Liquid gold investment boom
We were recently featured in a print article in the prestiges ICON Singapore magazine. The original article was published in Mandarin, which we have had translated and share below:
Rare whisky is also known as “liquid gold”. In addition to the collection of offerings and drinks, it also has investment value. In recent years, it has become a popular alternative investment option in the market. It integrates the opinions of international auction and whisky industry experts in this wave of trends and investment.
The persistent pandemic, unstable global market and the low interest rate environment of banks have led many high-net-worth individuals to hedge their investment wealth and pursue a more diversified investment portfolio and transfer a large amount of funds on hand to the alternative investment market. According to the 2021 Knight Frank Luxury Investments Index, the resale value of rare whisky has skyrocketed by 478% in the past 10 years, and the room for appreciation surpasses alternative investment items such as high-end art, luxury watches and handbags.
The precious and rare whisky, from the past that the whisky lovers and collectors have pursued, has now become the favored target of investors. With the rapid increase in market demand, the distilleries inventory has decreased rapidly, which led to short supply, and increased the price. It has become one of the most investment-worthy luxury products in recent years. Investors are increasingly interested, and it has become a question worth pondering in how to collect whisky and grasp a good opportunity to “dig for gold”.
The Booming Whisky Market
Rare and famous whisky, in extremely limited quantities, are regarded as the best by collectors, and auction records have repeatedly created good results. In November 2018, the most expensive single bottle of whisky in auction history was born. The Macallan 60 Year Old barrelled in 1926 from the famous Scottish factory Macallan, was sold at a London auction for a sky-high price of 1.2 million pounds, setting a world record.
Michelle Chan, Head of Wine, Christie’s Asia Pacific, said in an interview that the interest in whisky in various markets has been steadily increasing, but until recent years, collectors everywhere have begun to invest in the top whisky category, which has pushed up the market’s trend. “Whether it is Scottish, Japanese or American whisky, the market demand continues to grow. This is also reflected in the success we have achieved in auctions.”
In May 2019, Christie’s held an Asian whisky auction for the first time, with a total turnover of nearly US$500,000, reaching a 100% turnover rate; In July 2020, a selection of rare Scottish and Japanese single malt whiskies were launched. Almost all whiskies were bid successfully, and the total amount of bidding exceeded the underestimated price before the auction by 154%; In the 2020 autumn auction, Scottish and Japanese single malt whiskies were enthusiastically bid by Chinese collectors and once again reached a 100% transaction rate.
The auction market has received overwhelming response. Diageo, the liquor giant, has insight into the market trend as early as 6 years ago and launched Diageo Rare & Exceptional, a platform focusing on top-quality spirits, offering premium whiskies, including only 94 bottles worldwide, Mortlach Singing Stills Series 47 Year Old single barrel whiskies; At the same time, a management team to serve VIP customers was established, and Diageo Private Suite was set up locally, so that VIP customers could personally understand the various top whiskies and their collection value.
Adam Brewer, Marketing Brand Manager, said: “Our core goal is to make Scotch whisky more approachable and to increase customers’ awareness of whiskies. Such method has also attracted many customers and through our services, we have consulted the customers the way of establishing a personal whiskies collection and customize a private whisky cellar. “
Founded more than two years ago, based in the local whisky investment platform, Spirit Vault Collective, managed by a team of veteran whiskies enthusiasts. The company’s CEO Neil Paterson believes that there are many reasons for the rare whisky boom,
including the popularization of information, auctions or secondary market prices, and the rise of new distilleries. While the price of whisky continues to rise, the key lies in the relationship between market supply and demand. “Market demand is growing, but whisky brewing takes time, and it cannot be accelerated. Production cannot keep up with demand, resulting in rising prices.”
Neil Paterson is also optimistic about the local market and believes that the market is expanding. Local and overseas brands have sprung up, and the market is full of vitality. It also means that more different types of whiskies are readily available, which expands people’s interest in whiskies. “The Grande Whisky Collection, the well-known local brands The Auld Alliance and The Single Cask, and the international chain La Maison Du Whisky, with a wide selection of high-quality whiskies at various price points, make Singapore comparable to many major international cities.”
Popular and Rare Whisky Nowadays
What investors care about most is the most collectible whiskies. From the perspective of auction, Michelle Chan believes that Scotland and Japan have a long history of whiskies making, and the top whiskies of the two countries are also the most sought-after. “The most collectible whiskies on the auction market is inseparable from the leading brands in the opening, such as The Macallan from Scotland, Japan’s long-established commercial distillery Yamazaki, and one of Japan’s rarest malt whiskies, Karuizama.”
In addition to investing for clients, Neil Paterson and his team are also keen to collect rare whiskies in private. “Our personal collection comes from distilleries in different countries. There are three favourites with the largest proportion namely Springbank, Chichibu and Glendronach. The collection list includes Glendronch 33 Year Old, Springbank Millennium Series and Chichibu Intergalactic Series.
Adam Brewer specifically named Brora, a Scottish distillery that officially reopened on May 19 this year. After the legendary distillery closed in 1983, it did not reproduce whisky. In the past, with its unique flavor and the rarity, it became a popular whisky at auction. “Many people may not know Brora, but it is no stranger to experienced enthusiasts.”
He believes that the reopening of Brora Distillery is definitely the most important thing for the Scotch whisky industry this year. To celebrate and commemorate, Diageo Rare & Exceptional also launched a limited collector series Brora Triptych, consisting of 1972, 1977 and 1982 original whisky. He is optimistic that this set will become one of the most sought-after whiskies on the market.
Golden Guidelines for Investment
What are the things that new investors need to pay attention to when investing in whisky? How to discover potential special whisky? Michelle Chan believes that the first thing we must pay attention to is the origin of whisky, understand the characteristics of whisky from different origins, try as much as possible, and find out the type of whisky you like. “Regardless of the type of whisky, the origin is the key.”
Adam Brewer advises novices to take time to understand what they like, accumulate knowledge, and find trusted advisors to help them start their collection journey. “It is vital to find the right consultant. You can ensure that your whisky will not have problems with unknown sources with reliable information.”
He also believes that one of the determinants of the value of whisky is the age of the whisky. At present, 25 years old whiskies are categorized into rare collection. “Most of the common whiskies in the market are under 18 years old, which means that 25-year-old whiskies are becoming less, and 40-year-old whiskies are even more excellent.”
In summary, the factors that affect prices include scarcity of supply, age, and the unique way of making whisky itself. “The best example is the Diamond Jubilee launched by Johnnie Walker in 2012. This whisky was launched to celebrate the 60th anniversary of the reign of Elizabeth II, queen of the United Kingdom, which was limited to 60 bottles worldwide and the barrels were produced by The Queens Sandringham Estate, which is privately owned by the Queen. It’s made of precious oak with a vintage date of 1952, which is one of the highest released whiskies in the industry.”
Neil Paterson pointed out that the rare whisky issued in limited quantities by top brands will directly increase its price in the auction market due to its scarcity. “Take Yamazaki 55 Year Old as an example. The whisky is exclusively sold in Japan and is limited to 100 bottles. The original price was US$28,000 when it was released in February 2020. It was sold for US$795,000 at the Bonhams Hong Kong auction six months later.”
Investors are most concerned about the rate of return on investment. Neil Paterson revealed: “We set a 12% reporting rate target for investment clients, but last year we exceeded the standard by 15.7%. Over the past two years, our investors also received a return rate of more than 37%.
The local whisky market is booming, and different types of whisky are readily available in the domestic and overseas brand market, which also expands the general public’s investment interest in whisky. (Right top to bottom) The Japanese whisky brand Chichibu. Whisky investment platform Spirit Vault Collective, a team of four veteran whisky enthusiasts formed, non-executive director Marek Dawidowicz, who is in charge of Singapore market operations, and CEO Neil Paterson.
He pointed out that the unique supply-demand relationship of whisky enables it to maintain stability even during periods of market fluctuations. “During the pandemic last year, the value of our investment portfolio still did not decline, which is why many collectors call whisky liquid gold because it can maintain its value even if the market fluctuates or faces inflation.”
Neil Paterson also strongly recommends that novices must taste the whisky in person. “We can manage the investment of our clients, but the most important thing is personal enthusiasm in investment projects.” After all, a rare bottle of whisky represents the brainchild of the distillery, and it is full of stories behind it. If you can’t appreciate the uniqueness of whisky, you can’t understand its rarity and true value.
The Future Trend
Adam Brewer talked about whisky worth paying attention to in the future, especially the personal favorite, the recently launched Talisker 43 Year Old, “The aging barrels of this whisky have a unique and fascinating story, and it is also one of the whiskies that I have had the honor to try with great flavor. The other is the upcoming collection of Singleton, which is matured in oak sherry barrels. The single-barrel collection with the highest year released by the distillery so far-Singleton 54 Year Old.”
Michelle Chan also predicted that the global whisky market will develop optimistically, “especially the growth trend of Scottish and Japanese whisky in the Asia-Pacific region, we also plan to continue to expand the breadth and depth of Christie’s whisky sales worldwide.”
High-age whiskies have high value, but new whiskies are equally attractive. As time goes by, there are potentials for future return. The key is to be unique and know how to choose the right one. Neil Paterson believes that more attention can be paid to the new distilleries. “Look out for Ardnahoe, Ardnamurchan, Bimber and Nagahama. Their first bottled product, and any limited-edition whisky that may be launched.”
He emphasized: “As a whisky lover, it is now a golden age. Many new product brands and new flavors have entered the market. Among these whiskies, there are undoubtedly some very collectible “jewels”. They may be highly sought after in the future, but it is not easy to find them. Basically, investors can get a return much higher than the initial market price.”