Investing in whisky casks vs bottled whisky: Which is the better investment?

Stuart Thom, co-founder and partner at VCL VintnersStuart Thom, co-founder and partner at VCL Vintners
Stuart Thom, co-founder and partner at VCL Vintners
Whisky is a popular alternative asset choice amongst investors looking to diversify their investment portfolios, writes Stuart Thom, co-founder and partner at VCL Vintners.

With whisky investment, two popular options are investing in whisky casks or bottled whisky. Both offer unique benefits, with the decision ultimately coming down to an investor’s investment goals and preferences.

Whisky casks

Whisky casks are typically purchased when the whisky is first distilled and then left to mature for several years before being sold. This is due to their maturation process, which increases the whisky’s taste and value over time. Casks can be stored for long periods without additional costs, making it a low-maintenance investment.

Considering your budget and timeframe are factors when determining whether to invest in casks or bottles. Those with a higher budget and flexible timelines will benefit from investing in young casks. Casks are long-term investments; we typically suggest investing in them for at least five years. If you have a smaller budget, bottles are a solid investment choice for those with a smaller budget due to their lower starting price.

Whisky casks have an added layer of security unlike whisky bottles; every cask is assigned a registration number when it is filled. This registration number follows the barrel throughout its life. When an investor purchases a whisky cask, they will receive a certificate of ownership which includes the registration number of the barrel and the location of where the cask is held.

Whisky casks’ large profit margins are because they are classed as wasting assets. This means they are not subject to Capital Gains Tax as whisky casks’ lifetime is typically under 50 years old. Although whisky’s maturation process will improve its taste and value over time, whisky cannot be stored in a porous wooden cask indefinitely. As a result, the quality of the whisky will deteriorate, which is why a regular regauge on a cask is important.

Bottled whisky

Bottled whisky tends to be more liquid than whisky casks, meaning one can buy and sell them with greater ease amongst investors. This is beneficial for investors who are looking for short-term investment opportunities compared to casks as mentioned previously.

Once a whisky is bottled, it stops ageing and can no longer gain value from the maturation process, so is typically sold at a set price. This makes it easier for investors to predict and calculate the potential returns on their investment, unlike whisky casks whose value will fluctuate depending on various factors including age, rarity, and market demand.

Many whisky collectors and connoisseurs choose to invest in it because of its taste and high value as an investment opportunity. Bottled whisky is a more practical investment because it is ready to drink, whereas casks need time to mature before they can be enjoyed.

To conclude, whisky is a reliable and stable alternative investment choice that can provide both financial and personal satisfaction. Casks are a wise choice if you are looking for a long-term investment opportunity. Bottled whisky is a better short-term investment if you want the option to drink your investment soon and have a smaller investment budget.