Why Scottish whisky is hot property for investors

With valuable private collections and individual bottles coming to market, with some of the latter fetching more than £1 million, many people are choosing to invest in that most liquid of assets – whisky.

Whisky is becoming a popular investment choice, and items can be real 'talking pieces'. Picture: Getty Images/iStockphoto.

One key player in the sector is Perth-based Whisky Auctioneer, which says it is the world’s leading platform for buying and selling whisky and spirits on the secondary market.

Today it announced the launch of its spotlight Bourbon and American Whiskey auction from Pat’s Collection, the world’s largest private whisky collection ever to go to auction, including almost 100 bottles of Jack Daniel’s.

The whole collection, totting up at some 9,000-plus bottles, has been expected to sell for more than £4m altogether – amassed by the “novice collector” who apparently did not even enjoy whisky when he started his collection in around 2005.

Joe Wilson, head of auction content at Whisky Auctioneer. Picture: Peter Dibdin.

Separately, it was also recently announced that The Scottish Maritime Museum had successfully bid for an 80-year-old bottle of whisky salvaged from one of Scotland’s most famous shipwrecks and the inspiration for the film Whisky Galore! The film’s story – based on a true event – concerns a shipwreck off a fictional Scottish island. The museum paid £9,200 for the unlabelled bottle.

What is the attraction of investing in whisky?

Joe Wilson, head of auction content at Whisky Auctioneer, told The Scotsman that part of whisky’s appeal is the rich history it can involve, which he said is very much reflected in Pat’s collection.

"I think it’s something that's very easy to get quite interested in, quite quickly,” Mr Wilson explains, adding that it suits both those with deep pockets, but also those who want to take it at a slow pace and build up their knowledge. “It's good fun, I think, for people as well in a lot of ways ... stocks and shares can be quite dry.”

He also notes that on the flipside that with considerations such as storage, it’s not as straightforward as keeping a digital portfolio of stocks. “But [whisky bottles] can be talking pieces, you can have them on display in your house, they are things that you can treasure, and even a few if you develop an interest in drinking it as well,” he said. “You can always turn your attention to opening the bottles and drinking them as well.

"It's not just something that you can buy and sell. It's something that you can open up and enjoy with friends or trade with other people, so there's different dimensions to it which make it make it quite interesting for people.”

Alternative investment

And it isn’t just the relatively interesting subject matter that is causing people to seek out whisky as an alternative investment. New research by cask whiskey investment specialist Whiskey & Wealth Club has reported strong interest in the sector as investors hedge against market volatility resulting from the coronavirus pandemic.

The 2020 Cask Whiskey Buyer Report found 89 per cent of investors state they are turning to alternatives to spread risk. It said cask whiskey as an investment is becoming increasingly appealing, with 20 per cent willing to invest in Scotch.

Whiskey & Wealth Club founder Jay Bradley said cask whiskey “is becoming popular as an ever-appealing prospect for investors looking to negotiate this period of financial uncertainty and meet their changing needs”.

As for where interest is originating, from Whisky Auctioneer’s perspective, Mr Wilson sees a split between the EU, Asia and America and the emerging markets in Australia and New Zealand as well as South Africa.

But he believes the biggest market is Asia, on the back of its growing middle class population looking to invest in luxury goods, with a lot of interest in distilleries like Macallan.

What should I do if I want to start investing?

Mr Wilson stresses the auctioneer is not a financial adviser, but he says there are three elements to bear in mind.

The first is rarity – look for limited releases, particularly older ones from the ‘80s and ‘90s.

The second one would be the quality of the liquid. “The best thing to do if you're interested in buying whisky is to get read up and try as much as you can, and develop a knowledge of what the more renowned distilleries are, so places like MacAllan and Bowmore on Islay, Laphroaig,” he said.

The third is reputation. “It’s good to keep abreast of what people are talking about, the whiskies that people are enjoying now, because these are going to be the ones that people are going to be more willing to pay money for in the future,” he said.

It is undoubtedly a deeply varied market with rich historical and cultural appeal – with investors entering at their own risk – and it can always conjure up surprises. Mr Wilson says there are people who buy and sell on a monthly basis, and keep the money ticking over, and those investing in the hope of creating a nest egg. “And we also have people that come in and they'll have just found 15, 20 bottles in their grandparents’ attic or something and they have no idea what the value is,” he said.

"Sometimes you have these kind of nice moments where people get a real shock at how much money was actually stashed in the attic for so long so. It's always an interesting job and it's always a fun thing to talk to people about.”

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