News

‘Independent bottlers make this market move’

17 March 2023 By Louis Thomas

Cask Trade founder and CEO Simon Aron tells db about how to avoid the pitfalls of cask investment, the importance of independent bottlers, and the challenges facing the whisky industry.

Aron’s background is in technology, including spending 15 years working at Microsoft and running a 24 hour systems monitoring centre. By 1990, he had started his first company.

It was towards the end of the decade that his obsession with whisky started to take hold: “Mainly because my father was trying to branch out from Chivas and Johnnie Walker Black Label. We started to look for single malts from lesser-known distilleries and I thought ‘oh, this is fun’. I started buying bottles: opening some, keeping some, looking for limited editions.”

The whisky bug has never left him, and he claims that he still buys between 20 and 100 bottles each month: “My wife had enough of me a long time ago and I had to take all the bottles and put them into storage. The general plan is to take all 4,000 bottles and put them on display someday.”

But, though his enthusiasm for whisky remains strong, an early foray into cask trading left a lasting impression for the wrong reasons: “There was a Springbank ’92 that I owned. I paid for it 18 months before I went to go and look for it, I think it cost me £29,000 at the time. I actually went to Campbelltown to check it out in the warehouse, and it wasn’t there. They told me where it was, which was another bonded warehouse, and they said ‘sorry, your name’s not on this cask’. I went back to the company and asked where it was and they said ‘sorry, there was a bit of a mixup on that day, we can see we’ve actually sold it to someone else’.”

Eventually, after much back and forth, Aron was compensated, but that and other bad experiences prompted him to take a different approach when he founded Cask Trade in 2018, as he put it: “I built the business on experience. I didn’t have a good one, but I wanted to give people a good one.”

For Aron, one of Cask Trade’s key features is that it is a marketplace, rather than a brokerage: “Brokerage is a very dangerous thing when you’re buying an alternative asset, because essentially you’re buying something that doesn’t even belong to the person that sold it to you. It got a lot of these brokers that I bought from into trouble. Because they didn’t have a licence, they had to rely on someone else’s licence, so it’s Chinese whispers all the way down to the client.”

As for if Cask Trade might branch out into the murky world of non-fungible tokens (NFTs), Aron said: “Unless an NFT is asset-backed, and is using a mainstream cryptocurrency, don’t touch it with a bargepole.”

He then cited BlockBar, whom db spoke with recently, as an example of how NFTs can be successfully applied to the drinks industry: “You don’t have to get delivery of it – they keep it for you in bonds so you don’t have to pay tax on it. When you want it, you burn your NFT you get your bottle. Then you can do whatever you want with it. You can drink it, you can put it into a cabinet. That’s the type of NFT for me that works.”

While private clients constitute half of the company’s business (Aron remarked that it’s a diverse group: “the youngest is probably 23, the oldest 87”), he explained that independent bottlers, that is to say those who source and bottle whiskies under their own label, are still the company’s bread and butter: “First of all, they’re the exit. Secondly, they are the most important thing outside of the producers in the whisky industry. Independent bottlers make this market move.”

“Independent bottlers really opened the market out to people that wanted to know more about whisky. So I am a big fan of them, and I set up the business so that I can continue to supply independent bottlers all around the world [approximately 1,500 at present]…We [Cask Trade] will never become an independent bottler, because that is ultimately the exit. I am a big believer in independent bottlers gaining their reputation through their creativity and business. It’s their accolade.”

“There are lots and lots of distilleries that make amazing whiskey with amazing master distillers that are now being discovered through independent bottles mainly.”

As for the timeframe for bottling, he said: “If someone asks me ‘how quickly can I bottle my cask’, I answer ‘how long is a piece of string’, and they look at me like I’m completely bonkers! If you’re super organised, and you’ve got the bottle, the dry goods, the cork, the foil, a pre-set template for the label, and you’ve got a labeller that can print pretty quickly – six weeks. But, that probably accounts for 10% of our bottling…The longest for bottling is about eight months.”

But the whisky industry is going through a number of challenges. In addition to uncertainty in Scotland over a proposed ban on the sale of alcohol-branded merchandise and the Deposit Return Scheme, supply chain issues of recent years have proven to be a major hindrance, particularly when it comes to packaging. He said that complications at customs since the UK’s departure from the European Union have been off-putting for many businesses: “No-one wants to deliver to the UK…I can import stuff sometimes quicker from Taiwan than I can from Europe.”

However, Aron believes that the other crisis for Scottish distilleries, and whisky tourism, has been finding staff: “You go to Scotland – so many people left after Brexit, and then Covid made them not want to come back. And when you speak to people on the whisky trails and at hotels, they can’t get staff. Distilleries, bottlers, all the people that used to finish the bottles, they’ve got no staff…People left, and that caused trouble in Scotland because it’s not very heavily populated. Friends of mine that run [whisky] businesses there have had a real nightmare.”

He concluded with a warning to those considering buying a cask, whether it costs them £2,000 or £1.5 million, to not fall into the traps he once did: “Do your due diligence.”

Secondary market for Scotch is 'absolutely brutal', report finds

LCB's Glasgow warehouse tailors its Scottish offering