The CEO and co-founder of the Singapore-based Whisky Cask Club, which specializes in the investment of entire whisky casks, is optimistic about the value of this alternative investment.
Whisky is among the most profitable investments when it comes to pursuing your interests. As an alternative asset class with proven high yearly returns, whisky collectors have effectively integrated their hobbies into their portfolios over the last several years.
The profitable liquid is useful in every manner. It increases in value over time and offers several exit possibilities (such as the secondary market, auctions, and bottling). According to the Knight Frank Luxury Investment Index 2022, its performance will increase within a decade.
Whisky investing serves as a natural inflation hedge
Alexander Knight, CEO, and co-founder of the Singapore-based Whisky Cask Club, which specializes in the investment of entire whisky casks, explains that whisky casks provide the ideal opportunity for whisky collectors and those seeking to profit from this age-old asset class to combine business and pleasure.
Alternative assets, such as whisky, which have a minimal link to the success of regular markets, should comprise at least 20% of a portfolio as a natural inflation hedge, according to him. In times of inflation, asset preservation is crucial.
“Whisky casks have exceptional annual growth. Clients can choose barrels of their favourite brands and buy them directly from us at the Whisky Cask Club.” Moreover, he said that as a Singaporean firm with headquarters in the Central Business District, they can host tastings many times every month. In addition, he can discuss in person with investors what they are seeking and their budgetary constraints.
Knight, who entered the industry during the epidemic, observes that the majority of customers in Asia desire on-the-ground knowledge, and having a location in Singapore allows them to drop by for a discussion over a drama.
Investing in casks is superior to bottles for the long term
Citing that all single malt Scotch is investment grade, thus their focus on these particular whisky expressions, the company has also made sure to develop fully insured bonded warehousing facilities in Scotland. That’s where the physical casks are looked after, and where investors can visit in-person.
For long-term investment, Knight believes investing in casks is superior to bottles. “Risk is reduced without needing personal storage, insurance, and shipping. The aging liquid guarantees increased returns, whereas the brand popularity bottles rely on can vary. The bonded warehouses overseeing the casks guarantee the liquid will remain safe and continue to deepen in flavor. With age, the profit a barrel will yield can be easily calculated.”
He recommends holding on to them for five to 10 years, during which they will typically double or even triple in value. “The beauty of this is that the barrels are fully insured and well looked after by whisky experts, meaning that it is the best possible environment for them to appreciate,” adds Knight.
Just last month, the Club also launched the Whisky Cask Fund, the only fund of its kind to be regulated by the Monetary Authority of Singapore (MAS), which allows accredited investors (based on definitions by MAS) a unique vehicle to invest in premium whisky casks at competitive rates. A minimum investment sum of US$50,000 (about S$70,000) is also required.
“We decided in February this year that some sort of fund would be an additional feather in the Whisky Cask Club’s hat as it brings an alternative investment asset class to those who want the comfort of a regulated entity that holds the casks,” explains Knight.
“The fund allows us to create greater profits from actively trading casks. The business is highly liquid. 22 million barrels of whisky are aging in Scotland now and 44 bottles are exported from Scotland every second of the day. This means that there is virtually unlimited scope for cask trading.”
The growth of whisky investing
A further draw of whisky investment is how straightforward it may be to comprehend. Knight cites the imbalance between supply and demand as one of the most enticing features of the whisky industry. The best-performing whiskies include Macallan, Dalmore, Craigellachie, and GlenAllachie, as would be anticipated. Even though Macallan casks are scarce than gold dust.”
As evidence of the advantages of investing in whisky, he cites its present tremendous worldwide boom in demand, particularly in Asia, where sales of spirits are breaking new records. China and India are fast expanding markets for all alcoholic beverages, but Scotch whisky reigns supreme.
Knight remarks, “It’s extremely simple. Mark Twain, the legendary American author, and satire, stated it best: “Too much of everything is terrible, but too much fine whisky is barely enough.”