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Although many whisky investors prefer bottles, the cask market has gained in prominence among collectors. Casks vary in size, holding several hundred or perhaps 1,000 bottles. That enables deep-pocketed enthusiasts to invest millions.Handout

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Rare Scotch whisky has been called “liquid gold.” These days, it’s much more than that. Last month a very limited edition, single-cask bottle of The Macallan sold at auction for US$250,000, three times its top guide price. That works out at US$10,000 a dram of whisky, more than five times its equivalent by weight in gold.

So, should you consider investing in these rarefied whiskies? There are those who prefer not to acknowledge whisky as an investment, but there’s no doubt that money is in the minds of collectors. Even if prices sound astronomical, it remains a relatively small market. Although the data sources vary, sales of rare Scotch bottles were worth over £90-million last year, according to data from Edinburgh-based corporate adviser Noble & Co.

Top whisky prices have appreciated greatly in value over the past decade. These are almost always single malt whiskies – meaning from one distillery – as opposed to blends.

The Rare Icon whisky index of the 100 top auction-traded bottles of rare whiskies has more than quadrupled in the decade to the end of last year, according to data from Rare Whisky 101. But that rise masks a range of performance among distilleries. Age matters, but so does branding. An index of Springbank bottles, from the Campbeltown area on the Kintyre peninsula, has done even better, up almost six times in the same period.

The most valuable distilleries are those that are not around any longer. “Maybe the best strategy, I’ve told my clients, is simply to stop making whisky,” quips Duncan McFadzean, Noble’s managing director. Highland distillery Brora went “silent” for almost four decades before Diageo reopened it in 2019. The index of its extremely rare single malts has increased by almost seven times in the 10 years to December.

Historical narratives attract buyers. Campbeltown offers one. Having peaked at 34 distilleries over a century ago, only three operate today: Springbank, Glen Scotia and Glengyle. Not surprising, Campbeltown bottle prices rose 35 per cent year-over-year to September, according to Noble.

Even established fine wine merchants offer whisky. “The ability to own old and rare liquid is in great demand,” says Matthew O’Connell at Bordeaux Index. Fine wine exchange Liv-ex too offers rare whiskies on its online site.

Although many buyers prefer bottles, the cask market has gained in prominence among collectors. Casks vary in size, holding several hundred or perhaps 1,000 bottles. That enables deep-pocketed enthusiasts to invest millions. One special cask of 1975 Ardbeg, owned by luxury group LVMH, sold last year for £16-million.

Given rare casks can be seven-figure purchases, ultra-rich buyers demand a personal, exclusive whisky experience. Sourcing old, rare casks of whisky, arranging storage, bottling and delivery is the end-to-end service provided by Charlie Beamish, chief executive of Beamish International.

Why a cask? Beamish believes “this is the ultimate expression of wealth for certain clients.” He found a cask of Glen Grant from 1949 for one Taiwanese buyer, the year that Chinese Nationalists fled to the island from the mainland. But they are in “short supply,” says Mr. O’Connell of Bordeaux Index.

Andy Simpson, co-founder of Rare Whisky 101 and a collector for more than 50 years, today makes a good living sourcing casks for billionaire clients worldwide. He emphasizes that his clients buy to consume, not to invest or flip their purchases.

Who are the buyers? Andy Skene both trades whiskies and matures these in special barrels for his clients. “I notice that from my online sales, the priciest bottles [and casks] go to Asia.”

Some collectors choose to have their own cask made. Donald Farquharson, who rents space to Mr. Skene’s Aberdeenshire business, has put some 12-year-old Balvenie, a Speyside single malt, to mature in one of Mr. Skene’s casks originally designed for holding cognac. “I was intrigued to see what cognac maturation would be like as [it is] not so common.”

What are the risks for investors? With waves of money entering the whisky market, some are concerned. With bottles selling for £100,000, and casks for multiples of that, speculators are drawn in. Type “whisky investment” into a search engine and several links will pop up, some offering 8-12 per cent annual returns (free of U.K. capital gains tax) plus free storage and insurance.

That makes Andrew Shirley nervous. He puts together the Knight Frank Wealth Index, which tracks the movements of collectible assets such as fine art, classic cars and rare whisky. He worries about the misuse of his index by those keen to set up and advertise whisky investment funds.

“One person called me about setting up an ETF [exchange-traded fund]” using his indexes, he complains, pointing out that both classic cars and fine art did better than whisky last year.

Another threat to prices might be added distillery capacity. Before 2000, there were 93 Scottish distilleries operating. Since then, another 42 have opened. As many as 59 new distilleries are planned, including one at Campbeltown, according to Mr. McFadzean at Noble.

Not all will come to fruition. Moreover, any “new make” spirit – the distillate from the early stages of production – requires more than three years of aging before it qualifies as Scotch, and multiples of that time to achieve aged status.

Some distillers would welcome more supply of new make spirits, which shot up in price 60 per cent last year as malt and energy prices jumped. Mike Younger of Ian MacLeod Distillers has rarely seen the availability of whisky for blending so tight in his 20 years in the business.

The normal trading among distillers of aged whisky stock for blending purposes has diminished dramatically. “Too many distillers want to hold back their stock for further ageing,” he says, in the hope of receiving better prices later.

Even so, just buying old Scotch won’t guarantee easy success for collectors. Is it worth trying, though? “You need to do the research and find a trustworthy seller or retailer,” says Tim Nicholson, a private investor in bottles. But he adds: “Yes, you can make 20-25 per cent per annum.”

Without a catastrophic collapse in global asset markets, the whisky market looks underpinned by demand from a select group of wealthy buyers chasing scarce supply.

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