February 18, 2022 SVC 0

Monthly newsletter for February 2022

Dear All,

First off, we are pleased to say that our portfolio had a solid run this month, and we have once again successfully crossed our annual benchmark goal with a +12.18% return to date, with 2 more months to go before we close off the financial year. We don’t see this category growth abating over the next 12-18 months, due to a number of factors we’ll discuss below.

We have seen some of the slowest trading volumes on auctions in many years. As just one data point to set context, the Kariuzawa’s that were sold on auction over the last 2 months had not been on the open market for +2 years, and they jumped at 60-90% when they were. Just this month we had a bottle in our portfolio, a Karuizawa 1968 Single Cask #6955, increase by an an incredible +93% to £17,000. We are seeing similar patterns across multiple brands and across all the major online auction houses. With our team having been in the industry for over a decade, we have some hypotheses on what is driving this and the potential outcomes for investors.

Given the current inflation pressure in the markets globally, many collectors are sitting on their stock with the view that appreciation of their tangible assets will continue. The record liquidity in the market has also boosted prices of bottles when they do come onto the market, creating positive tailwinds for rare and collectible bottles. For our rare and collectibles portfolio at SVC, we will be holding onto the brands for the foreseeable future until we see a semblance of a slowdown (which is tough to call right now). Investing in bottles at the moment is very difficult given the valuations we are seeing, but we will continue to monitor the markets for any value, with a focus on rare and collectibles and wildcards that we feel may have potential (eg. Raasay and Helden)

Speaking of value, in order to extract maximum returns for our investors, we have moved ahead in the bottling of our first cask for SVC. For those that attended our most recent AGM, this was always going to be our strategy this year, and we are pleased to say that the first bottles are almost off the line. The good news is that we expect a 2.5X return for the portfolio once these bottles are sold through our distribution partners over the coming months.

Marek, Marc, Neil, Gary

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