Looking into an alternative investment? Headquartered in Edinburgh and Singapore, and now with a strong presence in Hong Kong, Whisky Cask Club is a platform that connects whisky enthusiasts and investors to exclusive casks. Founder ALEXANDER KNIGHT tells us more about how to buy a whisky cask.
Why is whisky a good alternative investment option?
Whisky is a great alternative investment choice for a few reasons. As it ages, it often becomes more valuable, just like a fine wine. You’ve probably noticed that older bottles cost more at the store. The best part? Whisky gets better on its own, without you having to do anything!
The whisky market isn’t as volatile as stocks, bonds or cryptocurrencies. People enjoy whisky in both good times and bad, and the growing middle class in Asia is especially driving demand for Scottish whisky, which is considered top-notch. You don’t need to be a whisky expert to start investing. But understanding how the process works can definitely help you make informed decisions.
How different are the returns on buying whisky casks compared to bottles?
Bottles and casks are different investments. Bottles have a fixed age. For example, a 10-year-old Laphroaig will always be 10 years old. But whisky casks keep ageing until they’re bottled. Casks are stored in warehouses and sold to bottlers or blenders. Bottles are yours to keep and sell later to collectors or investors. Finding a buyer for a bottle can take time, and the market for bottles can be tricky to understand.
So, while bottle investments can be interesting, we focus on casks because they’re easier to invest in and often offer more potential for value growth.
Can you explain the process and how to buy a whisky cask with help from the Whisky Cask Club?
We’ll guide you through the entire investment process. To select the perfect cask, we’ll need to understand your budget, how long you want to invest, and your comfort level with risk. This information will help us determine the starting price, type of whisky, age and potential return.
Our online members area is your go-to placefor tracking your investment’s performance andstaying up-to-date on exclusive offers and events. When you’re ready to sell, we’ll leverage our network of bottlers and blenders to get you the best possible price for your whisky cask.
Is there a minimum investment period?
There’s no minimum investment period, and you can sell your cask whenever you want. However, we recommend holding it for at least five to 10 years to maximise your return.
What are the main risks?
Whisky is a relatively safe investment compared to many other options. The demand for quality whisky continues to grow steadily, while the supply of casks remains limited. This imbalance between supply and demand often leads to price appreciation. However, it’s important to note that investing in Scottish whisky involves some currency risk. All transactions are conducted in British pounds sterling. This means that if the value of the pound falls relative to your local currency,your returns may be reduced.
Despite this currency risk, whisky’s long-term prospects remain positive due to its growing popularity and limited supply. For those seeking a relatively safe and potentially rewarding investment, whisky can be a compelling option.
What are some reasons your members start exploring an alternative investment in whisky?
One common motivation is the desire to diversify their investments in a volatile and inflationary market. Unlike broader markets that can be impacted by macroeconomic trends, the niche whisky market offers a degree of insulation
while still providing opportunities for growth. Another growing trend is parents investing in whisky casks for their children’s future. This approach can be seen as a unique way to save for education or other significant life events.
Historical data suggests that whisky cask investments have outperformed traditional savings and investment funds over the long term, with average annual returns ranging from 12 percent to 18 percent over five to 10 years.
What would you say to someone starting to seriously look into whisky cask investments?
The most important thing when considering a whisky cask investment is to understand the various options available and the factors that influence potential returns. While Laphroaig whiskies often perform well, they can be relatively expensive. New-make casks, on the other hand, are generally more affordable but may take longer to appreciate in value. Your budget and desired holding period are crucial factors to consider. Whisky typically performs best when held for eight to 10 years, and most casks come with an initial purchase pricethat includes five years of storage and insurance.
By carefully evaluating these factors, you can make an informed decision about which whisky cask investment aligns with your financial goals and risk tolerance.
What are your favourite whiskies and what is a whisky you would dream of having in your portfolio?
As a dedicated fan of Aberlour and Speyside whiskies, I’ve cultivated a portfolio that’s heavily weighted towards new-make casks. While some might find this unconventional, my long-term perspective allows me to embrace the patient approach required for these alternative investments.
New-make casks, filled with freshly distilled spirit, offer a unique opportunity to watch as the whisky develops over time. It’s a fascinating journey, filled with anticipation and the promise of future rewards. Speyside, with its abundance of distilleries and diverse range of flavours, has a special place in my heart. The region’s combination of rich history and modern innovation continues to captivate whisky enthusiasts worldwide.
As Mark Twain aptly observed, “Too much of anything is bad, but too much good whisky is barely enough.” While I may have a particular fondness for Aberlour and Speyside, I believe that the key to successful whisky investing lies in finding the right balance between passion and patience.
Five interesting facts about Scottish whisky
#1 The Angel’s Share
A portion of whisky evaporates during the maturation process. This loss, known as the “Angel’s Share”, is a natural part of the ageing process and contributes to the unique character of the final product.
#2 The influence of casks
The type of cask used for maturation can dramatically impact the flavour profile of a whisky. Ex-bourbon, ex-sherry and ex-wine casks all impart distinct characteristics, from sweet vanilla notes to spicy complexity.
#3 The single malt myth
While single malt whiskies are highly prized, it’s important to note that they aren’t always produced from a single cask. Blending from multiple casks is often used to achieve a consistent flavour profile.
#4 The role of water
The quality of the water used in the whisky making process plays a crucial role. Scottish distilleries often source their water from natural springs or reservoirs, which can contribute to the unique character of their products.
#5 The Scotch Whisky Act
This 1887 law defines Scotch whisky and sets out the specific requirements for its production. To be classified as Scotch, whisky must be made in Scotland from malted barley, distilled in pot stills, and aged in oak casks for at least three years.
Want to know more about how to buy a whisky cask in Hong Kong? Visit whiskycaskclub.com.
This article about making an alternative investment by buying a whisky cask in Hong Kong first appeared in the Autumn 2024 issue of Expat Living magazine. Subscribe now so you never miss an issue!
