We have been crucial in educating customers on the mechanics of cask ownership for over two years. Specifically, the necessity of getting a delivery order has been emphasized.
The only means to transfer cask ownership at the warehouse level is for the seller of the cask, the buyer of the cask, and the warehouse keeper at the warehouse where the cask is being housed to sign and acknowledge a delivery order.
Even though certain brokers and dealers give a certificate of ownership/acquisition/title, it is essential to note that these documents are not replacements for a delivery order. Purchasing a cask without a delivery order is analogous to purchasing a vehicle without receiving the V5 paperwork; you may own the cask but have no autonomy or control over it.
We released our first detailed post on delivery orders in early 2020, and in our cask purchasing guide published later that year, we discussed the dangers of not getting a delivery order. Additionally, we have expanded to new platforms by creating YouTube videos regarding delivery orders and WOWGRs.
The notion of delivery orders for private cask owners is not ours to claim. The Scotch Whisky Association provides the guidelines we adhere to and have been actively discussing for so long (SWA).
For many years, the SWA has stressed in its official instructions that any private buyer of a cask should acquire complete title and ownership of the cask by transferring the records at the warehouse from the seller to the buyer.
“If the cask is located in a warehouse that belongs to someone other than the seller, you should ensure that the transfer of ownership is properly recorded and acknowledged by the warehouse keeper. Traditionally this was done by way of a delivery order, a document setting out the details of the cask to be transferred, signed by the purchaser and seller, and then delivered to the warehouse keeper. Nowadays, an invoice or owner’s certificate may suffice.
Before purchasing, you should check with the warehouse keeper what documents they require and ensure that the seller can deliver them to you.”
Scotch Whisky Association, Personal Investment In A Scotch Whisky Cask, 2020
After having been the lone voice on this topic for a few years, we are glad to note that many other whisky magazines and journalists have begun debates regarding the significance of delivery orders. In recent weeks, whisky journalist Blair Bowman and publications like The Sunday Times have written about cask ownership’s practicalities. Specifically, they have discussed how one may ensure that they own their asset and that they are the rightful owner of the barrel.
The five-page spread describes what may occur if you do not conduct adequate research before buying whisky barrels. The first point of emphasis is the 582% return number brokers and dealers frequently cite when attempting to sell barrels. This number is derived from the Knight Frank Index, a magazine that analyzes the increase of rare whisky bottles, but not barrels. Following this is a discussion of the “guaranteed returns” touted by many cask brokerage firms, despite the reality that there are no guaranteed profits in cask investment.
The second focus of the essay is examples of what might go wrong when investing in casks, with Bowman highlighting cask frauds like those perpetrated by the Nant whisky firm, which sold nonexistent barrels. Bowman stresses the need to utilize Firms House when investigating brokers and dealers to invest with, noting how new the companies are, where they are registered, and what their registered name is.
The most significant component of cask ownership is now discussed: getting a delivery order. Blair Bowman elaborates on the requirement for a delivery order to verify ownership in the eyes of HMRC and the justifications certain businesses provided for not delivering a delivery order. Bowman also cautions against purchasing from nonexistent or unbuilt distilleries like the Grandtully distillery.
Bowman ends by adding that he is “very concerned” about the whisky cask business’s condition if this behavior is permitted to continue.
Now, publications concerning the mechanics of cask investments are not meant to terrify but rather to inform. Consumer education has always been our top priority.