Frequently asked questions about whisky cask investments

We're often asked questions about whisky cask investments. It's a topic a lot of people are, understandably, curious about. In this article we thought we'd cover 10 frequently asked questions about whisky cask investments.

1: Is investing in whisky casks a rewarding venture?

Investing in whisky casks can be a fascinating and rewarding experience. But, you need to be careful, do your research, and understand the risks as well as the benefits - some of which we cover in the following questions.

2: Can I invest in whisky casks as part of a diversified portfolio?

Yes, whisky cask investments can be part of a diversified portfolio. Make sure you understand the risks, and avoid over-committing, as with any other part of your portfolio.

3: What factors should I consider before investing in whisky casks?

Before making any investment, you should reflect carefully. Here is a non-exhaustive list of things you should consider:

• Do you understand whisky, and how familiar are you with the whisky cask market?
• What kind of whisky cask do you want to buy?
• Where are you going to buy the whisky cask, and have you done your due diligence on the seller?
• How much money can you keep locked in whisky casks for a decent period of time (several years, ideally five or more)?
• Can you afford to lose the money, worst case, without it being overly detrimental to your finances?
• Have you done the sums, factoring in fees, costs, and evaporation?

4: How do I buy whisky casks for investment purposes?

There are a few ways you could buy a whisky cask. You could buy a cask directly from a distillery through a cask scheme. You could buy a cask from a cask broker who specialises in buying and selling whisky casks. Or you could buy from a private whisky cask owner. 

However you buy a whisky cask, make sure you do your homework, check the seller is reputable, and ask for all the paperwork.

5: What are the risks associated with investing in whisky casks?

Like any investment, there are risks you need to be aware of. These include:

• Future value is not guaranteed and you may get back less than you put in
• Over time, a small amount of whisky will evaporate. This is a natural part of the ageing process and is known as the angels' share. However, you need to recognise that, over the years, the volume of liquid in the cask will decrease.
• Whisky has to be a minimum of 40% ABV, if evaporation is severe and left unmonitored, there is a risk the cask could dip below 40%
• Wooden casks can sometimes fail, with cracks and leaks developing. Left unchecked, these can reduce the volume of whisky in the cask.
• It is possible to 'overage' a whisky, creating something that is too woody with undesirable characteristics. 

6: Are there specific types or brands of whisky casks that are better for investment?

There's an incredible array of different whisky brands and casks, many of which make good purchases. There's no single answer to what's best, as it will vary depending on budget. But here are a few variables to consider:

• A well-known distillery may be better than a lesser-known distillery. 
• A cask which includes naming rights may be better than a cask sold without naming rights
• Medium to high ABV may be better than lower ABV (noting the legal minimum for whisky is 40%)

7: What storage conditions are necessary to maintain the value of whisky casks?

Casks have to be kept in a government-regulated bonded warehouse. Scotch whisky must be kept in warehouses in Scotland. Whisky cask warehouses should be secure and adequately set up with proper racking to keep the casks safe. Insurance can be taken out to protect the cask while it ages.

8: Are there any reputable brokers or platforms for investing in whisky casks?

Yes, there are. It's worth doing research and checking the likes of customer reviews. We, Spiritfilled, are a cask broker.

9: Are there any industry trends or market dynamics that could affect the value of whisky cask investments?

Yes, there are a number of trends that could affect the value of the whisky casks - largely centred around supply and demand. These include

• Overall supply and demand of whisky casks in the market
• Overall performance of whisky as a category
• Specific trends and interests (for example, popular distilleries or styles)
• Tax and regulation
• Role of industry players, such as independent bottlers

The other important factor that whisky has in its favour is the fact that it will age and improve over time. This works independently of other market forces and means the whisky inherently improves over time. This can positively influence its value.

10: What role does the age and rarity of a whisky cask play in its investment potential?

Age and rarity can both play a part in a whisky cask's investment potential. 

Generally speaking, the older the cask becomes the more valuable it is. This can be particularly true around milestone birthdays, for example, 3 years, 12 years, 18 years, etc. One just needs to monitor a cask over time to ensure: there are no leaks; evaporation is in line with normal expectations; the ABV doesn't dip too low; and, of course, flavour is improving.

Rarity can be a good thing. Interesting casks will be easier to build a sales pitch around. However, it is worth remembering that it may not be as simple as rare = super valuable. An esoteric distillery, for example, may not command the same premium as a famous distillery. If in doubt about the potential of a cask, as a reputable cask broker how similar casks are currently performing.

Whisky cask investments with Spiritfilled

If you’d like help exploring whisky cask investments further, we’d be pleased to help. We help clients around the world buy and sell whisky casks every day. We’ve written a free guide to whisky cask investments which you might find interesting - get your copy here. And, if you’d like to speak with one of our whisky cask experts further, contact us here today.