Whisky is the most traded spirit in the world, accounting for nearly 20% of all the UK’s food and drink exports. Despite the global pandemic, Scotch whisky exports were close to £4.5bn in 2021. And, with Scotland’s distilleries struggling to keep up with demand and inflation pushing up prices across the board, healthy returns for investors are set to continue over the coming years. In addition, the arrival on the market of emerging economies with immense potential for development are projected to cause demand to skyrocket further as the trend in whisky investment spreads to every corner of the world.
As the whisky market continues to flourish, interest in investment in whole casks of whisky is catching the attention of investors. What was traditionally a market focused on industry specialists in the British Isles, is fast becoming a global phenomenon as investors in different regions start looking for ways to grow their wealth through whisky casks. As financial markets become increasingly more globally connected, whisky casks are set to become an increasingly popular tangible asset in all regions of the world.
When sales of bottles of ‘liquid gold’ grow, sales of casks grow in parallel. This has led to an increase in the value of cask prices in all market segments, responding to the classic laws of supply and demand. This particularly applies to top distillery brands as consumers entering the market from around the world search out brands that are familiar to them and have a real and authentic history behind them.
An interesting trend is the growth of single malts and the whisky cask market in general. In most developing countries, blended whisky is adopted by consumers first, and then, as consumers become more savvy, the demand for older and more select whisky increases, both in terms of the volume consumed and the value of the liquid. That’s why the long-term global trend shows that the real growth will come from whole cask investments.
The arrival on the market of emerging economies with immense potential for development will have a significant impact on whisky cask investment, while more established markets are also increasing their focus on casks in response to increasing uncertainty in global markets and traditional investments.
Demand is high for premium casks in Asia Pacific
Throughout Asia, a growing population with rising disposable income is expected to propel the demand for whisky casks, with an increasing preference for more premium and super-premium products. At the same time, some investors in the region are turning to alternative assets such as whisky to weather the storms of global market volatility.
This region, which includes economies such as Taiwan, Vietnam, Malaysia, and Singapore, is hungry for rare casks, pushing up prices globally due to the limited supply from Scotland’s distilleries. Over the past few years, some of the biggest cask sales in recent times have been made to investors from Asia.
World record cask sales in China
Premium and Blue Chip casks are the most coveted in what is potentially the world’s biggest market for whisky, with 6-figure investments now becoming a reality in the region. In fact, some of the world’s biggest cask sales in recent years have been in Hong Kong.
The Chinese market traditionally seeks out the rarest casks from the top brands at higher prices with investors willing to enter the market at the top end and look for large profits when exiting.
Growing interest in the world’s biggest market
In the U.S., rising inflation is having a significant impact on traditional investment strategies, opening the market up to new ways to hedge against uncertainty. Among them, whisky casks, which appreciate steadily and are largely unaffected by outside market forces, are proving particularly attractive.
Despite a heavily regulated investment market, investors are finding it easier than ever before to access whisky casks, with many attracted to the steady returns as a useful part of a diversified portfolio. The U.S. promises to become a key player in the whisky cask market over the coming years.
Rising popularity in Latin America
The economic and political challenges that have traditionally impacted investors in this part of the world, has meant that the market is turning towards cryptocurrencies and tangible assets to secure their investments abroad. The inherent security of cask investment as a tangible asset, with casks carefully traced to avoid counterfeiting and stored throughout their lifetime in government bonded warehouses, is catching the attention of investors looking for safer places to store their wealth. Also, changing lifestyles and rising disposable income of consumers have led to an increase in spending on crafted spirits, which is contributing to the growth of the whisky market in general.
Countries like Mexico, Argentina, Chile, and Brazil have become huge markets for Single Malt Scotch Whisky, and interest in whisky as an alternative investment is set to grow rapidly over the coming years.
Trade barriers provide obstacles in India
The 150% tariff imposed on whisky by the Indian government alongside further taxes in different states has impacted the whisky market at all levels.
However, sales of whisky casks are starting to appear on the radar. Despite the slow rate of investment now, the sheer size of the population in India, alongside a fast growing middle class looking with growing disposable income mean that this market represents an incredible opportunity for cask investors in future.
The only way is up
Looking at the world market, despite strong variations across different markets, all the long-term trends in whisky cask investment are pointing upwards. While, in some parts of the world, investing in a whole cask of whisky is still a very rare activity, awareness is growing rapidly and, with it, the opportunities to become part of this increasingly attractive option for global investors.
Want to learn more about investing in Scotch Whisky Casks? Take the first step by downloading our free Market Report today. In this powerful 24-page guide you’ll discover which regions, distilleries and vintages have performed best; empowering you to make a well-informed decision.
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