Many investors have long turned to alternative investments such as real estate, artwork, or fine wine to build a more diverse portfolio. But have you ever considered investing in whiskey?
As it turns out, your favorite way to unwind may offer more potential as a long-term investment than you thought! According to information recently released by the Knight Frank Luxury Investment Index, rare whiskey bottles proved to be one of the most lucrative luxury investments of the last decade.
But how exactly does whiskey investment work? There are three main routes to choose from: investing in whiskey bottles, whiskey casks, or whiskey stocks.
Join us for an introduction to each approach and what you need to know to decide if it’s the right choice for you. We’ll give you an unbiased breakdown of each, complete with a list of pros and cons.
Is Whiskey a Good Investment?
Like any other type of investment, whiskey can be lucrative if you take the time to understand it as a unique market niche. Unfortunately, investing in your favorite amber beverage isn’t as simple as picking up a few bottles of your usual Johnnie Walker or Jack Daniel’s the next time you visit the grocery store!
Unless you’re a big spender who loves scooping up exclusive releases like Johnnie Walker & Sons Diamond Jubilee. Like most other luxury goods, rarity is part of what makes some whiskies more valuable than others.
But if you do manage to gain access to the right bottles, the whiskey market can be a lucrative place indeed. Look no further for evidence than the 81-year-old bottle of Macallan Fine & Rare single-malt scotch whisky sold at a 2019 Sotheby’s auction for $1.9 million.
Or the bottle of 1919 Springbank that pulled in over $200k at a Christie’s auction in 2021. Both are solid examples of the possibilities of the first path to whiskey investment: investing in individual bottles.
Investing in Individual Whiskey Bottles
Much like fine wine or other spirits, one of the most direct ways to invest in alcoholic beverages is to purchase individual bottles. On the consumer side, plenty of alcohol brands out there that bottle delicious whiskey.
But if you want to buy and sell whiskey for a profit, it’s time to learn to approach your purchases with an investor’s eye. When it comes to investing in whiskey, the biggest pro or con – depending on your sensibilities – is that you’ll want to put in the time to do your fair share of research.
While no law says whiskey investors must know their way around top brands and vintages, it’s definitely to your benefit! Think of it as the difference between two investors who want to make money in the stock market.
The first takes the time to learn how to read charts, evaluate fundamentals, and develop strategies to navigate market volatility with minimal losses. The other picks stocks at random and hopes for the best.
It doesn’t take a financial guru to guess which will probably have the best luck! Here are some basic facts and skills you’ll want to add to your knowledge bank.
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Whiskey Investing 101
While the whiskey market is a wide and wonderful world, here are some fun facts to help get you started. Not only are they important to know from an investing standpoint, but they’ll also make you feel more at home when networking with other investors!
- Is it “whiskey” or “whisky?” It depends! In the United States and Ireland, it’s usually spelled “whiskey” with an “e,” while in Canada and Scotland, it’s more commonly known as “whisky.”
- In order to be considered Scotch whisky, a whisky must actually be made in Scotland. In order to be classified as bourbon, by law, a whiskey must be made in the United States.
- The Scotch Whisky Association (SWA) reveals that more Scotch Whisky is enjoyed globally than Irish, Japanese, and American Whisky combined!
- Several brands tend to be behind the most “iconic” whiskey bottles on the market. While by no means an extensive list, several top brands Macallan, Yamazaki, Glenfiddich, Ardbeg, Bowmore, Karuizawa, Springbank, Port Ellen, and Balvenie.
- Single-malt whisky, made from one distillery, tends to be particularly popular among private investors.
- Scotland is unofficially known as the whisky capital of the world. The small Scottish town of Campbeltown (home to the Springbank distillery) is particularly well-known for its rich history of whisky production.
- The longer a young scotch or whiskey remains in its cask, the more opportunity it has to age. Once bottled, its flavor stops developing, though older whiskey bottles may sometimes prove more valuable due to rarity.
Essential Whiskey Investor Skills
The price of rare whiskey and other spirits often depends on supply and demand. That’s why luxury goods like wine and spirits tend to increase in value due to factors such as rarity, age, brand, and condition.
If you hope to sell individual bottles for a hefty profit someday, then Rare Whiskey 101’s Rare Whisky Icon 100 Index is well worth bookmarking. The regularly updated index tracks the top 100 collector’s bottles and their performance over time.
As with any investment, past performance doesn’t always indicate future potential. That said, the index has historically performed incredibly well, with an overall 300%+ increase since its inception in 2012.
Rare Whiskey 101 tracks several other indexes like the Japanese 100 index, the Vintage 50 index, and the Single Grain 100 index. The site also has one of the most comprehensive Single Malt Scotch Whisky valuation databases available, with over a million records dating back to 2003.
In addition to staying current on the market, you’ll also want to hone certain skills. These include:
- Learning to spot authentic vs. fake bottles. Many investors also hire professional authenticators before making a substantial whiskey investment.
- The art of whiskey bottle storage.
- How and where to buy whiskey at auction. Major auction houses like Bonhams, Sotheby’s, and Christie’s are great places to start.
- Patience. While a solid whisky investment can be a great way to diversify your portfolio, it’s not one of those assets that will produce a stellar return overnight.
The Pros and Cons of Investing in Whiskey Bottles
Pros:
- It can be a very lucrative opportunity for skilled investors who know how to seek out rare and exclusive bottles.
- A solid alternative asset for long-term those with plenty of patience.
- While all investments come with risk, alcohol hasn’t shown signs of going out of style soon.
Cons:
- Collectibles of any sort come with a learning curve that involves everything from learning to authenticate and store a bottle to knowing how to spot a promising investment.
- Certain bottles always carry a certain amount of risk when they go in and out of style. While history can provide hints about the best potential investments for the future, there’s still an element of luck involved.
- Whiskey investing is a waiting game involving patience and skill when identifying the perfect time to sell.
Investing in Whiskey Casks
In addition to individual bottles, buying whiskey casks is another popular whiskey investment method. Cask investment can be an attractive option for some investors, but it’s important to understand how it works and the pros and cons involved.
Some distilleries will allow investors to purchase a cask directly and store it at their warehouse until it matures. The upside is that a single cask of whiskey can often produce hundreds of bottles, which holds the potential for a nice return.
The drawbacks, however, are that purchasing a cask directly often involves a whole other range of costs worth considering. From taxes and bottling costs to warehouse and tariff charges, it’s important to get a more realistic idea of the price of investing in casks of distilled spirits.
The Scottish Whisky Association offers a great guide to whisky cask investment worth reviewing. The good news is that if you are interested in investing in whiskey casks, there are now several reputable platforms that can help make the process a whole lot easier.
Whiskey Cask Investment Platforms
Over the past few decades alone, the advent of online trading platforms has opened up new opportunities for investors everywhere. Whether you want to invest in the stock market or alternative assets, there are plenty of platforms out there designed to help you build a portfolio right from your computer.
Wouldn’t it be great if there were platforms that made it as easy to invest in high-end whiskeys as it is to invest in stocks? Fortunately, several companies not only agreed but made it happen.
Let’s look at some of the top platforms that now make investing in rare whiskey from all the top brands easy. Whether you want to add a full cask to your portfolio or buy into the whiskey equivalent of fractional shares, here are several top platforms worth exploring.
- Vinovest
VinoVest is a California-based company that launched in 2019 as a fine wine investing platform. The company began its mission by allowing accredited and non-accredited investors alike to access highly sought-after blue-chip wine investments for as little as $1,000.
After seeing the success of its wine offerings, the company recently decided to expand into offerings for rare whiskey casks. When you sign up for a free Vinovest account, you’ll now enjoy two different cask investment options; the first starts at $1,750 for a cask of American whiskey.
Choose from top American whiskey brands such as Whistle Pig, High West Whiskey, or Breckenridge Distillery. However, if you want to go all in, you can also invest in a cask of ultra-premium scotch whisky starting at $15,000.
This is where you’ll get access to high-end whiskey from companies like Ardmore, Macallan, and Highland Park. The best part is that Vinovest takes care of everything from authenticating, insuring, and storing your cast to helping you sell it when ready.
See Related: Vinovest Review: Is It Legit & Worth It?
- CaskX
CaskX is another solid company that’s dedicated to helping investors create and manage their own whiskey cask portfolio. Founded in 2020, the company uses its strong relationships with top bourbon and scotch whisky brands to purchase bulk casks, which are offered to clients at competitive prices.
It’s important to be aware, however, that CaskX only works with accredited investors. In short, that means that you’ll need to be able to prove that you either have a net worth of $1 million or have maintained a yearly income of over $200,000 ($300,000 for joint income) for at least two years.
If you do quality, the company offers several investment tier options ranging from $25,000 to over a million. All CaskX portfolios include up to 10 years’ worth of storage, which can go a long way toward allowing your whisky to mature.
CaskX’s strong connections in the whiskey world also come in handy when the time comes to cash in on your investment. When you’re ready to (literally) liquidate your assets, the company will provide you with several pre-planned exit strategies designed to help you get the most out of every cask you sell.
- Vint
Vint is a unique investing platform that offers a solid approach to alcohol investing for both accredited and non-accredited investors. The SEC-regulated platform has a solid track record for allowing investors the opportunity to invest in shares of bottles, casks, and collections of fine wine, whiskey, and other spirits.
Part of what makes Vint unique is its crowdfunding options, which allow groups of investors to join forces to raise capital for a single asset. This allows investors to own shares of casks or bottles from top companies they may not have had the means to invest in alone.
Think of it as purchasing fractional shares from companies whose stocks would have otherwise been out of reach. With share prices available for as little as $100, Vint can be a great way to diversify your portfolio and enjoy steady growth from a variety of different assets.
Pros and Cons of Investing in Whiskey Casks
Pros:
- If you select the right cask and time your sale correctly, cask investing can generate a very lucrative profit.
- There are plenty of whiskey investing platforms that make purchasing a cask easier than ever before.
- Such platforms have also removed the historical barrier to entry that non-accredited investors have long faced.
Cons:
- Some investments involve more costs and risks than others regarding storage, insurance, and legal considerations.
- Much like other spirits, the price of any given vintage is a bit of a moving target that’s impossible to predict with 100% accuracy.
- The longer you wait to bottle your whiskey, the more time it’s given to age. While this can be great news if patience is your strong point, it’s important to understand that whiskey is best approached as a long-term investment.
See Related: How to Invest in Stocks: A Comprehensive Guide
Investing in Whiskey Stocks and ETFs
Last, there’s always the option to invest in alcohol stocks and funds directly. If you’re familiar with the market, you won’t be surprised to learn that the sheer number of liquor companies to choose from can often be the hardest part of getting started.
Let’s look at some of the top alcohol stocks to invest in and what each brings. As always, the importance of doing your research can’t be emphasized enough, as the stock market is ever-changing.
1. Constellation Brands (NYSE: STZ)
An investment in Constellation Brands is actually an investment in a huge umbrella of different beer, wine, and spirit labels. The company’s alcohol sales aren’t just limited to whiskey brands like Nelson’s Green Briar and High West Distillery but also include brands like Svedka Vodka, Modelo, Corona, and Boston Beer Company.
If you’re looking for access to a wide range of exposure to alcohol companies, STX is definitely worth checking out. As you’ll see from its charts, the company has enjoyed stable growth over time, even during choppy periods like the pandemic.
2. Brown Forman Corporation (NYSE: BF.B)
If some of your favorite whiskey brands include Jack Daniel’s, Woodford Reserve, or Benriach single malt scotch, then Brown Forman may be the stock for you. While the company’s whiskies account for much of its market share, Brown Forman also produces several select brands of wine and other spirits.
3. Diageo PLC (NYSE: DEO)
Even if you’ve never heard of the London-based company Diageo, you’ve almost certainly heard of a few of its 200+ alcoholic beverage brands. Diageo is the brand behind everything from Johnnie Walker and Crown Royal to Don Julio Tequila and Smirnoff vodka.
While not exclusively a whiskey company, scotch whiskey is Diageo’s largest category, as the company envelopes an impressive 100 different scotch brands. Its other notable brands include Buchanan’s, J&B, and Grand Old Parr.
With a $90 billion+ market cap, it’s safe to say that Diageo enjoys a nice market share among the top alcohol stocks worth investing in. Not to mention that it’s also been known to pay dividends consistently.
4. Alcohol ETFs
Unfortunately, no exchange-traded funds (ETFs) are currently dedicated specifically to whiskey. But there are plenty that will give you exposure to alcohol stocks and sales in general.
For instance, AdvisorShares Vice ETF (NYSE: VICE) includes access to everything from Las Vegas casinos to brands like LVMH Moet Hennessy Louis Vuitton ADR. The latter owns everything from champagne house Moët Chandon to the distillery that makes Hennessey.
Then there are ETFs like AdvisorShares Restaurant ETF (NYSE: EATZ), focusing more on restaurants where alcohol is commonly sold. While ETFs constantly evolve, they offer plenty of variety in profiting from humanity’s legendary love of booze consumption!
The Pros and Cons of Whiskey Stocks and ETFs
Pros:
- One of the most obvious perks of any stock market investment is the ability to sell shares at any time. Long-term investors can enjoy the benefits of dividends, while short-term investors can enjoy the chance to benefit from market volatility.
- In some ways, investing in stocks can present less risk than investing in physical bottles or barrels of whiskey. There’s no need to worry about your investment’s security or getting hit with unexpected storage or bottling fees.
Cons:
- As you may have noted, very few pure whiskey plays are available on the market. Many companies attempt to verify their brands to capture a larger market share. While not necessarily bad, investing in a specific brand can be harder.
- The returns on some alcohol stocks and ETFs are far more impressive than others. That’s why it’s so important to research and understand each option’s potential benefits.
There are now more opportunities to turn whiskey into an investment than ever before. Whether you decide to invest directly in bottles and casks or stick to the stock market, the important thing is finding the right approach for you.
We hope this has given you a better idea of what investing in whiskey entails. No matter your route, we wish you the best of luck! Cheers!
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