A whisky barrel is a lucrative investment opportunity. We have firsthand experience with this, having helped clients liquidate millions of pounds worth of cask so they could get out of the business.
After owning their barrels for five to twenty years, our customers often see a return of eight thousand to one hundred and fifty thousand pounds when they decide to sell. All of these portfolios began with the purchase of a young cask of single malt whisky, which typically cost less than £1,500. (purchased in the early 1990s and 2000s).
Don’t worry! Let’s go through the seven easy steps you may take to make the best possible selection when purchasing a whisky.
1. True or False – Is this some sort of sales pitch?
Many businesses care primarily about their bottom line and just marginally about maintaining and growing their consumer base. So, you may discover that most whisky businesses’ so-called “investment tips” seem more like a sales pitch than actual advice.
Do they, for instance, extol the benefits of investing in casks without mentioning any drawbacks? If a business advertises that you may bottle your cask after 10 years without disclosing the associated fees, they are engaging in deceptive business practice.
We think it’s important for you to have all the information possible before making any financial decisions. For this reason, we will provide in-depth and objective details regarding the rewarding experience of cask ownership.
There are unavoidable drawbacks, and we don’t ignore them. To avoid buying a cask based on “false news,” we’d rather you have all the facts and decide not to buy one. Our primary focus is as brokers. We aim to inform those considering buying a cask that they are making a good investment.
2. Happy clients? – Does the business have positive and valid feedback?
We take great pride in the quality of our customer service at Mark Littler LTD since our clients are the reason for our existence. As of this writing, 190 of our customers have given us five stars on Google Reviews (updated June 2020). On Facebook, we have 84 five-star ratings, and on Yelp, we have 85. Over here, we value honesty above anything else. Still, some businesses don’t.
Businesses do not often provide financial incentives to customers who provide favorable feedback about the company online. Most of the time, there will be no reliable reviews of these businesses online.
Fake reviews frequently come from anonymous accounts or those with generic profile names and no visible profile pictures or review history. Reviews that have been paid for are sometimes completely unrelated to the firm, reviewing something completely else, or are extremely general, such as “Great customer service!” We appreciate it. The dates of the reviews will be comparable.
Keep an eye out for these indicators to know you’re dealing with a reputable business that cares about its clients.
3. 20% Annual Return? Easy to trick yourself.
When considering a purchase, most people will believe the seller at face value if they claim that the item comes with a bonus or benefit. This is the “you are the simplest person to mislead” idea, which Richard Feynman elaborated on.
In response to the search query “Buying a cask of whisky,” the top sponsored result boasts, “Average Returns 20%+ Per Annum” (last checked June 2020). You can’t believe everything you read online; these returns are unrealistic, given their referencing periods.
Whisk does not increase in value yearly. You won’t be able to access the funds in your cask annually as it accumulates value in a storage facility.
Second, whisky barrels are a good way to build wealth over time. If you purchase a young whisky barrel, you won’t be able to sell it for a profit until it has aged for several years.
Thirdly, why aren’t they just getting a 5% interest rate on a small company loan and pocketing the money if possible? Or, to put it another way, why don’t pension funds and financial corporations make substantial investments in casks?
Although it is possible to earn a quick profit by investing in an older cask, doing so has a considerably higher level of risk. You stand just as much to lose the value of your barrel due to excessive evaporation and a decrease in ABV, especially if you overpay. The greatest method to make money is to invest for the long term, but I’m afraid you’ll have to be patient.
Do some research on the firm and ask for proof of the claims they are making if they promise you incredible annual returns. Don’t bother with them if they can’t give you any!
4. Buying high and selling cheap — wait, what? – Is the price of the cask too high?
We adhere to the motto “Buy Young, Sell Old” while selecting casks for purchase. Buying a young cask at the correct price will net you a better return in the future than paying too much for the same cask. Since casks have a short lifespan and an uneven market, this is much more crucial than usual.
But how can you know that your first offer is fair?
The market for whisky barrels is asymmetric, meaning buyers often have far less information than sellers about the goods offered. This is why spending too much for a whisky cask is simple.
The internet is a tremendously egalitarian instrument, leading to a more level playing field in most retail sectors. Nowadays, a Google search is all it takes to learn a product’s worth. For instance: Used-car prices may be determined with the help of an Auto Trader. You may find information about a fund’s worth via Morningstar. Zoopla is a great resource for determining how much a house is worth.
However, whisky barrels are not suitable for this purpose. Since the worth of whisky barrels is subject to many variables, there is no publicly available information. This highlights the need to ensure that the firm you’re purchasing the cask from is reputable and offering you a reasonable price.
We can provide impartial pricing for any whisky barrel you consider purchasing or selling. We’ve also developed a method for you to easily determine how your cask measures up against similar bottles. It is difficult to compare the cost of a cask to that of a bottle because of the additional taxes that must be paid. To help you determine the value of a cask on your own, we have developed a cask calculator that will add up all the standard costs associated with your cask to provide you with a per-bottle price.
5. Do some investigating: how reliable is the business?
Look up the names of the company’s directors and the phrase “scam” and see what comes up. There’s a chance that what you uncover may shock you.
You may look up a firm here to see whether it has suddenly appeared or is registered. This resource will help you determine whether or not the vendor you’re thinking about doing business with is real.
6. Is the company a revenue trader?
Whisky barrel trading is illegal without the proper permits.
Without a Whisky Oak Whisky Grape Report (WOWGR), it is illegal to exchange whisky barrels (Warehousekeepers and Owners of Warehoused Goods Regulations certificate). Excise Notice 196 provides the following description of a revenue dealer (someone who requires a WOWGR): “any person engaged in the purchasing, selling, importing, exporting, dealing in, or handling of excise items, or in the financing or facilitation of any such transactions or operations.”
Owning a whisky cask and reselling it for a profit is possible, but frequent trading in whisky barrels is prohibited. HMRC can seize your barrels and press charges if they learn you’re involved in the trade.
A corporation is misleading if it says you may deal in whisky casks without the proper permits. The question that follows is whether or not you can have faith in a corporation that is willing to risk your money.
However, this is not to argue that having more than one barrel is not satisfying, profitable, or even lawful. Rather, you should familiarise yourself with the regulations concerning their ownership.