In the first six months of this year, we’ve seen record lows in markets around the world. A microscopic virus created uncertainty that brought about a typhoon in the global economy, disrupting everything in its path. As the world seeks a new normal, investors are still dealing with the whiplash of violent market swings. This begs the question:
What can investors do to protect their wealth and still reap great returns?
It sounds like the kind of question you ask your friends over a dram of whisky. Ironically enough, the answer is in the glass.
What is Whisky Cask Investment?
When you visit your local watering hole, you expect to pay more for a 25-year-old dram of whisky than you do an 8-year-old dram. As whisky matures, it draws in more flavours and character from the cask before being bottled for your enjoyment. The unique flavour profile is only achieved through years of patience and commitment, which drives the price of whisky up.
Whisky officially becomes “whisky” at 3 years old but distilleries know they can stand to make a much better profit if they let the spirit mature for another decade or two. However, distilleries don’t always want to hold their own casks to maturation. If they need to make cash quickly or want to build up their brand, distilleries start to release young casks onto the secondary buyers market.
That’s where all types of investors can step in and take advantage of this lucrative opportunity. By purchasing and holding a full cask of whisky, investors can capitalise on the natural process of maturation. A traditional stock market investment can rise and fall in value with the market. However, an investment-grade whisky cask increases in value as it matures each additional year.
Why Invest in Whisky Casks?
Investors agree that when it comes to building a successful portfolio, diversification is key. What most investors leave out of the equation, however, is the diversification into tangible assets. Buying and holding a tangible asset as an investment means putting your cash in something with intrinsic value. Plenty of tangible investment options exist, from classic cars to fine art to precious metals.
What makes whisky casks a top choice for investors in 2020?
Naturally Appreciates in Value
Whisky casks increase in value through no other means than nature itself. As the spirit rests in its cask, the whisky mellows and transforms into a prestigious dram using only time and the wood of the cask. That’s why whisky casks are such a lucrative investment – the whisky naturally increases in value as the years pass.
Low Stock Market Correlation
Whisky’s demand isn’t tied to stock market performance. The stock markets can rise and fall for countless reasons, including political uncertainty and unexpected pandemics. Whisky casks still mature as normal through all those conditions. Plus, whisky casks can be bottled and sold no matter what’s happening in the world.
Blended Scotch whisky and the prolific spirits categories continue to rise in demand. In 2018, the categories experienced increases of 7.8% and 11.3%, respectively. While the demand for mature casks continues to surge, distilleries can only do so much. Whisky needs to age for years or even decades before encompassing the flavours that enthusiasts crave. Even if distilleries produce at full capacity today, the spirit won’t hit the market for years to come.
With the increase in demand, whisky casks have been emptied and bottled for consumption at higher rates. Once a mature cask is bottled, it can take decades to replace a spirit with that same quality. That’s great news for investors. Whisky casks can be sold at record prices because of dwindling supply and high demand for casks throughout the industry.
Not only is whisky a liquid asset in a literal sense but casks have much higher liquidity than other types of tangibles. Because whisky is in high demand and well-matured casks are becoming increasingly rare, casks sell quickly on secondary markets. Independent bottlers and blenders are constantly seeking out mature casks that their existing customer will enjoy. Even other investors are searching for the perfect cask to add to their portfolios.
Whisky is a spirit that is enjoyed across the globe. Don’t limit your enjoyment to just drinking this elite spirit. Become an investor and hold your very own unique cask from an iconic Scotland distillery. The natural maturation process combined with an increasing demand for aged casks creates a lucrative way for investors to safeguard their wealth from the violent swings of the stock market while reaping even higher returns. Next time you take a sip of the water of life, consider becoming part of the journey.