Investors could heat up their portfolios with a little bit of dram – as rare Scottish prices soar as a result of the Brexit deal. A few years ago, the United States imposed a 25 percent tax on imports of single malt Scotch – a punishment for the EU subsidizing aircraft manufacturer Airbus.
It caused the price of some of the most collectible bottles of whiskey to drop by about ten percent. Still, prices have started to rise again.
Whiskey broker Rare Whiskey 101 has compiled an RW Apex 1000 index that tracks the collective price performance of the 1,000 most sought after whiskeys.
Raise a Glass: Whiskey Broker Rare Whiskey 101 has compiled an RW Apex 1000 index that tracks the collective price performance of the 1,000 most sought-after whiskeys
It rose nearly 7 percent last year and has appreciated 595 percent over the past decade – largely due to explosive demand for whiskey from abroad. Over the same ten-year period, the FTSE All-Share Index is up just over 25 percent.
With the Brexit deal deadlocked, experts predict America will cut this hefty rate as part of new trade talks. This could help create a surge in global demand for the most sought-after drinks, leading to a rise in prices as the market expands and stocks of rare whiskey dry up.
Tim Ashley, head of sales at whiskey cask merchant VCL Vintners, says: “We believe an agreement could be reached in the coming weeks to cut or scrap the tariff.
“It could lead to a strong year for single malt sales – and we expect a significant rise in the value of single malt whiskey.”
You won’t find investment-grade whiskey on the shelf of your local supermarket. The smart investment money goes to whiskey that costs at least £ 100 for a standard 700 or 750 milliliter bottle – and it should be a single malt from a renowned distillery where it has typically been aged in cask for at least 20 years. This differs from the blended blends that account for about 90 percent of the whiskey consumed.
The most sought after product usually comes from a Scottish distillery, where it earns the nickname Scotch. It must be kept in a barrel for at least three years before it can be officially called whiskey.
When it comes to picking bottles that are increasing in value, Rare Whiskey 101 lists the best distilleries, including Ardbeg, Balblair, Balvenie, Bowmore, Dalmore, Glenfiddich, Glenlivet, Glenugie, Highland Park, Killyloch, Lochside, Macallan and Springbank. But whiskeys from closed distilleries – including Brora, Dallas Dhu, Glen Flagler, Rosebank, and Port Ellen – also have some of the highest prices.
A spokesman for Rare Whiskey 101 says, “Older Scotch is increasingly valued from an investment perspective. And we’re also seeing an increasing interest in previously overlooked gems – such as Clynelish, Mortlach, Glendronach and Talisker. The Macallan distillery has the largest market share for the trade, but you should also consider other whiskey distilleries. ‘
Buying from a specialist auctioneer, such as McTear’s Auctioneers, is the most popular way to get investment-grade whiskey. This comes with a guarantee of authenticity – and you will get your money back if the bottle turns out to be fake.
McTear’s typically demands a buyer’s premium of 24 percent on top of the hammer price. And when it comes time to sell, the auctioneer can also demand a 15 percent discount off the sale price.
Counterfeits are widespread. Three years ago, a survey by the Scottish Universities Environmental Research Center in East Kilbride found that nearly a third of the whiskeys it tested were counterfeit.
Whiskey is traded in an unregulated market, so there is no way of recourse to the Financial Services Compensation Scheme if you are the victim of a fake.
Next month, a bottle of the world’s most expensive whiskey – The Macallan 1926 Fine and Rare 60 Year Old – is expected to be sold at a record price.
It is one of only 14 bottles of this ‘top’ Scotch that we know exists. It is being auctioned by Whiskey Auctioneer as part of a collection once owned by former PepsiCo bottling magnate Richard Gooding. Other auction houses to consider include Scotch Whiskey Auctions and Whiskey. Auctions that, amid the pandemic, are still running online auctions.
Bottles of whiskey can be stored indefinitely without going off – provided they are upright and out of direct sunlight. The age of a whiskey is the amount of time it has been stored in a barrel – and this is what determines its color and flavor.
While the vast majority of investors buy bottled whiskey, it is also possible to buy bottled whiskey.
Trading while still in the barrel allows investors to pay tax or VAT – as long as it remains in a warehouse. Barrels vary widely in size, but a typical 225 liter barrel can produce more than 200 bottles of whiskey.
Simon Aron, general manager of Cask Trade whiskey business, says: ‘Normally you invest between £ 1,000 and £ 30,000 in a cask of whiskey. Investors should be aware that there is something known as the angel’s share – where up to 3 percent of the whiskey evaporates. Outfits like ours allow you to trade whiskey while in the barrel with others who want to buy something before it ever comes in a bottle. ‘
Aron believes a conservative estimate of the return on investment of casked whiskey could be about 8 percent per year. But you should factor in an annual cost of maybe £ 50 for insurance and £ 20 for storage. Purchases may also be subject to a 15 percent buyer’s fee. Cask whiskey dealers include Cask Trade, VCL Vintners, and WhiskeyInvestDirect.
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