The rare whisky market is a competitive place. Across countless auctions houses, online retailers, and secondary trading groups, collectors the world over close deals each day. Well-aged, limited bottles are at the forefront of the rare whisky market, however, there is another branch of whisky to invest in and enjoy that remains quite undiscovered when compared to bottles. We’re talking about casks, and luckily, most of the world hasn’t heard of them yet.
For some, the returns of cask ownership has been staggering. Record-breaking sales of privately owned Macallan casks are amongst the greatest success stories. For others, the appeal is selecting and owning your very own privately bottled cask.
Sales are often tailored to a private buyer so there is little visibility meaning even connoisseurs are not yet aware of the process and benefits of owning their own casks. But worry not, here’s a full guide to buying your first cask of whisky.
Why casks?
While not yet at the level of bottle trading, the cask trading market is expanding. Owning your very own cask of whisky, which is stored in a distillery or warehouse in Scotland, is hugely appealing and (usually more so than bottles) the potential returns are huge. The main difference between buying a bottle and a cask is that a cask continues to mature. Looking at long-term investment, one can buy a newly filled cask of spirit today, and 10 years from now this will have become a 10-year-old cask of whisky, containing over 300 bottles. If bought at the right price, the potential profit is huge. A 50-year-old bottle of whisky bought today will still be a 50-year-old bottle years from now.
Cask trading is also free of many hindrances found in bottle trading
Shipping is not an issue, as the cask remains in the care of the distillery/warehouse staff where it is stored
Personal storage isn’t needed. For a very low fee (usually between £40-60 a year) the warehouse staff keep your cask safe in a perfect, monitored environment
Unlike bottles, casks vary in quality and taste, so there’s not a one-price-fits-all policy. No longer will you be sent crazy auctions prices for a comparison
You have an excuse to head to Scotland, to visit and taste your casks
How it works
The process of purchasing a cask is also quite simple:
However, there are many small points that come into play, such as annual storage fees, insurance, bottling specifications for the cask, moving the cask to another warehouse if the buyer chooses. However, all this is easily managed if you follow one point, the most important one in the entire process:
Know who you are buying from
Because of the lack of knowledge surrounding the category and the large profits to be made, there are countless cask traders out there who take advantage of new buyers, trade low-quality casks, hide information, and lack transparency. Countless buyers have been scammed, so be careful. Do not be fooled by sleek websites and salespeople. Ask around about the company you are buying from, look for reviews, and check their history. It’s an unpleasant feeling to purchase a cask with a 10-year plan in mind, only to find the company you bought it from shut down a few years after your purchase.
As we do here at F+R, you need to be given a full plan for your cask, not only encompassing the purchase but also the years ahead and the final exit strategy.
Exit strategies explained
We’ve discussed the benefits and steps to buying your first cask, but what of the steps that follow? In what ways can you profit from your cask after you’ve allowed it to mature?
Sell on: the first exit strategy is the simplest, re-sell your cask. This is where the company you bought from can help you find a new buyer or company to take on your casks. These can go to a new investor, collector, an independent bottling company that plans to make a release out of it, or to a number of bars. After a consultation, you’ll know what your cask portfolio’s new value is and the profit that stands to be made.
Bottle it: If you’re a company owner, bar owner, or do business in whisky you may choose to create your own bottle and label design, and bottle your cask. Once again – your supplier should help you with each step of this process, right down to the delivery of the bottles. This, again goes back to the company you initially choose to work with.
Risks
Of course, as with any investment, there are certain risks to consider. Firstly, the product is a wooden container of liquid and is prone to leaking. This is monitored by the warehouse team, however, sometimes there may be loss. It’s not a common occurrence, but a possibility nonetheless. When moving the casks the may drop, or break, a number or situations can occur. Therefore, the contract must be full proof before signing.
As with other investments, the growth of casks is hard to monitor especially as more time passes. The brand buyers invest in may grow more or less popular, and this point falls into bottle as well. At the very least, brand aside, an older whisky will command a higher price that a younger one so your cask will rise in value no matter the state of the whisky market when you decide to sell.
Beyond stocks and cryptocurrency, whisky is an investment to both enjoy and profit from. Purchasing a cask is, above all else, an exciting adventure.
Perhaps you’ve decided to support the cask-selling program of a brand new, up-and-coming distillery, and alongside the cask, you can follow them on their journey. Perhaps you managed to buy a cask from the distillery you’ve loved for years but never knew how to become a part of it until now.
Maybe you want to open your own independent bottling brand or bar, and need some casks to make that a reality. Or, you simply want to make some investments you actually enjoy, and wouldn’t mind an annual trip to Scotland to sample the progress your cask portfolio is making.
There are many reasons to enter the world of whisky casks, with countless benefits along the way. The important part is to be safe, deal with trustworthy sources, and educate yourself along the way.
