The sky’s the limit when it comes to the price of the rarest casks of liquid gold. In 2019 a 30-year old cask of The Maccallan was sold by Bonhmans in Hong Kong at auction for $572,000, an eye-popping amount for an ex-sherry hogshead of single malt. These ‘super sales’ are just a symptom of a market that is booming, with casks of rare single malt becoming one of the most coveted assets for investors looking to protect their wealth in a volatile market.
There is an enormous range of casks available to investors at diverse prices. From simple, New Make Casks from lesser known distilleries, available from as little as £2000, to highly prized, decades-old Blue-Chip casks from renowned distilleries that can easily fetch six-figure prices.
But, as in all markets, price is a complex determination of value based on both subjective and objective factors. So, what makes some casks worth more than others?
Whisky Economics 101
Before the great whisky boom of the 1980s, Scotland’s distilleries often struggled to make ends meet due to the economic challenges of manufacturing a product that takes years to come to market. Releasing casks for sale was a good way to generate the income they needed for their day-to-day operations. However, as whisky started to become the tipple of choice in a growing economy, stock began to struggle to keep up with demand and it was no longer in the distilleries’ interest to sell their casks on the open market.
The Macallan, which many regard as Scotland’s premier whisky brand, stopped releasing its casks at the end of the 1990s. They were soon followed by other prestigious distilleries like Dalmore and Laphroaig, who decided to hold on to their precious stock. Consequently, the most prized casks were soon all in the hands of private collectors, making them extremely rare, and therefore significantly more valuable.
There is now a finite amount of premium whisky casks sitting in warehouses throughout Scotland, and every time one of them is bottled, there are even fewer. Eventually, there won’t be any left at all on the private market. This inherent rarity is priced into the value of every older cask, making them one of the most tantalizing and exciting investment opportunities available anywhere.
As we can see in the figures from the latest Whisky Cask Market Overview, investors are increasingly aware of the scarcity and value of whisky casks from the top distilleries, which continue to perform at a rate unmatched by any other traditional asset.
It’s All About the Brand
As Scotch whisky continued its conquest of global markets, and large corporations began to snap up distilleries, the importance of the brand became a determining factor in the price of casks. Building a successful whisky brand is a long, and often expensive, process. Brands that have built a reputation will jealously guard their stock and protect their brand by ensuring that all the liquid from their casks ends up in their own bottles. Often, that doesn’t mean the whisky is better (in fact, at Braeburn we have identified the investment potential of many lesser known brands); it does mean, however, that the big Speyside, Islay or Island whiskies have that intangible brand value that translates into higher prices. Here, The Macallan is king: a whisky brand owned by the spirits giant Edrington, which resonates worldwide.
What Determines The Value Of A Cask?
- Age. As the spirit needs to mature in the cask for a minimum of three years, even the youngest casks on the market already store value. However, this value increases exponentially with every year that the spirit remains in the cask. It’s calculated that the value of a whisky cask doubles every 5 years. When casks reach 15 years, their value tends to accelerate even more quickly.
- Supply. Whisky casks respond to the classic dynamic of market-driven growth: demand outstrips supply. Put simply, there is not enough whisky produced in Scotland to quench the thirst of an increasingly global market. This situation has a significant impact at the beginning of the value chain: the casks that will eventually end up in bottles around the world.
- Origen. Perhaps the most important factor is where the cask comes from. Like wine with its terroir, whisky is a product that is intimately connected to the land that produces it. Scotland currently has around 300 distilleries producing the golden liquid, each of them defined by their own history and whisky making traditions. Inevitably, when talking about a manufacturing process that mixes industrial know-how with artisan techniques, some of these distilleries have built stronger reputations than others. As in all free markets, there are ‘winners’: those are the distilleries that have built a reputation for excellence. Their casks are sold at a premium.
- Rarity. Not all casks are created equal. It’s commonly said that without wood, there would be no whisky, which is another way of saying that the cask is the secret to the spirit inside. During the early years of the 19th Century huge amounts of sherry was imported from Spain in wooden casks. One day a distiller decided to recycle one of those casks to mature his spirit and, almost accidentally, he created the perfect whisky. Nowadays distilleries struggle to secure enough ex-sherry casks to create their distinctive spirit, even going so far as manufacturing and treating their own Sherry Casks in Jerez, Spain. There are many different casks available, but a good rule of thumb is that those that once contained sherry are more valuable.
How Can I Get My Hands On A Rare Cask?
Luckily, there are still ways to get your hands on the rarest of casks. Braeburn Whisky has a unique approach in the world of whisky cask investment: instead of making deals with smaller distilleries to market their casks, we focus exclusively on the dynamic secondary cask market, using our unparalleled contacts and a propriety algorithm to access a wide range of casks from private investors, including some of the rarest and most highly prized casks on the market.
And, every now and then, we are privileged to help an investor purchase the gold standard of whisky casks: a Macallan.
Download the 2021 Whisky Cask Investment Guide to discover more about the keys to whisky investment.