In 2020, the Knight Frank Luxury Investment Index reported that the value of rare whiskey – including bourbon – had grown more than 560% in 10 years’ time, causing purchasers of fine wine, gold, and other stereotypical investments to do a double-take.
Unfortunately, for anyone interested in bourbon as a financial growth or business opportunity, dipping into the bourbon industry is anything but straightforward. Among the main reasons for this are the long-term costs needed long before the return, as it takes years for whiskey to age, not to mention most banks’ unwillingness to lend money for distillery startups.
While it is a rather multifaceted and complex process, it’s not impossible! In fact, you can choose to invest in bourbon in several ways:
- Consider Liquid Sourcing
- Buy By the Barrel
- Build Your Own Business, Brand
- It Boils Down to Networking
- Have a Cost-Free Conversation
Brindiamo Group sources bulk liquor and offers third-party consulting for our clients including financial solutions, beverage mergers and acquisitions, branding, and more.
Consider Liquid Sourcing
While you can always search for and acquire rare bourbon on your own – a risk in and of itself – the truest form of investing in liquid sourcing, and the most cost effective, is in a league of its own: buying in bulk. Why? Even if bourbon sells well by the bottle, the smaller the source, the quicker your stockpile will dry up.
Bringing in a steady supply of quality bourbon will be critical to your business or personal investment by ensuring you won’t run out, especially if the whiskey or bourbon you’re acquiring takes a number of years to mature. (The minimum is three years.)
Buy By the Barrel
Considered a longer-term investment, selling or purchasing barrels through a distillery is another way to muddle your way into the bourbon world. If purchasing from a distillery, a single barrel can cost $5,000 to $15,000 – and even higher – depending on the distillery, their particular bourbon, and how they will price the bottled product. According to Wave Financial, barrels can steadily appreciate three to five times their initial value in five years (a 20% rate of return for investors).
Young distilleries, especially, are often looking for investors to purchase barrels in order to lift their business and to bring awareness to their brand. For some investors, the benefit is not only the return on investment but also the exclusive barrel picks, or “bakes.”
Something to be wary of, however, is which distilleries you choose to invest in. In addition to the risks characteristic of the industry (like theft and bankruptcy), not all distilleries are created equal. For example, not every distillery will produce high-quality spirits, meaning you may not see the return on investment you might have hoped for. For this reason, it helps to have a bourbon expert in your corner before purchasing barrels.
Build Your Own Business, Brand
Another way you might decide to invest in bourbon is by jumping on the bandwagon – whether opening your own distillery or crafting your own brand. There is a lot of potential in opening a craft distillery, specifically.
Perhaps the initial downside, however, is that it takes an average of $3 to $5 million to open a distillery. Even when you know your investment can be profitable over time, several million dollars’ worth of startup costs can be intimidating.
When Bardstown Bourbon Company was first getting started and looking for the right investor for their business, they turned to Brindiamo Group. Contact us about helping you secure private equity or financing your business needs.
It Boils Down to Networking
When it comes to bourbon, there is one primary ingredient in your investment plan that you cannot afford to forget: networking. Perhaps even more important in the adult beverage industry (due to the roller coaster of the three-tier system and other stipulations), networking to secure your liquid sourcing or business partners bolsters your business investments long-term.
Brindiamo Group is in the perfect position to help. One of Brindiamo’s primary goals is to give our clients access to our global network of partnerships within the bourbon industry.
Have A Cost-Free Conversation
Want to learn more about what a partnership with Brindiamo Group could look like? It won’t cost you anything to have a conversation about how we can help your business. Contact us today!