Why Is Whisky Investment in 2023 Smarter Than Investing in Stocks?
Investing is all about buying at the right time, no matter the luxury item. The cask industry can be relatively unregulated, but our fully managed service takes that responsibility from your shoulders and helps balance the buying burden. Alto purchases casks at wholesale prices, meaning you will be paying below the price distilleries would offer directly to market. Buying mature casks means investing in a product with a lifespan in excess of 20 years – Alto allows you to re rack the casks during that period while also providing an annual health check report of all casks older than 20 years.
Sipping a single malt glass of scotch whisky on a cold winter’s day – what could be a better luxury? Like art, fine wines, or classic cars, scotch whisky is a luxury that has been shown to grow in value over time and is seen as a new form of “alternative investment.” During times of recession and economic instability, whisky investments are excellent alternatives because they can be preserved and even increase in value – who doesn’t want a drink when times are tough?
How Safe Is Whisky Investment?
Cask-strength whisky is completely unadulterated (not diluted with water) and bottled directly from the barrel. The value of a cask depends on many factors, but long-term investment is the biggest factor in terms of profit – just ask Roger Parfitt. Parfitt was a former bank manager who made an unbelievable 4,600% return on cask whisky purchased 27 years prior. He invested £4,700 (around $5,300 USD) and sold for an astounding £225,000 – that’s over $275,000 USD!
Whisky prices were even shown to stabilise quickly after the 2020 pandemic.
Since the effects on the price were short-term, investing in malt whisky seems all the wiser in 2022.
Whisky is a tangible asset that has proven time and time again to offer yearly table returns. Because it is labelled as a “wasting asset” due to the natural evaporation process that occurs over time, they are not subject to Capital Gains Tax. A tax-free asset that could net over a 250% profit in a little over a decade? There’s not a much better deal on the investment market than that.
Investing in Whisky for Beginners
The whisky market can be challenging to enter. Many new to the whisky investment market wonder how safe whisky investment is, as it can be challenging to understand why certain casks grow in value over time.
A cask whisky investment isn’t as simple as picking a bottle off a shelf – like all things worth investing in, the whisky must have traits desirable enough to increase the bottle’s value over time. Many factors go into the amount you can make on a whisky cask investment, such as the original payment price, the length of time you keep the cask, the age of the cask, the quality of the cask, and the exit strategy.
Want to make some of the best whisky investments 2022 has ever seen? You have two options: buy and sell yourself, or use a third-party stockist like Alto Whisky. We’ve created a good-to guide for anyone looking to invest in a cask of whisky, which explains the buying process and the options of how to sell when the time is right.
Alto Whisky’s Investment Guide
What qualifies as a rare whisky?
As long as your cask is in good health, the value of your cask will increase in value at a steady pace for the first 12 years of the cask’s life. Over 12 years, around 90% of casks produced will already have been used. If you bought a cask in 2022, by 2034, your cask would be in the rare 10% of the remaining 2022 casks. If you keep allowing your cask to mature over a long period, you will maximise the amount you have made on that investment.
The Age of Your Single Malt Whisky Cask
Purchasing a “young” cask (5-12 old) as a short-term investment offers higher risks than simply buying a brand new one and allowing it to mature over a more extended period.
You don’t want to be left with a cask that has not been allowed to properly appreciate in value, especially if you have paid an extravagant amount for it. Investing in limited edition whiskey is an art, and it is better to take a long-term approach to investment instead of a short-term one.
Alto Whisky’s provides clients with a range of new, young, and mature casks to give you more options regarding your individual investment strategy. If you are planning on selling to an independent bottler, there are significant ages the cask will need to reach before doing so. Alto allows you to purchase a 5 year old cask, hold onto it for 3 years, and then sell it to a bottler for a good profit. Because Alto already has the relationships in place in our bottlers, we are able to help you form connections with a variety of bottlers to assist you in finding the right buyer for your specific needs.
Paying the Right Price
Investing is all about buying at the right time, no matter the luxury item. The cask industry can be relatively unregulated, but our fully managed service takes that responsibility from your shoulders and helps balance the buying burden. Alto purchases casks at wholesale prices, meaning you will be paying below the price distilleries would offer directly to market. Buying mature casks means investing in a product with a lifespan in excess of 20 years – Alto allows you to re rack the casks during that period while also providing an annual health check report of all casks older than 20 years.
A tip for investing is to price-check the cost of the cask you would like to purchase with the price of a publicly available cask from a distillery. In doing so, you’ll easily be able to cross-reference the price you paid to the typical cost of the cask. Nobody wants to be overcharged for a single malt in the bar on the bargaining table!
Choosing the Cask That Is Right for You
The cask controls the whisky’s eventual flavour and colour and how fast the whisky can be matured.
There are 5 different cask factors that influence the flavors of the whisky:
Predecessor Liquid
The predecessor liquid is what is first put in the cask. The liquid can range from a variety of whiskys, wines, fortified wines, or sherries. The type of liquid in each cask can greatly influence their value. A sherry cask costs up to 10 times more than a bourbon cask due to the scarcity of their supply, meaning their value will greatly increase over time.
Each type of liquid can also influence the overall color and flavor of the whisky. For example, using a chardonnay as a predecessor liquid creates a lean, acidic, and tropical flavor pallet while also making a very bright whisky. Whisky shades can vary from a bright red to a deep golden brown, and have a taste range from sweet and fruit to a rich and syrupy vanilla.
Size of Cask
The casks range in sizes from small to big, and the size of the cask can affect the rate of maturity and flavor of the whisky. The smaller the cask, the more the wood has in contact with the whisky and influences its flavor. The larger the cask, the less contact the whisky has with the barrel and the longer the maturation process. The size of the cask you chose can be affected by your short-term and long-term investment goals, as a quicker maturation time means a faster turnaround, but won’t always meet your investment standards.
Type of Wood
The most common types of wood used for casks are: American White Oak, European Oak, Mizunara Oak, and Maple.
American White Oak grows quickly, making it more affordable. It is a dense wood that brings out a classic Bourbon vanilla flavor.
European Oak grows more slowly, making it more expensive. It adds a bitter and spicy flavor to the whisky.
Mizunara Oak is more difficult to use for whisky because of its lack of waterproofing oil enzymes, meaning more whisky will evaporate during the maturing process when using this type of wood. Despite this however, it still remains popular due to the unique aromas it gives to the whisky, such as sandalwood and coconut.
Maple is primarily used when making Tennesee whisky, as filtering the distillate through a layer of sugar maple gives the whisky a smooth finish, while also adding in sweet notes of maple syrup.
Level of Charing
A cask is charred to change wood sugar into caramel and vanilla flavoring. A lighter char adds a more earthy and spiced flavor to the whisky, preserving the wood’s aroma. A heavier char provides a sweet smokey note and a deeper color and caramelization. You can also find toasted casks, which are exposed to less extreme temperatures. A bourbon aged in a toasted cask is a rare find!
First Fill vs. Refill
A cask reused multiple times releases fewer flavors into the whisky, meaning a first fill cask will have the most initial flavor. Only fresh casks are used when making bourbon, while other casks are charred over and over to restore caramel and vanilla flavors before being refilled with whisky.
Alto offers expert level experience and education when advising clients like yourself on the type of cask that would best suit your needs, whether your goals be short-term or long-term.
How Alto Whisky Can Help You Confidently Enter the Market
When entering such a complex market, it’s crucial to have a trustworthy and reliable guide to help you with your first buying process.
Alto Whisky is one of the top whisky investment companies on the market right now. What makes us the best whisky investment company is the thorough process in which our team works with clients like you to increase your knowledge of scotch whisky investments. Create a whisky portfolio with us and buy whisky as soon as today!
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