The 2020 Whisky Cask Market Overview delivers positive news for investors.
Over the last five years investors have been facing increasingly choppy waters. Market volatility, fluctuating returns on traditional asset classes and low interest rates caused by global monetary policy have all led to some unexpected challenges for wealth management. That’s without even mentioning the unprecedented impact of a global pandemic on the world economy. However, it’s not all bad news.
The recently released Whisky Cask Market Overview has reported robust annual growth and a steady upward trajectory for whisky cask investment, proving that, when it comes to investment in an uncertain global market, whisky casks represent an exceptional opportunity to successfully navigate the currents.
Here are some of the key takeaways we’ve found in this year’s report.
Robust annual capital growth of 13.09%.
Since January 2019, the projected average annual capital growth rate of whisky casks has risen by a healthy 2% to 13.09%. Not only does the Whisky Cask Market Overview show steady growth, but the rate at which casks appreciate annually is rising. According to the report, one of the main reasons behind this continuing spike is the investment ‘sweet spot’ offered by the unique characteristic of whisky casks, which offer dual channels of appreciation (the value gain offered by liquid maturation combined with the highly positive supply vs. demand dynamic).
Strong performance compared to other assets.
The report highlights the competitive opportunities of whisky cask investments compared to both tangible assets and the S&P 500 index. An analysis of returns from January 2018 – April 2020 shows that whisky casks significantly outpaced stocks as well as outperforming other tangible asset classes like gold, or alternative investments such as Bitcoin.
Top distilleries highlighted.
The Whisky Cask Market Overview gives us an opportunity to survey the performance of the best performing distilleries in terms of client interest and trade on secondary markets. According to the period from July 2019 – June 2020, casks from the Highland Park and Caol Ila distilleries took up more than 40% of sales between them. In terms of capital growth, the distilleries with stand-out performances include Laphroaig, Bunnahabhain, Staoisha and The Maccallan, which all show projected returns approaching 20% per annum. If growth continues at a comparable rate, investors selecting casks in the top ten distilleries on the BC20 index can expect to double their investment over the next five years.
Choosing your cask.
The Whisky Cask Market Overview also offers us some interesting insights to help investors when selecting the right casks. As expected, the report shows that older casks offer spectacular year-on-year returns. However, it also highlights that the largest percentage increase in value is offered by younger casks, which represent a more affordable investment option than casks at the end of their lifespan. In regard to cask types, sherry casks continue to offer the best returns due to their rarity and high value for connoisseurs. However, ex-bourbon casks are experiencing solid growth with age and may prove a more affordable investment option when starting a portfolio.
The future looks bright.
Where to next? The Whisky Cask Market Overview offers us some possible answers. Given the relative infancy of the cask market, the report identifies much scope for growth. The current interest in whisky investment is set to grow further as more private individuals start bottling their own whisky and more independent producers move into the market. Other possible areas to look to in future that are mentioned in the report include the emergence of the undervalued grain whisky market.
Overall, the Whisky Cask Market Overview underlines something of which savvy investors have become increasingly aware: due to the special characteristics of whisky casks, which appreciate exponentially as the liquid matures in the cask, this asset offers a clear complement to stocks, bonds and alternative assets for well-balanced investor portfolios. As a store of wealth and a growth opportunity, casks have outperformed most major asset classes, while providing robust performance in both rising and falling markets.
Daniel Campi is a journalist and published author based in Barcelona