Archives for October 2011

I’m very pleased to feature a guest blog posting today from Andy at Whisky Highland.
You can read more about Andy at the end of the post.

Surely whisky’s just a drink?

It’s created using a careful combination of craftsmanship, science & years of ‘distilled’ knowledge passed from one generation to another; produced to be enjoyed worldwide by people with great taste.

Over the last couple of decades there’s been a growing population of enthusiastic whisky collectors (and recently whisky investors) who seek out the finest examples of the finest spirit. Collectors who have no intention of drinking something which was created for that very sole purpose. The use of whisky as a collectable/investment has led to an interesting polarisation in some factions of the whisky community.

Whisky collectors have occasionally been criticised, even berated for storing some of the rarest, most sought after bottles on their shelves….on shelves never to see the light of day, not even to be touched let alone opened. Even more recently there’s been an emergence of another group of ‘collectors’ who focus their efforts on ensuring their bottles (portfolios) increase in value and become a viable alternative investment.

Without pigeon-holing, and from experience, a whisky collector may focus on one distillery, one series of bottles (such as the Rare Malts Selection or Flora & Fauna bottles), birth year vintages, number ‘1’ bottles, having a bottle from every distillery or a great many other drivers with the primary objective being to complete a specific goal. Increasing value is not the main objective (although I’m sure it’s good when it inadvertently happens), the pleasure and satisfaction of collecting something with passion is what’s important.

I often get asked what price should be paid for a bottle of whisky, especially in the secondary (auction) market. My first answer is that depends entirely on what you want to do with it? If you want to drink the bottle then pay whatever you consider a fair sum for the privilege of opening a rare example. If you want to collect the bottle then pay the maximum you can afford/stomach to enable ownership of something which may increase or even complete a collection. If you want to use the bottle as an investment then it becomes a very different question.

A whisky investor ‘collects’ bottles with the sole aim of a future return. The completion of a specific collection no longer becomes the main goal. The mere thought of having every single bottle from one or two specific distilleries would be investment suicide; only a tiny proportion of releases from even the most iconic distillers will become worthy investments.

From a personal perspective, I started collecting whisky when I was 16. Over many years I discovered some of my bottles were worth more than I’d paid for them. As this part of my ‘collection’ grew I started to focus on whiskies I believed would give me a greater financial return in years to come …. a very liquid pension if you like! The bottles with little value got drunk (and still do) in order to make space for more viable investment grade Scotch …. in effect I drink my portfolio up in value …. a more suitable bottle gets bought and the worst performer gets opened (although I do occasionally weaken and open something I know will be a great investment).

Recently there has been a lot of positive press and PR surrounding Scotch as an alternative investment (Dalmore’s £125k ‘Drew Sinclair’ bottle being a good example). This has happened with every collectable/alternative investment, wine, toys, art, books…the list is endless. All these ‘assets’ were designed with a specific purpose in mind, a purpose which was absolutely not to sit on a shelf becoming an appreciating asset. Toys were designed for kids to play with, books are designed to be read, art is designed to be admired and wine (like whisky) is created to be drunk.

The simple fact is, wherever there’s demand for something in short supply, values will inevitably increase….more people want it and the price reflects that….more people become interested and it becomes an upwards spiral. With Scotch, it’s really just beginning to happen as sales of six figure bottles become more commonplace. Five years ago if someone had asked me if a bottle of Scotch would be sold for £100,000 I’d have said they were nuts……clearly I would have been wrong!

Taking this back to my earlier comment on the perceived rights or wrongs of being a ‘drinker’, ‘collector’ and/or ‘investor’, I actually believe we all do the same thing. We spend money on something we’re passionate about and do what we want with it; be that drink it or keep it on a shelf. We all support the Scotch whisky industry and by doing so enable it to release further single casks, limited editions and commemorative bottles for everyone to enjoy.

Personally ….

I’m a Scotch drinker, a bit of a collector but mainly an investor. The one thing I know for certain is that whisky’s here to stay as an alternative investment.

Drink it, collect it, Invest in it ….

But most of all just enjoy it!

About The Guest Blogger
Andy is based in Lairg, Scotland and runs the website Whisky Highland.
The Whisky Investor specialises in the value of rare & old Single Malt Scotch Whisky, specifically in respect of iconic distilleries such as Macallan, Dalmore, Ardbeg, Bowmore, Springbank, Brora & Port Ellen – to name but a few.
You can also catch up with Andy who’s very active on Facebook and Twitter.