How to invest in whisky and why it could be a good long-term bet (2024)

When stock markets plunge, investors flock to 'safe havens' to protect their wealth.

One such classic, gold, is up 21 per cent in the past year and hitting six-year highs, while the FTSE-100 is ahead just one per cent.

But can Scotland's own liquid gold, rare whisky, match the precious metal as an investment?

Few of us could afford a bottle of 1926 Macallan – two special editions sold for a total of £2million in auctions last year, setting new world records.

And you risk being stung by a Scotch scam. After tests this year, 21 supposedly rare old bottlings valued at £635,000 were found to be fakes.

But experts insist that the right collectable whiskies could be a better long-term bet than gold, wine, classic cars, or other alternatives to the stock market.

The figures are impressive. Rare whisky was up 40 per cent last year, ahead of coins (12 per cent), wine and art (both nine per cent) watches (five per cent), cars (two per cent) furniture (one per cent) and jewellery (minus-five per cent).

Over ten years, cars are up 258 per cent, coins 193 per cent, stamps 189 per cent, art 158 per cent and wine 147 per cent – but rare whisky claims growth of 582 per cent, according to the Knight Frank index.

The £848,750 paid at Bonhams in Edinburgh last October for an old malt was twice the £424,000 record for a fine French wine.

The £1.2million bottle knocked down a month later at Christie's in New York, also for a Macallan 1926 bottled in 1986, dwarfed the top price in 2017 of £95,000 for a 62-year-old Dalmore.

Almost 108,000 bottles of rare whisky were sold at auction in the UK last year, a rise of 29 per cent, and their value was up 63 per cent to £41million.

Even stripping out the two giant sales, the average price per bottle rose 21 per cent to £362.

Scotch whisky is booming. Exports reached a record £4.7billion last year, which is 20 per cent of all UK food and drink exports.

Three new distilleries – Borders in Hawick, Roxburghshire; Toulvaddie in Tain, Ross-shire; and Falkirk, in Stirlingshire – opened in 2018. Edinburgh's first new distillery for 100 years, Holyrood Park, opened its doors last week.

Diageo plans to reopen two closed distilleries, Port Ellen on Islay and Brora in Sutherland, which have acquired cult status among whisky investors.

In 2017 a bottle of the Port Ellen 12-year-old Queen's Visit 1980 (issued to only 40 staff to mark the visit) attracted 50 bids in an online auction held by Whisky Auctioneer and made £50,000 – four times the record for a bottle.

Andy Simpson, co-founder of Rare Whisky 101, said: 'The key to rare whisky's sustained growth as an asset class is the passion buyers worldwide share for investing, collecting and occasionally drinking some of the best and rarest Scotch whisky ever made.'

But before raising a glass to a winner, check what your outlay might be. It is at the top end where big growth has arisen.

Auction sales of bottles valued at more than £10,000 have multiplied 12 times since 2014 and they are driving the market. Specialist investment has its pitfalls, in this case with distilleries rising and falling in buyer fashion.

Experts warn that the secondary whisky market is still relatively young, and isolated high prices can distort the statistics and trends. Investors need to focus on attractive marques and research their detailed history.

Glenmorangie, for instance, saw its old whiskies crash by up to 50 per cent in 2010, prompting questions over a 'bubble' in today's highest-priced marques.

Rare Whisky 101's Macallan Exceptional Single Cask Index, benchmarked at 100 in April last year, had fallen to 55 by the end of April this year.

A year ago, when Macallan Genesis was created to mark the opening of the £140million distillery in Craigellachie, Moray, investors camped overnight in their quest for one of a reported 360 bottles released on site.

The lucky few paid £495 and within a fortnight the bottles were fetching close to £5,000 on auction websites, only to fall to £1,500 over the next few months.

Dr Chris White, auctioneer at Royal Mile Whisky Auctions in Edinburgh, said there can be 'an initial spike when it's a hot, sexy new bottle coming onto the secondary market'.

His firm will not auction any new release in its first 12 months, to deter instant sellers known as 'flippers'.

A Chinese investor got less than he bargained for after persuading a Swiss hotel owner to open a 140-year-old Macallan single malt worth £265,000, and serve him a dram costing £7,810.

S ocial media got interested, and it turned out to be a fake – a blended whisky no more than 45 years old. This week, however, came news of an artificial 'tongue' that could help fight the fakes.

Engineers from Glasgow and Strathclyde universities tested it on seven whiskies including Glenfiddich, Glen Marnoch and Laphroaig and distinguished between the drinks with a 99 per cent accuracy – including the same whisky aged for 12, 15 and 18 years.

Jim Murray, who compiles the Whisky Bible, laments the fact rare whiskies are now hoarded, not drunk, and said most are 'out of reach' of the ordinary investor.

His bible's 'top picks' assume whisky is for drinking – and his first choice is not Scotch but a £150 bottle of Kentucky Bourbon.

His runner-up, however, is an 18-year-old Glen Grant single malt from Speyside, priced – when available – at £100.

Mr Simpson insisted that growing worldwide demand and the wave of new distilleries make him 'confident that the right bottles from the right distilleries will continue to offer a strong investment proposition'.

Anyone starting down the whisky trail needs to become their own expert. Useful websites include brokerages Whisky Online and Rare Whisky 101, industry sites such as scotchwhisky.com, Whisky Advocate, The Spirits Business and the eight times a year magazine www.whiskymag.com.