How To Invest Your First 5k In The Whisky Market

Editor’s Note – This guest post comes to us courtesy of Alistair Moncrieff, Managing Partner at Whisky Investment Partners. This is not a paid advertisement.

If you want to dip your toes into whisky investment but you’re unsure of where to start, here’s a guide on how to invest your first 5k in Scotch whisky.

As an industry, Scotch Whisky is currently worth £3.8 billion a year* and whisky’s popularity is on the rise around the world, with HMRC export figures for 2019 showing a worldwide growth rate of 4.4%. The Scotch Whisky industry is continuing to grow in more than 100 different global markets – making it an appealing investment that shows no signs of slowing down. While Scotch Whisky production and exports were briefly affected by Covid-19 restrictions, there’s been no sign of any real impact on the value of whisky casks or bottles. Indeed, it has continued to rise because as a commodity that gains value as it matures, it’s still considered to be a safe port in a storm.

Investing in rare whisky bottles can be incredibly lucrative, with rare vintage bottles of Macallan selling at auction for more than £1m in recent years. However, if you’re starting out, you can’t expect to make that kind of profit overnight from a 5k investment in bottles, so investing in casks could be a smarter choice.

Casks aging inside a Glendronach warehouse (image via Brown-Forman)

Casks are a wise investment because they’re one of the safest assets, along with gold, to invest in. As the whisky matures inside a cask, it becomes smoother, richer and more valuable. A great example of this was seen in 2019, when a cask of 1989 Macallan was bought in Hong Kong for £441,000, setting a new world record.

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One important factor to take into consideration when investing in cask whisky is the liquid being stored in wood. Not only do you need to make sure the liquid is good, but the wood itself in which the whisky lays also needs to be of strong and high quality, as there can be a risk of leakage due to improper storage. Therefore, you need to research well when picking who to partner with for cask investment and ensure the quality control of cask storage is equally considered. That’s why at Whisky Investment Partners, we only use HMRC bonded warehouses to store your casks whilst they mature and ensure that they are safe and secure until you are ready to choose an exit strategy for your investment.

Another reason why cask whisky makes an ideal investment for your first 5k is that each cask is also totally unique because of the nature of the process. After three years and one day – the minimum investment period for a New Make Spirit whisky cask – you can choose to bottle the whisky or leave it to mature further, giving you added flexibility which is hugely appealing to any investor.

And it doesn’t matter your age or experience; younger investors are getting in on the action now more than ever. In a recent white paper, Whisky Investment Partners’ research found that 11% of its investors are aged between 25-34, and 17% between 35-44, and of its current customers, one in three are in the millennial age bracket*. When asked about having other luxury investments, 64% of customers surveyed said their only luxury investment is in whisky, but 36% of millennial respondents spoke about the other luxury investments they hold, including watches, classic cars, wine and art.*

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In fact, younger investors opting to invest their funds in tangible assets, as opposed to traditional investment funds, stocks and even property, is one of the biggest contributing factors pushing the growth of the whisky investment market. It is believed this is because millennials are increasingly interested in investing in something they can own outright and do their own due diligence on, as opposed to giving control of their money to a traditional investment house.

The kind of profits available through cask whisky is demonstrated in a recent report that showed that a £72,500 investment would have been worth £116,000 within the first two years, however I would say that is more the unusual than the norm.

If you want to begin your investment journey, cask whisky represents a safe route to profit, particularly when dealing with rare, collectable casks such as Macallan and Highland Park.

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