure #1 – Nikka From The Barrel Gift Pack
Japanese whisky is generally a good thing to buy, especially in this country where stocks are limited due to the high import tax. Along with its rarity, I also thought the aesthetic value would further increase my profits. I should have realised that pretty much all gift packs (see also Connemara, Fettercairn, Glenmorangie and just about everyone else) are regularly produced as they are big sellers to fools easily seduced by the pretty aesthetics. Like me. Although not a total failure (I got it on sale so it has since gone up £6 in 2 years. Yay!), I must conclude that this was not my wisest decision, and the only person enjoying how damn pretty it is, is me.
Lesson Learned – Don’t buy gift packs, unless strictly limited edition.
Failure # 2 – Jim Beam Signature Six Grains 6 Years Old
Having learned my lesson from the Nikka incident, I moved on to something different altogether. A limited edition, small batch Jim Beam special – Jim Beam is hugely popular, I reasoned. I’m still not sure how this failed, but fail it did. Despite all the positives it can still be purchased nearly two years after I did from most specialist retailers for EXACTLY the same price that I did. The only option available to me now is the long haul one, but I can claim solace in the fact that it comes in a leather bag, which is just better.
Lesson Learned – ???????? (Possibly don’t buy Jim Beam, but I’m not even sure about that)
As you can see it can be something of a lottery, with no absolute guaranteed method of success (well, nearly no guarantees). Listed below however are a few pointers that I have either learned myself or had passed on to me through the ancient practice of blagging from investors mightier than I. And remember, the beautiful thing about investing in whisky is if you fail then you can just crack it open and enjoy drinking it! How perfect is that?
1 Spend more than you’re comfortable with.
The Caol Ila 15 Year Old 22ct Gold Ceramic Jug – not cheap at £375
The hard truth is this; if you want to make money from investing in whisky, then you’re going to have to spend some first, and probably more than you would on a bottle for yourself. There’s rarely going to be an example of making a decent profit on a bottle that costs less than £30 unless you leave it until long after you’re dead. It’s far wiser to save for a few months to invest in a decent bottle of malt/grain, say one for £50 or £60 that perhaps has more class or exclusivity, than a standard bottling. Of course, how far you go up the whisky ladder depends entirely on your disposable income. Remember, in the whisky world, the more you spend the more you make.
Macallan’s 55 Year Old Lalique Crystal Decanter – at £15,000 a bottle you’d be crazy not to buy two.
2 Avoid Independent Bottlings
A Gordon & Macphail Benrinnes 1993; just say no.
Independent bottlings are created from casks sold off by the distillery to an independent company or individual to boost their income, or because the end product of the cask is too markedly different from their standard produce (this is especially true of blends). As a result, independent bottlings offer a unique and sometimes startling new insight into some of your favourite distilleries. Quality-wise they’re very much hit and miss (I’ve had a terrible G&M Glenburgie which I still haven’t got round to reviewing as rereading the notes will take me back to a dark place), but the benefit is that they usually retail significantly cheaper than the distilleries own bottlings would be. Indeed for some of the mothballed, closed or demolished distilleries it can often be the only viable method of trying their whisky without having to take out a loan. Companies doing it range from the professional and vast (Gordon & Macphail, Douglas Laing, Signatory), to the amateur and small (just about anybody can bottle and release their own with the right knowledge).
Where they fall down is as an investment. If you do intend to invest then avoid independent bottlings at all costs, unless the distillery you select offers no available alternative (and if you are investing then you should probably try a different distillery). You must make sure your bottling is a distillery bottling, which most specialist retailers will be able to tell you, and for this simple reason; sentimentality laced with romanticism. People who pay serious money for their whisky like to appreciate the history behind their purchase, and like to think that it’s the distillery’s own product that they proudly laboured over, rather than some off-cut that they didn’t want and farmed out to any old fool. This view, while not accurate, is hard to disagree with, and one I am often guilty of. You want to know when you’ve spent a serious sum that you’ve got something official rather than someone else’s interpretation, however good it may be.
This attitude is not surprising: it takes place in any form of collecting, from comic books to porcelain, so why should whisky be any different? To summarise, if you’re buying whisky to drink it, by all means take a risk and try one of the cheaper independent alternatives. If you’re buying for the enhanced profit of your future self, however, stick to what the distillery proudly calls its own.
A Benrinnes 1985 Sherry Cask Distillery Bottling; just say yes.
3 Buy From The ‘Lost’ Distilleries
Dallas Dhu Centenary – now a museum (the distillery, not the whisky).
If your budget will stretch far enough, try to find a distiller-produced bottle from one of the lost distilleries. By lost I mean any distillery that has either been closed, dismantled (St. Magdalene is now a housing estate) or mothballed (Inverleven’s stills have been quiet since 1991). Many of the companies who purchased the company or land relating to a closed distillery held on to the still-full casks that were part of the deal, and they sporadically appear from time to time. As stated before, avoid independent bottlings where you can, although in some cases there may be no alternative. While they will set you back a lot of money (the above pictured Dallas Dhu retails at a stomach churning £350) they are a sound investment for the future, or alternatively a good way to set up your own museum, where you can charge people to look at your bottles (ok that’s probably unlikely, but if you’re rich enough to afford these bottles, then why not?) An even better idea would be to keep an eye out for any distilleries that close in the future. While hopefully this won’t happen it is almost certain that at least one will, and then you can desecrate their company corpse by stocking up on as many bottles as possible. Just try to ignore the pang of guilt as you do.
Glenugie 30 Year Old Deoch An Doras; It means ‘buy me as an investment’, or something.
4. Tie In With Significant Events
The Dimple Mexico World Cup 1986 12 Year Old Decanter. Price in 1986: £55. Will now set you back £399 if you can find it.
Whisky companies like to shamelessly cash in on significant events in history by producing special commemorative bottles for the occasion, so why shouldn’t you do the same? By buying one of these bottles you get two sets of collectors: the first for the whisky and the second for the event itself. A bottle of The Macallan’s 1986 Charles & Diana wedding special would have set you back £26 when it was first released, now you would be looking at closer to £200. I have bought both of St. George’s commemorative bottlings; one for the wedding of Prince William and Kate Middleton, the other for The Queen’s Diamond Jubilee (well they are English). Only 3,300 bottles were made of each, and both are currently still available, although the royal wedding bottle has already increased in value by £10. These won’t be available forever; my advice is buy them immediately! (Rum & Reviews does not endorse the poor recommendations made by its staff; thought I would save the editor the trouble – Cheers but you’re too late. As soon I leaned you were doing an investment guide I drafted a 13 page disclaimer – Editor).
The two St. George’s Distillery commemorative bottles – get your tax back that you pay for the royal family!
5. Buy Jack Daniel’s & Ardbeg
Jack Daniel’s 1915 Gold Medal – people will pay silly money for this in years to come.
If you want a whisky that’s just about a certainty to make money, then simply buy any JD or Ardbeg limited edition release you come across. Both have fans that are so devoted they must come close to being an official religion, and both pretty much instantly make money as soon as their stocks are depleted. But be quick, once they’re available they will go in a matter of days (the Ardbeg Alligator I bought certainly did; purchased for £55 last year, it’s now already worth nearly triple that). Providing the fans remain loyal, holding on to these for a couple of decades should result in a windfall so vast that you can afford to buy yourself a truly decent bottle to drink for yourself.
Ardbeg Alligator; yes I bought it, and yes I feel smug about it.
In summary then, buying whisky is a joy. Buying it as an investment is nowhere near as fun (you don’t get to drink it), but if you buy wisely, you can smoke a fat cigar while discussing your whisky portfolio with the local elite. And they will be impressed.
Neither Rum & Reviews Magazine or Steve Crotty are qualified to give financial advice. Any actions you undertake as a result of reading our article are done so at your own risk as investments can decrease in value as well as go up. If you lose out, don’t come running to us.