The Craft Irish Whiskey Company smashed all records when its Emerald Isle Collection sold for $2 million (£1.52 million) with an NFT (non-fungible token), last year. These intoxicating prices are becoming increasingly common with rare whisky experiencing a meteoric 483% rise in value over the ten years to 2021, the Knight Frank Luxury Investment Index found.
By comparison, vintage cars rose by 193%, luxury handbags by 108%, collectable coins by 72%, fine art by 71% and fine wine by 127% in the same timeframe, the index shows.
The average per-bottle price hit £426.58 by 30 June 2021, according to Rare Whisky 101, a whisky indices company. Full-year data for rare whisky sales in 2021 has not yet been released, but Rare Whisky 101 predicts a 40% increase in 2020 sales values.
This rise in value is not limited to bottled whisky either. Investor interest in Scotch whisky casks was valued at $40 million in 2020, according to the IWSR, a global benchmark for wine and spirit data. The broader market closed the first half of 2021 up 9.06% with a full-year estimate of 17.5% growth in investment values, according to Rare Whisky 101’s Apex1000 Index.
As with many alternative assets, whisky does not correlate with traditional financial markets, the University of South Africa found. So, when the pandemic hit, the value of top-end whiskies barely flinched. When the S&P 500 dropped by 34% in August 2020, the value of rare Scottish single malts rose by 3%. By the end of 2020, that figure had risen to 11%. And, as inflation climbs and Russia’s invasion of Ukraine rocks financial markets, this trend looks likely to continue. What’s behind rare whisky’s high prices?
Buyers’ enthusiasm for investing in and collecting whisky is one of the key drivers of this growth. It is often described as a classic passion investment.
The industry’s supply and demand dynamics are appealing. If there is only one cask of a collectable whisky, there are only 54 bottles in a global supply. If one of those bottles is drunk, the remaining 53 are even more valuable. Some websites crash following a new release, leaving secondary and auction markets as the only place to buy.
What’s more, rare whisky’s rise in popularity has also coincided with the industry successfully selling into China and other Asian markets. Asian buyers are investing heavily in Scotch, says Rupert Patrick, CEO of Whisky Invest Direct. “People think it’s a very attractive asset,” he adds.
Between 2000 and 2021, the Scotch whisky exports to China went from £107 million to £198 million, according to the Scotch Whisky Association (SWA). Taiwan, Singapore and Malaysia are also growing markets. In 2021, exports of Scottish whisky to the Asia Pacific region increased in value by 21%, the SWA reported.
While Scotch prices remain far higher than Asian whiskies, Japanese distilleries such as Karuizawa, Yamazaki, and Hanyu are increasingly growing a reputation for fine whisky. In fact, rare Japanese whisky saw a 40.45% rise in value in the 12 months up to 31 January 2022, Rare Whisky 101’s Japanese index shows.
A 54-bottle set of Japanese whisky, the Hanyu Ichiro Full Card Series, recently broke records when it sold for $1.52 million at Hong Kong’s Bonhams’s Fine & Rare Wine and Whisky auction. The previous record for the most expensive Japanese whisky collection ever sold had been set the year before when a full card series sold for $917,000. Old age stated Yamazakis from Japan have also seen strong sales in recent years.
However, there are global increases in demand. It is not just in Asia. In 2021, Scotch whisky exports increased by 8% in the US, 21% in the Asia Pacific region and 71% in Latin America (albeit form a lower base), according to the Scotch Whisky Association. Are whisky’s high prices a bubble?
Some argue that rare whisky’s intoxicating increase in value is a red flag. “Much of whisky’s dramatic rise has been fuelled by investors thinking there’s a quick buck to be made,” says Rupert. “It won’t last forever – it is a bubble,” he adds. “If it all goes wrong, would you be happy to just sit there and drink it? If not, you’re just speculating on an asset class.”
However, other experts disagree. Some suggest that while anything is possible, the market’s bullish characteristics make it unlikely. Others cite the tangibility of a bottle of whisky: “Bubbles burst and leave nothing. You can’t have nothing with whisky,” said one industry expert. Should you buy bottles or casks?
Investors can buy whisky in both […]
source Investing in rare whisky: potent asset class comes of age
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