In 2015, while the S & P 500 index was up just 0.7 percent and gold and oil tanked, one commodity outperformed just about every other investment vehicle in the world.
Was it platinum? Soybeans? Frozen concentrated orange juice? Nope — it was good old-fashioned whiskey.
For 2015, the tantalizing tipple averaged an almost 15 percent gain, making it a solid performer when compared to other asset categories (including fine wines).
Of course, we’re not talking about just any whiskey. If that was the case, you could run down to your local liquor store and simply stock up on Jack Daniel’s or Makers Mark. But in this case, the most valuable brands of the brown-hued booze are almost exclusively Scottish (otherwise known as “Scotch whiskey”).
For 2015, the price increase was very much reflected in terms of the total amount of the spirit purchased for investment purposes, with rare whiskey sales climbing 25 percent over 2014 quantities. More than 43,000 bottles changed hands versus about 34,000 in the previous year.
Last November, online whiskey outlet Master of Malt began selling “whiskey bonds” that have a 5 percent compound interest rate to try to capitalize on the trend. Another website, Whiskeyinvestdirect, allows capitalists to invest in portions of the liquor as it ages in its barrels.
In Japan, the returns have been even more impressive. The country’s Karuizawa Index, which tracks the potent palliative in the Land of the Rising Sun, was up 75 percent for the first three quarters of last year before falling by 7 percent in the remainder.
A healthy percentage of rare whiskey collectors and drinkers are in Japan, and a solid bunch of Japanese brands are highly sought after. A 1960 bottle of the elite Karuizawa sold for $114,952 last August.
Other brands to consider investing in are Hanyu (a revived legendary brand of which shots can cost up to $70 apiece), Yamazaki (called the world’s best whiskey by Jim Murray’s Whiskey Bible in 2013) and Nikka.
Hanyu’s “playing card series” of 52 individual malts plus two blended “Joker” malts sent collectors into a frenzy, with one aficionado spending almost half a million dollars to acquire them all.
In fact, only three people worldwide are acknowledged to have a complete “set” of 54 bottles. For those especially intrigued, they’re on display at the private Club Qing whiskey bar in Hong Kong, one of the most renowned venues for the liquor in all of Asia.
Since 2008, the average price of rare whiskey has more than tripled, according to an index maintained by brand experts Whiskey Highland, which records the price of every bottle sold at auction. From 2008 to 2012, investing in the top 10 brands would have returned a 400 percent gain to speculators.
If the top 100 were chosen, a 245 percent return could have been realized, and even the top 250 brands saw a healthy 180 percent profit. Compare this to gold, which saw a 146 percent gain in the same period.
The Rare Whiskey Apex 1000 tracks 1000 of the most popularly traded whiskey brands. Despite losing some of its market share recently, the most traded whiskey in the world is Macallan, produced since 1824 in Speyside in the Highland region of Scotland.
It represents almost 10 percent of the rare whiskey market and 23 percent of the value, falling from 31 percent in 2013. The brand holds the record for the most expensive bottle ever sold, at $460,000 for Macallan 64.
In the number two spot is Ardbeg, a variety made since 1798 on Islay, an island on Scotland’s west coast. It commands 8 percent of both the market and the value.
Other popular brands to collect are The Dalmore (a bottle of The Damore 62 sold for $200,000 in 2011) and Bowmore. Scotland also has a number of newer micro-distilleries producing artisanal whiskeys in small batches.
Older bottles can fetch large sums, with a number from the 1920s commanding prices of more than $10,000 in recent auctions. Consultancy Rare Whiskey 101 says that the age and the vintage of a bottle are two very paramount qualities that are more important than the perceived quality of a brand.
Even poor quality scotch whiskey that’s old has increased in value. Of the top 10 most desirable whiskeys, seven are no longer produced.
Of course, as opposed to gold, futures or many other investment vehicles, whiskey presents a unique challenge for the collector which could be hard to overcome: the temptation to consume one’s assets rather than hold them.
Hoarding a supply of bottles on a shelf may be appealing for teetotalers, but for the hard drinker, having such rare intoxicants on hand may be too tempting to pass up. Caveat emptor.
Regards,
Ethan Warrick
Editor
Wealth Authority
