At Longspey our ethos is “for the long term” and this is particularly important when considering building a cask portfolio.
Casks of whisky are the ideal legacy investment, perfect for building wealth over time, but time is the key component. Both quality and scarcity increase with age, and so time is the underlying foundation for cask investment. Yes, picking the right distillery to invest in can drive additional value—which is something we can assist with—but time is the most important factor because it allows for all three value drivers to happen.
If You Don’t Have Time, Don’t Invest In Casks
The relationship between age and value of casks is not linear. The relationship is complex because casks are not bottled evenly throughout their lifetime; 88-90% of all whisky is used for blends, of which the majority are less than 12 years old. Furthermore, while older whisky is deemed to be higher quality and therefore worth more than younger whisky, studies suggest quality doesn’t peak until around 18 years old.
The complex relationship between scarcity and quality means value tends to increase slowly for the first 10 to 12 years of a cask’s lifetime and begins to increase more rapidly once the whisky reaches its teenage years. The relative jump in price between 5 and 10 years is smaller than the jump between 15 and 20 and smaller still than between 25 and 30.
Time is the most important aspect for any potential cask investor. When buying casks as a private individual we suggest casks should be a minimum 10 year investment, that is for young whisky (3 to 10 years old) and older casks as well. For new-make spirit (0 to 3 years old) we suggest a minimum 15 to 18 year investment.
For investors looking to build a larger portfolio or cask maturation programme shorter return periods can be considered on a case by case basis.
Don’t Expect Per Annum Returns
The graph below is based upon the average price of bottles of whisky at different age points. It is provided to demonstrate how the value of whisky changes over time, and to show the importance of time for value in whisky regardless of the age at which you enter the investment.
Per annum figures are misleading because if you create a per annum figure from a 30 year old cask the rate of change would be significantly different than if you created it for a 10 or 15 year old. Pa returns are therefore misleading and not that useful.
More importantly you do not see returns from casks until you come to sell so there is an additional sense of unreliability for pa returns.
What Certificates Do You Need?
For private individuals looking to invest in five or fewer casks then you do not need any additional certification or registration. For businesses or individuals looking to invest in larger numbers of casks then the additional paperwork needed varies based on where you are based. UK businesses will need to apply for a WOWGR, overseas businesses will need to appoint a duty representative.
At Longspey we use our industry expertise and connections to facilitate UK and overseas based clients to invest at private and larger levels. If you wish to discuss your needs for building a cask portfolio then please get in touch for an initial consultation and discussion of suitability.