Elite Traveler November-December 2015

ANDY SIMPSON ON WHISKY INVESTING

75 elite traveler NOV/DEC 2015 ISSUE 6

Arguably, one of the best parts of investing in this sector is the requirement that you try before you buy. A bonus, but also a serious consideration. Most distilleries will let you try the product before you buy a bottle, and you should always take them up on the offer. First and foremost whisky is for drinking, so make sure that whatever you buy as an investment is of exemplary quality. One person’s investment today is another person’s drink tomorrow. If the whisky itself isn’t excellent, actual whisky drinkers won’t want to buy it from you when the time comes to sell, so you’re limiting your market. And finally, I would advise any budding whisky investor to make sure they don’t cross asset classes. When the Queen celebrated her diamond jubilee, Chivas released the Tribute to Honour bottle, which retailed for $230,000. A grand gesture perhaps, but certainly not an investment. Encased in a bejeweled bottle, it crosses two asset classes. It will undoubtedly be a phenomenal blended whisky, but once that’s been drunk it becomes an expensive bottle. What do you do with it? Collectors wouldn’t be interested once the seal is broken and I doubt Chivas would refill it. If you buy carefully and keep your collection away from thirsty guests, whisky can be a great alternative investment Andy Simpson is a whisky investor and broker with 25 years’ experience. He is co-founder of whisky valuation, consultancy and brokerage firm, Rare Whisky 101. He also contributes to the Financial Times , Wall Street Journal and Forbes .

Once the hobby of a niche group of enthusiasts, whisky investing is fast becoming a global pursuit for investors seeking returns in a non-traditional asset class. Rare bottles from silent (closed) distilleries and from bigger brands such as The Dalmore or Macallan can fetch thousands of dollars at auction, both in the US and also in the overseas markets, including Asia. But how can you tell whether a bottle of whisky tucked away in the back of your cabinet is a decent investment, or just a decent drink? As a professional whisky broker and consultant – not to mention an avid whisky collector from the age of 16 – I’ve found that there are certain rules you can apply to whisky investing, in the same way you would set yourself rules if investing in any other commodity. If you buy carefully and can manage to keep your collection away from thirsty guests, whisky can be a great alternative investment option. However, like any other asset class or form of investment, there are multiple factors to consider before making your investment. Bottles from iconic distilleries such as Glenfiddich, Lagavulin and Laphroaig will hold their value best. I’m also careful not to forget about silent distilleries such as Port Ellen. No more of this whisky will ever be produced; at some point existing stocks will run out and collectors will only be able to buy a bottle from another collector. In general I also go for limited releases. The fewer bottles produced in a limited edition run, the better. Take, for example, the Balvenie Tun 1401, released in 2010. A small run of just nine batches, the bottles from batch number one that sold for $230 exclusively at the distillery are now selling on the open market for between $2,450 and $2,750. With very limited releases such as these, desire and demand are going to totally outstrip supply.

WHISKY INVESTING: IN BRIEF

Whisky is a medium-term investment. Short-term gains are possible but you should expect to wait 10 to 15 years. Whisky is easier to store than wine but if you’re treating it as investment you’ll still need to take care. Store your bottles upright. Laying them on their side will cause the alcohol in the bottle to eat through the cork, ruining the contents. Keep bottles out of direct sunlight. And certainly keep them away from house parties. Don’t handle the bottles at all if you don’t have to. It’s a tangible asset and it’s made of glass so there’s always a risk when handling it. Only invest in bottles from iconic or reputable silent distilleries, look out for limited releases and always remember to try before you buy.

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