How to Invest in Whiskey
We talk a lot about finding the right investors for your distillery, but what about becoming the investor? Whiskey's popularity is at an all-time high. Rare whiskeys have increased in the value of 447% since 2010. It should be noted that past experience can't guarantee future performance, but there is a lot of hype worldwide thanks to traditional collectors and professional investors. If sinking your teeth into the market interests you, we’ve outlined popular investment choices.
Popular Ways to Invest in Whiskey
Maybe one of the trickiest, but there are opportunities to make it work. The concept is pretty straight forward. You must align with a proper group that can facilitate the ability for you to own the profit interests in a cask. You cannot directly own the cask unless you have a beverage alcohol license. Why is it worth it?
Barrels often age for about ten or more years. During that time the value of the whiskey will go up in price. But, as a profit interest holder, you are expected to pay storage costs during the aging process and mark-up on production. We mentioned they are tricky. Why? Well, it requires a lot of trust between yourself and the investment group.
Over the years, there have been fraudulent cask schemes. Working with someone from a consulting agency like Brindiamo Group can help you define the risk and reward to determine if it's a good value.
Buy Rare Whiskey
Buying rare bottles is an option if you want to invest. Bottles appreciate over time, and if you get one rare enough, you could see a considerable return. As previously mentioned, some have appreciated by 447%. Retailers and private collectors are purchase options. Once you start wading through the pool, you might notice the same names appearing as whiskey collectors. Some people have been in the game for so long they hold a corner in the market. But, options are out there.
Where should you start? Macallan, Glenlivet, and Highland Park are good Scotch brands to research. You might want to look into limited releases. Many brands issue limited edition bottles once a year. Getting your hands on a bottle might have a more significant impact than you think. Take Kentucky Owl. Their bottles have gone up 8% in value.
Buy Shares on the Stock Market
Businesses can opt for two stock options common or preferred. Common stock gives shareholders voting rights and more control over the business. Preferred stock does not come with appreciation or voting rights, but it has set payment criteria. Preferred stock is prioritized over common. A company that files for bankruptcy must pay out the preferred shareholders before common. If you take an interest in building a portfolio, we might suggest looking into companies like Diageo. They own 30% of the world's Scotch. Single-malt brands include Cardhu, Talisker, Mortlach and The Singleton. Diageo sells over 35 million barrels a year. Their market cap is $97 billion with a profit margin of around 23%.
Invest in a Whiskey Fund
Back in 2018, the first publicly traded whiskey fund was started in Sweden. It's a unique business model that gives you the chance to own a small portion of an extensive collection of rare or limited edition whiskeys, and the opportunity to buy single bottles. Five managers who make the selection heads the fund's portfolio. Don't get it confused with similar funds that allow you to invest in the whiskey companies like Spirited Funds/ETFMG Whiskey. Instead, you are putting money towards the liquid and not the brand. CEO and founder of the fund described it by saying "instead of gold, we buy liquid gold."
It's an alternative to buying rare bottles from collectors or at auctions. The fund is listed on the Nordic Growth market and will liquidate after six years. There is an expectation of seeing a 10% return. Keep in mind these funds have management fees and storage costs. Any bottles that go to an auction will have associated fees as well.
Tips for Investing
Learn the lingo
Whiskey has its own language. Get familiar with the terms. We've talked about whiskey before. You can use our post Different Types of Whiskeys as a guide. Plus, you can head over to our glossary page. It's a comprehensive list of terms that will be useful. Here is a brief recap of what you will hear:
Malt whiskey - whiskey produced from only malted barley.
Blended whiskey - a mixture of malt and other grain whiskeys.
Angel's Share - refers to the alcohol that evaporates while whiskey is maturing.
Know what you're drinking
Get familiar with your favorite type of whiskey. It will make the investment process a lot more enjoyable. Novices who are interested in learning more can seek out a knowledgeable bartender who can disperse relevant information about the different blends. Visiting distilleries and tasting products is a similar option. When you're tasting whiskey, try to avoid a tumbler. Opt for something like a whiskey nosing glass, a brandy snifter, or even a white wine glass. It gives you the chance to swirl the liquid and take in the vapors.
Whiskey Investment Opportunities
There has never been a better time to invest in whiskey. With all the hype and explosion in growth, investment opportunities are favorable. Expand your portfolio with the help of experts at Brindiamo Group. Visit our website to learn more information about our strategy and advisory services in the adult beverage industry.