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3 Reasons Why Cask Whisky Is a Good Alternative Asset Choice for 2022

Financial uncertainty, rising inflation, and political and trade disruption over the last few years has left a lot of investors looking to diversify their portfolios. Even for those who don’t make investment a regular habit, there’s been a lot of space for thinking about the future, and how best to prepare for retirement or how to give children a strong financial start in life.

With interest rates for much of the globe failing to pick up since the financial crisis over a decade ago, savings accounts provide little hope for those looking for higher returns.

Many people’s first thoughts when it comes to investment may be traditional assets such as stocks and shares, but a tumultuous few years has reinforced the fact that these aren’t an ideal fit for anyone who doesn’t want to be constantly watching markets.

Alternative assets have been becoming more and more attractive to investors new and old, as they’re typically more stable and can offer greater long term returns.

What Are Alternative Assets?

These are often defined as anything that doesn’t sit within the usual categories of ‘traditional assets’, like cash, bonds or shares.

There are many different types of alternative asset, which can include more complex financial packages such as hedge funds and private equity, which often require a deal of financial expertise and can be hard to value. Alternative assets also include tangible assets – i.e. physical assets that exist beyond a computer screen.

It’s likely that you’ve already dabbled in this world. For most people, it’s buying and selling property, for others a family heirloom constitutes a tangible asset that can often hold significant financial value.

Tangible assets can include property, precious metals, and a growing choice amongst investors is whisky. Bottle collecting has grown into a target for investors, and now cask whisky has too.

So, why should you invest in tangible assets, and in particular – why should you invest in cask whisky?

Here are three reasons why cask whisky can be a savvy investment choice for the coming year.

1 – Tangible assets like whisky can hold up even when financial markets are struggling.

Supply and demand is, as with any investment, still a key consideration, but alternative assets tend to exist in cycles that don’t always follow other financial markets.

Periods of economic uncertainty can make them more attractive and boost their prices, and demand for certain goods will still react to the broader financial landscape, but over time fluctuations are usually far shallower than volatile financial markets.

Cask whisky stands out amongst many other investments, however, because its value is equally tied up within the process of barrel aging. Whisky in its cask matures over time, and becomes more valuable as it does. This is not the case for bottles, as maturation only takes place in the cask. That means that regardless of overall market values, a cask of whisky will increase in value over time as the product becomes more desirable in itself.

A tangible asset such as cask whisky can complement a series of shorter term financial investments like a stock portfolio, or can exist on its own to provide returns later down the line.

That doesn’t mean it’s without risks, particularly as a product that is perishable. But, with the right storage, risk is almost completely eliminated – which brings us to our second reason as to why cask whisky is a great alternative asset.

2 – Cask whisky storage is all taken care of for you.

One of the biggest disadvantages of tangible assets is storage – unlike stocks and shares which only exist in a digital format, these real life assets need to be kept safe and well looked after.

Compared to a bottle gathering dust in a drinks cabinet, cask whisky is stored in secure bonded warehouses. Whisky is a significant part of the Scottish economy, and because duty is suspended on the whisky whilst in the warehouse, HMRC have it in their best interests to ensure the product is well looked after until it leaves.

Strict safety and storage measures are in place, and people are on hand to keep an eye on your cask. We are able to arrange your cask to be re-gauged in order to check the amount of liquid, and the ABV (alcohol by volume). This means you can keep track of the natural evaporation, give you a chance to change the cask, and understand when the best time to sell the contents will be.

3 – Cask whisky is great for enthusiasts, or anyone looking for something exciting to invest in.

The lure of tangible assets is often the asset themselves. If whisky is something you’re already interested in, or maybe you’ve begun bottle collection, then cask whisky can be a great next step.

With cask investment, whilst you can opt for a more traditional hands-off option, you can also become more involved in the process. You can play a part in deciding the outcome – where you sell the cask, or even if you want to bottle your own. Through the process you can even have the chance to sample your whisky as it matures. Alongside this, investing in cask whisky gives you the opportunity to explore a key part of Scottish heritage. Learn more about the whisky regions (blog link), or the history of the ‘water of life’ (link) that has become such a key part of the economy and landscape of Scotland.

There are many reasons why whisky cask investment makes a great alternative asset for 2022. If you are interested in learning more about casks, or wondering whether this may be a good fit for your portfolio – just get in touch.

We are always happy to offer advice and insight, with years of experience in both finance and whisky to share. We know that cask investment may not be the right decision for everyone, so feel free to book a call to learn more about what MacInnes can offer.

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Read through your copy of the MacInnes whisky investment guide and learn more about the market and the whisky investment process.

What Are the Whisky Regions of Scotland, and Why Do They Matter for Investors?

Whilst all casks can grow in value as they mature, it’s undoubtedly true that certain brands, blends and distilleries carry reputations and respect that can improve that value further. Knowing some of the ways in which whisky can be impacted – both in flavour as well as the demand from collectors and the public alike, can lead to a successful, well informed investment.

There are 5 regions officially recognised by the Scotch Whisky Association, each bringing with it unique history, processes and flavour profiles. These regions only apply to the classification of malt whisky, not grain, and of course – a distillery being in a certain region does not necessarily mean it will carry the characteristics of that region, and there are many distilleries breaking the mould.

It can be important to understand the regions to help learn more about the casks produced in each part of the country, and get a broader picture of the types of cask investment that are right for you.

What are the 5 whisky regions of Scotland?

 The whisky regions are, in order of geographical size: the Highlands, the Lowlands, Speyside, Campbeltown and Islay.

Occasionally, the Islands, which are part of the Highlands region, are sometimes considered their own unique region, although not officially recognised as such.

Here is a brief introduction to each of these whisky regions.

Highlands:

This is the largest of the whisky regions, and is well known for distilleries including Glenmorangie and Dalmore.

There are over 40 distilleries here across the area, making up over a quarter of Scottish whisky production. However, the vast size means that there is less of a unified flavour between distilleries.

In the coastal areas of the region, lots of the whisky takes on the salty flavours of the sea, whilst whiskies from the south of the region have a lighter flavour.

Lowlands:

Situated in the south of Scotland, near the borders, the Lowland regions are famous for typically light, citrusy whiskies which are mostly unpeated. Here distilleries such as Annandale and Bladnoch have made strong names for themselves. 

Speyside:

Speyside is tucked away as a region within the Highland region, but that doesn’t mean it doesn’t have a distinct reputation for itself. There’s nearly 50 distilleries producing whisky, including Glenlivet, Glenfiddich and The Macallan – home to some of the most expensive bottled whisky of recent years.

The River Spey provides fertile soil for malt production, and many of the region’s whiskies have a peaty and spicy flavour.

Campbelltown:

Once the whisky capital of the world, Campbeltown is now only home to three distilleries – making whisky from this region a desirable asset. Out on the Kintyre Peninsula, the region has less of a distinct style with fewer distilleries now operating. Springbank and Glengyle make popular whiskies here.

Islay:

In the Inner Hebrides of Scotland, Islay offers dry whiskies influenced by a strong peaty taste as a product of the distillation process. Laphroaig and Port Ellen are famous names here, offering popular collectors bottles.

When choosing a cask to invest in, knowing more about the distilleries that produce them can help you plan for the future of your investment. Our team is always on hand to help guide you through the process of choosing a cask and deciding on the best investment for you.

Book a call by getting in touch at sales@macinneswhisky.com

Get Started by Downloading Our Guide

Read through your copy of the MacInnes whisky investment guide and learn more about the market and the whisky investment process.

Biggest Risks When Investing in Whisky and How to Avoid Them…

As an investor, you should keep in mind that every investment comes with its share of risks.

When it comes to investing in whisky, the risks are varied. The type of whisky you invest in will determine the level of risk you’re likely to face. 

When investing in whisky bottles, the risks can be high. Firstly, one of the most common risks are fake bottles. As the market expands, selling fake bottles has become a multi-million-pound industry. Before starting to invest in whisky bottles, spend time researching how to recognise a fake bottle. 

Another high risk of whisky bottle investment is the potential for a significant drop in value. A bottle of whisky you decided to invest in years before could drop in value in the next few years causing you to lose a lot in return. However, the right bottles from the right distilleries will offer you a strong investment proposition. It’s just important to do your research ahead of making any decisions. 

When you’re investing in casks, the risks are somewhat lower as you can pretty much always find an exit strategy. Whether it be private investors, bottlers or distilleries in need of blends. However, this does not mean that casks investments face no risk at all. 

One of the risks of investing in cask is theft or damage to your cask. This is why it’s important to store your casks in a safe place. All of our casks are stored in HMRC registered bonded warehouses, and are fully insured. If anything were to happen to your cask, the insurance would cover it up to the market value. 

Another risk of investing in a cask would be not checking regularly on your cask. Alcohol evaporates much faster than water, causing the ABV (Alcohol By Volume) to drop. Whilst this evaporation, also known as ‘The Angel’s Share’ offers benefits in the terms of no capital gains on profits (as HMRC considers it to be a ‘wasting asset’) it is important to monitor casks regularly. Whisky must have at least 40% ABV to be considered whisky so it’s important to check both the level and strength of your whisky. Luckily, HMRC will be like a ‘monitor’ for you as if it evaporates by more than 2% per annum the Exchequer will suffer due to lost excise, so there are checks and balances everywhere.

Not letting your cask mature for long enough or letting it mature for too long can also be a cause of a potential low return. When it comes to whisky it’s all about timing. At the right time, the right cask can make you tens of thousands of pounds profit.

Choosing the right cask material can also help lower the risk on your investment. The oak the whisky is going to mature in is important, as the cask itself influences the taste (and value) of the whisky. A bad cask will make a bad whisky. If you’re buying from a reputable distillery or investing company there’s no need to worry, and we offer advice on the types of cask to be looking out for.

To conclude, despite all the great upside potential, there are some risks when investing in whisky,and no investment is ever risk free. Fortunately, with all the HMRC regulations and monitoring and the massive demand for branded, Scotch whisky worldwide in terms of the risk/return payoff, whisky cask investment comes up Top Trumps! Despite all this, we recommend that you do your research. Here at MacInnes the most important thing is that you do not feel rushed into buying a cask and to this end we will undertake the buying journey with you, and over several phone calls if needed so that you are 100% informed and happy before investing your money.

To start on your whisky cask investment journey, download our guide below, or if you’d like to speak to one of our specialists, email sales@macinneswhisky.com

Get Started by Downloading Our Guide

Read through your copy of the MacInnes whisky investment guide and learn more about the market and the whisky investment process.

Scotch Whisky History Facts

Whisky is one of the most popular spirits in the world and is continuing to grow in popularity. Even in the most remote regions of the world, whisky has since become a familiar product but where did it actually originate from? 

The Origins of Whisky

It’s origin dates back to the Egyptian 10th century, when an Alchemist discovered the process of distilling alcohol with the aim of creating cosmetics and other perfumes.

The word “alcohol” would even be directly derived from the term “al kuhul” which designates the word “kohl”, a make-up for the eyes, originally used by the Egyptians. However, the Egyptians did not consume this alcohol,  only becoming a popular drink in Europe, with new products starting to be distilled.

From the 12th century, people began to distil spirits from grapes, cereals, fruits or vegetables. At that time, most spirits producers were largely monks or scholars. The paternity of whisky is still the subject of heated debates between the Irish and Scottish today! 

What we do know is that whisky has been distilled in Scotland for centuries. It’s thought that Highland farmers did not discover how to distil spirit from their surplus barley by themselves. There’s some evidence that Christian missionary monks brought distillation with them along with Christianity in the fourth and fifth centuries.

The first written reference to whisky dates from 1494 and indicates that the practice of distillation was already widely established in the 15th century: “eight balls of malt to Friar John Cor wherewith to make aquavitae”, a recipe found in the rolls of the Exchequer. This reports the quantity of malt necessary to produce almost 1,500 bottles. The whisky was consumed for its medicinal virtues. The Gaelic term for “water of life” happens to be “uisge beatha”, which will gradually become “ooshki” then “whisky”.

It is said that whisky was consumed by the Scottish “from cradle to grave” as a medical treatment. It was also used as a water substitute for when the water was not consumable.

The Globalisation of Scotch Whisky

Whisky was an integral part of Scottish life at that time. The men used to gather around a table, and each in turn, pour the contents of the keg into each of the glasses placed on the table. It is likely that the term “round” used today in Scottish pubs has its origin in this ancient custom.

By the 16th century, whisky distillation had become as popular as beer production, and the vast majority of local farmers began to derive part of their harvest of barley and oats. In addition, the difficult climate of the Scottish territory hardly allowed the storage of crops. The waste generated by the distillation process was used as feed for livestock, which is still the case today.

Since its origins, whisky has been subject to numerous taxes, from 1644 until 1823, the date of its official recognition. During all these years, the tax officials fought against illegal distillation. Around 1780, there were about 8 legal distilleries and 400 illegal ones. Even today, not a drop of the precious spirit escapes the very strict controls carried out by the HMRC!

Towards the end of the 18th century, the production of whisky began to change, moving from production intended for private use to production intended for commercial use. Fast forward to where we are today, whisky has come a long way over the years! 

Scotland is not the only home of whisky-making though. Ireland, the US and Japan all have long traditions of distilling the spirit. There are also some countries you might not expect producing whisky these days such as Denmark and Australia’s Tasmania! 

To start on your whisky cask investment journey, download our guide below, or if you’d like to speak to one of our specialists, email sales@macinneswhisky.com

Get Started by Downloading Our Guide

Read through your copy of the MacInnes whisky investment guide and learn more about the market and the whisky investment process.

What Is the Most Collectable Whisky? 

If you are looking at investing in whisky in 2021 and 2022 but don’t know where to start, we have got you covered! Buying whisky as an investment is growing in popularity worldwide and as the market continues to evolve and grow we want to help you with the question… What is the most collectable Whisky currently?

Macallan Fine & Rare 1926

A record breaking bottle of this 60 year Scotch sold for a massive £1.5 million at auction back in 2019, taking the top spot from another 1926 Macallan that had sold for £1.2 million 

There were only 40 bottles from cask 263, with 24 of those getting limited edition artist designed labels. 

The prestige of the brand, and the limited run of bottles make this top of many collectors wish lists. 

Hanyu Ichiro Full Card 

54 Japanese bottles each in each collection, they represent one full game card. After Scotland, Japan has imposed itself as a serious competitor in the whisky industry. This series has 400 bottles, making 8 full card games. 

In a recent auction, they were sold for a record value of $1,520,000 USD. 

Macallan Fine and Rare 1938

Another in the Fine and Rare series, and first bottled in 1969. Getting your hands on one of these will set you back around £40,000. Maybe not quite as much as the Fine and Rare 1926, but still a worthy contender as a collectible. 

The Macallan distillery has an amazing reputation in the whisky investor community;

The average bottle can reach 3 figures easily, and their best whiskies can cost more than £3,000 when freshly bottled. 

Port Ellen – Staff of Port Ellen Maltings 1998

This collection was released to celebrate the 25th anniversary of Port Ellen Maltings, and features the names of the distillery staff on the bottle. An Islay Single Malt, bottles can sell for around £1,900 to over £3,000 in auctions. 

Diageo and HBO – Limited Edition Single Malts 

After the huge success of their White Walker mix in 2018, Diageo came out with a long-awaited collection of Game Of Thrones whiskies in the UK.

This was to celebrate the 8th and last season of the show, and features a range of whiskies from around Scotland. The popularity of the show makes us believe that a lot of fans will want to get their hands on this collection.

Glenlivet 1981 The Whisky Exchange Exclusive

A Glenlivet 36-year-old single malt scotch. Only 702 bottles were made, making it a rare collector’s piece.  Bottles can come in around the £600 mark, giving them some good room to increase in value if well stored. 

Bowmore 1973 Islay

While this Bowmore costs a bit more than your average bottle, with a starting price of around £6,500, it is an attractive option for investors. Bowmore’s 1973 single malt scotch was only bottled in 2016, giving it the almost perfect maturation time of 32 years. However if you want to ensure you see a profit, you will likely have to be in it for the long game, keeping it stored for a good few years. As it becomes rarer, its value should grow. 

To start on your whisky cask investment journey, download our guide below, or if you’d like to speak to one of our specialists, email sales@macinneswhisky.com

Get Started by Downloading Our Guide

Read through your copy of the MacInnes whisky investment guide and learn more about the market and the whisky investment process.

What’s the Difference Between Cask Investment and Bottle Investment

There are 2 main ways of investing in whisky, either investing in a bottle or investing in a cask. 

But what are the main differences?

Investing in casks 

The most difficult part of investing in Whisky casks is finding out where to invest, what brand or even what distillery to contact. At MacInnes Whisky, we help beginners find the right path and guide them through each step. 

Casks are continuing to rise in popularity, and can be a sound investment for the future providing an average return of between 10% and 25% per year. 

One of the greatest benefits when investing in whisky casks is that the more you leave your cask to mature the more profit you will get in return. Once you’ve found your cask all you need to think about is how long you can afford to let it mature. Your cask will be safe from being forged, it will be protected, monitored and kept safe whilst it grows in value. 

How long should you leave your cask to mature? 

If you decide to purchase a new fill cask, you need to know that you have to let it mature for at least 3 years before you can even call it Scotch whisky. Whisky sells better after 5 years and even better after 15 years. The rarer the whisky, the more valuable it gets. When a cask has been kept for more than 20 years, investors understand its rarity and are more willing to spend more on it.  

When it comes to casks, there is never a shortage of buyers. From private investors, bottlers to even distilleries themselves in need of their own blend. You’re almost guaranteed to find a buyer.

Investing in bottles

If you’re a big collector, investing in bottles would be the better option for you. 

The whisky bottle investing industry is already well established, which can make it difficult for newcomers to assert themselves in the industry. However, even if the best bottles are currently being held by tracking auctions and in the Whisky Market, there are still ways to get your hands on a great collector’s piece.

Unlike casks, you will be the one providing a safe room for your whisky bottles. You would need to have a room that’s away from the sun with a lower room temperature, and you need to make sure your whisky will have enough room to stand upright.

Selling a bottle of whisky is another thing. Essentially investing in a whisky bottle is a gamble. You are hoping that in the next few years there will be a high demand for your bottle. When a whisky is bottled, it does not continue to mature, meaning its taste will remain the same until opened. You can expect a not so popular bottle to still not be popular in the next few years. This is why it is advised to buy special releases from big brands such as Macallan, Bowmore and Highland Park. Why special releases? Because the rarer a bottle is, the better chance you will make a profit from selling it. You also need to keep an eye out for forged bottles especially when you’re buying from private investors. Read more here (Link to blog: Biggest Risks)

Unfortunately, you can never really predict the returns of bottles, even if you keep up to date with all the auctions around the world and estimate the best time to sell, there are still risks. 

If you are a keen whisky drinker, then investing in bottles may be for you, safe in the knowledge that even if the bottle does not sell, you can enjoy the drink in its own right.  

So whilst making your decision weigh up the pros and cons of both and decide what is right for you. 

To start on your whisky cask investment journey, download our guide below, or if you’d like to speak to one of our specialists, email sales@macinneswhisky.com

Get Started by Downloading Our Guide

Read through your copy of the MacInnes whisky investment guide and learn more about the market and the whisky investment process.

Is Cask Whisky a Good Investment?

The last couple of years have left many people reconsidering their finances, and looking at new ways to secure their money for the future. Having several safe income sources has now become the goal for a lot of people. As inflation rises, the attraction of keeping money in a savings account that pays very little interest begins to fall, and that is why investing in alternatives has become so popular. You can invest in gold but its value hasn’t changed so much for the past 10 years. You can invest in a cryptocurrency, but fluctuations and crashes are unpredictable, making it a risky choice. This is one of the many reasons why a lot of investors have turned to whisky investments over the last few years.

Why Whisky Casks?

The alternative investment sector has grown exponentially and at a constant rate, especially since last year. Finding an alternative investment that is not at the mercy of the global economy is now the goal. That’s why many investors decide to invest in whisky.

Cryptocurrency has had a big place in the investment sector lately but although it might seem like a quick way of getting money when at its peak, it’s also a quick way of losing  money. Cryptocurrency is one of the most volatile investments you can make. Investors who are seeking a more stable return are more likely to want to invest in whisky.

When bought at the right value, investors can expect between 10% and 25% return each year on their casks. Whisky investment is also a very good niche to start investing in as there’s no shortage of buyers. Buyers range from independent bottlers, auction websites, private investors and even whisky brands who are in need of blends. This creates so many different exits for the investors. If bought at the right price, your cask of whisky will become very lucrative.

Rare whisky is very valuable which means the longer you keep it in a cask the better. As your whisky matures, the more valuable it gets. This makes it a consistent and ever-growing asset. Making cask whisky investments is a very good investment alternative for your retirement. It gives you, the investor, a chance to ensure your pension.

The global Whisky Market was estimated at USD 61.7 Billion in 2019 and is expected to reach USD 95.9 Billion by 2026. Scotch single malt exports are set to grow 11.4% from 2018 to 2022. Markets like Japan and The US are growing more and more every year. Experts are predicting a strong growth in demand that will continue past 2030. Some Irish whisky producers have even become concerned that they won’t be able to keep up with these growing demands. The market is showing a stable expansion, making whisky a safer investment.

Rare bottles are also a great investment however the buyers in this market are more likely to be collectors. Casks are aimed at investors who are looking for stable growth, as well as whisky enthusiasts looking for a more hands-on investment.

Cask whisky can also be a very good passive income as it requires almost little to no management. After you’ve purchased your cask, you will be able to leave your cask in the bonded warehouse and just let it sit and mature.

To start on your whisky cask investment journey, download our guide below, or if you’d like to speak to one of our specialists, email sales@macinneswhisky.com

Get Started by Downloading Our Guide

Read through your copy of the MacInnes whisky investment guide and learn more about the market and the whisky investment process.

4 Types of Whisky That Turn Out to Be Great Investments

The value of certain types of whisky has increased significantly over the past decade, mainly due to the growing interest in Western and Asian markets for this spirit. Moreover

the surge in the prices of exceptional bottles should not stop there, making them synonymous with good investments.

Whisky Taste Qualities

Some whiskies are better than others, of course. These will always be coveted for their superior taste qualities. As the interest in whisky as a collector’s item continues to grow, the value of top quality, well loved brands and bottles will be the first to follow the trend.

Closed Distillery Whiskies

During the 19th century, Scotland and Ireland had hundreds of legally recognized distilleries, each producing spirits with unique characteristics. But, plunged into the tumult of wars and economic crises, many distilleries closed their businesses during the 20th century. After the Second World War, sales of whisky boomed again until the 1980s. At that time, single malt whisky was selling for much less than “blended whisky”, leaving a large part of the distilleries without commercial outlets. Today, the products of these “lost distilleries” are highly sought after collector’s items.

Limited Editions of Distilleries Classified “A”

If you are looking for good investments, bottles from distilleries classified “A” such as Macallan, Ardbeg, Highland Park, or Bowmore for example, are to be preferred. In Asia, in particular, the growing demand for limited or exceptional editions is driving their values up considerably. Within 10 to 20 years, there is a good chance that you will be able to achieve very good returns on your investment with limited-edition whiskies purchased now.

There are also the perfect bottles, a mix of extravagance and finesse. If you get your hands on a bottle that fits all of the above categories, you’ve got gold at your fingertips. A whisky of exceptional quality, produced in a limited edition by a closed “A” classified distillery can fetch very high prices.

To start on your whisky cask investment journey, download our guide below, or if you’d like to speak to one of our specialists, email sales@macinneswhisky.com

Get Started by Downloading Our Guide

Read through your copy of the MacInnes whisky investment guide and learn more about the market and the whisky investment process.

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