Whisky FAQs
Our most commonly asked questions, answered by our experts
Why is Whisky so popular among investors?
Whisky has proved itself to be an excellent alternative investment. As a tangible asset, it offers more financial security than stocks and shares and the nature of whisky means that it rises in value as it matures. Historically, Scotch Whisky has delivered returns of 15% pa over the last decade and whisky casks are amongst the safest and most secure assets you can hold.
What is Whisky Investment?
Whisky investment is the purchasing of rare whisky, either in bottles or casks, for the purpose of selling it on at a later date for a financial profit.
Why buy Whisky?
Until recently, cask whisky was difficult to purchase. So, unlike equities and bonds, it’s not a ‘crowded trade’. Buying tangible assets gives you more financial security as products can’t go bust like organisations can. It makes buying a cask of whisky a much more attractive option.
What is a cask?
A cask is the wood that whisky is stored in while it matures and it plays a critical role in developing flavours. Casks can come in all different sizes and wood types, but the most common type used for whisky is a 200l ex-bourbon barrel that was originally used to mature American Bourbon. However, whisky is regularly matured in other types of casks including sherry, wine and tequila, all of which bring their own flavours to the spirit.
Why purchase casks over bottles?
Whisky is unlike many stored goods – it develops and increases in value as it ages in the cask. Purchasing casks instead of bottles is a specialist approach. But, it’s much more profitable in the long term. Unlike wine, whisky doesn’t mature in the bottle. Once Scotch Whisky is bottled, there will be no change in its flavour. The age statement on the bottle refers to the amount of time it has spent maturing in the cask. Its ‘age’ doesn’t change even if the bottle is kept for decades. A 10-year-old whisky will always be a 10-year-old whisky once bottled. Generally, the longer that you leave the whisky in the cask, the higher quality it will be. So, older whiskies command higher prices. Purchasing casks means you are receiving a product that will improve and develop over time. Also, tax on whisky in the bottle is much higher per LPA, (which stands for Litre of Pure Alcohol – the measure used by the whisky industry to account for the alcoholic content of a spirit), than on spirit in the cask. There is no duty charged on the whisky as it’s maturing in a bonded warehouse either, which makes it very tax efficient.
Is my cask insured?
Yes, your casks are fully insured from the start of your ownership. Our premiums are adjusted annually to allow for the rise in value of each cask, ensuring each and every cask has the appropriate level of cover. The insurance covers damage (including accidental damage), full loss and theft and we give you insurance prepaid for a term.
How do I know I actually own a whisky cask?
Once you have bought a cask from us, you are entering into a sales and purchase agreement, just like any online purchase, like buying something from Amazon and at this point, you will receive a receipt confirming your purchase and all of the information about cask storage and insurance. You will be given a certificate of ownership which will include your unique cask number that relates to the exact distillery where the cask is stored, along with the technical information about your cask. This will include the wood type, the distillery of origin, the spirit name inside the cask and an ABV (alcohol by volume) as a minimum.
Can I go and get my whisky cask whenever I like?
You can remove your cask from the bonded warehouse whenever you like. However, it’s important to remember that you will be liable for any customs and excise duty and VAT due from that point onwards.
Why consider whisky cask investment with Highland Cask Group Limited?
We recommend taking your time to thoroughly research whisky cask investment. While it holds the potential for attractive returns, it’s important to note that whisky investment is an unregulated market and is considered high risk. Highland Cask Group Limited specialises in providing valuable insights, transparent information, and guidance for a successful medium to long-term investment.
What should I be aware of in the whisky investment market?
Understanding the risks is crucial. The market is unregulated, and success hinges on careful decision-making. Be wary of unrealistic return rates; the Advertising Standards Authority (ASA) is actively clamping down on such claims.
What factors should I consider before buying a cask?
Before purchasing a cask, ensure you fully comprehend, associated costs (insurance, storage, admin fees). It is advisable to avoid companies based outside the UK, those lacking a WOWGR license, and sellers without realistic exit strategies.
What are potential red flags in the whisky cask investment market?
Steer clear of companies without a WOWGR license and those promoting unrealistic exit strategies such as selling casks back to distilleries. Be cautious of references to the Knight Frank whisky index, as it pertains only to rare bottles, not casks. Avoid anyone using retail bottle prices to calculate future cask values.
How do I evaluate a whisky investment company's credibility?
Look for companies that deal with both independent bottlers and investors. Consider the entire supply chain, from the consumer to the investor, and assess the viability of the exit strategy. Remember that whisky is made to be enjoyed, and a comprehensive approach to pricing and market dynamics is essential for a successful investment.
Please note that these FAQs are intended to guide your understanding, and we encourage further due diligence and consultation before making any investment decisions.
