Don’t get caught over a barrel when you invest in cask whisky ownership - Daniel Milne

Cask ownership has become a popular way to invest in whisky. As the market for the world’s most exported spirit grows, so does demand for new ways to secure precious and up-and-coming liquids.

When done right, it’s a fantastic proposal. As the cask is a physical asset held within a secure, bonded warehouse, owners can be involved in every step of the maturation journey and sample progress. Everyone has different reasons for investing – whether that’s consumption, re-selling, or buying casks from vintages of when your kids were born – there’s something quite special about a ‘passion investment’.

Arguably, it can be a reliable investment. Low volatility and limited (if any) correlation to traditional asset class such as equities, bonds and property, makes alternative investments like casks even more attractive – especially in today’s economy.

While it’s never been easier to purchase a cask, this has resulted in a proliferation of unregulated private brokers offering guaranteed returns at extremely optimistic return on investment percentages. These are usually based on the retail prices of “equivalent” whisky, which are supported by the official brand, then multiplied by the number of bottles in the cask to calculate a cask value.

Daniel Milne is co-founder of Still Spirit, whisky cask specialists

This is dangerous for several reasons. Potential buyers should question if the cost of bottling (including VAT and Duties payable) has been considered, along with the risks of comparing official branded whiskies to the cask on offer, which will be bottled by an independent bottler, rather than the distillery itself.

A lifelong fascination with whisky was what led my brother Craig and I to co-found auction site Whisky Hammer. We also recently launched our cask investment arm of the business, Still Spirit, with our new business partner; Rickesh Kishnani – founder of the world’s first private equity whisky fund with expertise in the supply and sale of £millions of aged whisky casks.

All casks available for sale with Still Spirit are verified, owned by our group, and stored within our new private cask warehouse. On the flipside, brokers sell casks on behalf of others and generally do not own the casks they sell.

When you’re dealing with a company that owns the casks, you’ll receive a Delivery Order (and not just a printed certificate of ownership). These need to be certified by the warehouse that holds the cask for you, confirming that it exists and is recorded in your ownership title. As we own our warehouse, you’ll always talk to us directly and can come to visit your casks any time.

Many brokers won’t be able to produce a Delivery Order, so when you come to bottle, or sell, you may be surprised that the cask is actually owned by someone else.

You’ll also want to ensure your cask undergoes regular quality checks. There’s no point relying on someone’s word that a whisky is “brilliant” if there’s no proof. When investing, look for a company with genuine passion and care for the whisky - which goes hand in hand with integrity. All Still Spirit’s casks are quality checked via our Assurance Checklist, samples can be sent to taste before purchase, and our after-sales service team will help at every step.

It's helpful to consider what you eventually want to do with your whisky too. It might be to bottle, part-bottle or resell, but remember that the choice is yours. You should never be held over a barrel when it comes to your own cask.

Daniel Milne is co-founder of Still Spirit, whisky cask specialists, offering over 1,000 casks available to purchase by private clients – learn more at www.casks.stillspirit.co.uk.