Monthly newsletter for March 2023
Wow. The markets are definitely creaking, and we’re aware that some of you may be nervous. The collapse of SVB and Signature bank over the last few weeks, is a real concern in the stability of the economic system right now. Credit Suisse is also giving us some caution. I hope that you are all well diversified across asset classes, managing your risk appropriately, and having a dram or two over the weekend as you watch the show unfold.
The whisky market has not been affected over the last week, and based on the news cycle it seems like it is business as usual with positive news on investment returns as well as multiple launches continuing. Actually, the whisky market continues to boom in 2023, with new distilleries continuing to pop up and large players upgrading their operations, all trying to keep up with demand. With scotch whisky exceeding £6bn of exports for the first time in history last year. It truly is a new golden age for whisky right now.
As we had always expected, India continues to rise up the rankings in terms of consumption, and the Scotch Whisky Association recently announced that whisky consumption grew by +60% in the country last year. Apart from India, scotch whisky makers also saw double-digit growth in Taiwan, Singapore and China as the post-Covid recovery continues. Even young Koreans are beginning to warm up to the spirit both for consumption and collection, leading to record-breaking sales in 2022, and South Korea launched its first single malt whisky with a small batch of 1,506 bottles headed to only 5 markets globally. Taiwan has always been a big market for scotch whisky (third globally in terms of value, just behind US and France) and we’re now seeing more collectors snap up rare and collectible bottles. All of these emerging country dynamics bode well for the rare whisky market, and we expect prices to continue to rise.
The FT released another excellent and well balanced review on the returns (and risks) of investing in whisky, whether it is bottles or casks. There was also great guidance on which brands and distilleries to look out for (the closed ones), and solid insight from the founders of Rare Whisky 101 on why Asia continues to dominate the market and why Knight Frank is worried about the misuse of their annual index (and why we have also decided to stop using it at SVC). In summary by the FT, “the whisky market looks underpinned by demand from a select group of wealthy buyers chasing scarce supply”. We could not have said it better ourselves.
So how are we doing at SVC? The good news is that, even with the nervousness in the markets, we continue to significantly beat key global indices. Below is our updated comparison chart:
Our portfolio has been relatively stable over these past few months, and have even seen some exceptionally strong performance by our Hanyu 1988 King of Diamonds hitting an all time high of £15,751, up +100% on our initial purchase price of £7,000. We have also been looking at investing in the Littlemill Testament 1976, assuming we can enter at the right price, as well as moving forward this year with the bottling of 1 or 2 of our blended malt casks that will offer good returns over the next 3-4 years.
For some more lighthearted and entertaining reading during your spare time, we would encourage you to have a look at Bloomberg’s whisky lover’s guide to Japan.
Marek, Marc, Neil, Gary