In the whisky world, bottle sales always make headlines. The current record holder is a bottle of Macallan Fine & Rare 1926 that sold on Sotheby’s for over
$2 million USD. Bottle sale records set new heights each year at auctions, and the title has been held by Japanese producers, and Scotch makers for decades. However, what about the lesser known category of cask investment? Looking at long-term returns, are bottles or casks the way to go?
Bottles
In terms of investment, bottles are the norm. All the brands across the globe have their own core range releases, and the older bottlings are highly limited. The most collected bottles across the globe come from the Macallan distillery, the Karuizawa distillery, the Yamazaki distillery and Dalmore distillery. All whisky brands sell bottles, but many do not sell casks. This is due to the brand’s popularity; it makes more sense for popular brands to bottle and sell their own casks. Auction houses like Sotheby’s, Bonhams, and Christie’s all focus on bottles sales. The number of casks selling at auction, however, have grown in recent years. Collectors build huge bottle collections that they display and treasure, and when looking at short-term profits, bottles reign supreme. Buy a bottle in the US and sell to a buyer in Asia. With the right network, large profits can be made.
Bottle investment, however, has its downside. Firstly, shipping and moving bottles is difficult. Shipping is always a danger, especially when shipping high priced bottles that insurance just cannot cover. Beyond that, shipping means paying customs and taxes which can get astronomical for high-value bottles. Moving on, storage becomes an issue. Large collections require their own space and, for safety, they are usually insured. Sure, having your own whisky room is fun, but often difficult to maintain, especially for individuals who travel and move around a lot. Bottles rise in value, but they do not age further after they are bottled. This means that the growth of each bottle depends heavily on the brand’s popularity and not the aging liquid.
Casks
Casks are a lesser known category of whisky investment. Many popular brands do not even sell their own casks which has, historically, meant that only industry insiders could purchase casks. However, companies such as CaskX are now making it possible for anyone to purchase a cask from leading distilleries around the world.
The relative youth of the cask market makes it an attractive investment option as competition for casks is yet to reach its peak, and thus steep price increases are often seen on the secondary market. With famed brands holding most of their casks, coming by popular ones is all the more profitable.
Unlike bottles, casks require no personal storage space or shipping as they are held in bonded warehouses and maintained by warehouse professionals. This requirement, that casks be stored in government bonded facilities, also provides investors with complete confidence that the cask they are purchasing is 100% authentic. Bottles can be faked or forged, but casks cannot.
Another key benefit with casks is that the liquid contained within continues to get better with time. Casks are whisky’s maturation container, and so continue to age over the years. This means that, even though a brand may not grow increasingly popular, the liquid will be aging and thus becoming more valuable. Should the brand’s popularity also increase then profits can grow exponentially.
Conclusion – Which investment is best for long-term returns?
The best investment means the one that yields the highest profits and can be monitored and calculated continuously and smoothly, with minimal risk. Based on these points above, casks win over bottles for long-term investment.
Risk is reduced without the need for personal storage, insurance, and shipping. The aging liquid guarantees increased returns, while the brand popularity bottles rely on can fluctuate. The warehouse overseeing a cask portfolio guarantees the liquid will remain safe and continue to deepen in flavor, and with age the profit a cask will yield can be easily calculated.
Bottles often deliver quick profits, but auctions are a hard market to gauge and observe. Casks are better for long-term profits, but less so for quick trades. As an entrepreneur and whisky fan, however, entering both categories is perhaps the best way to go.
