Scotch sharpens investment credentials

Latest figures point to a healthy increase in UK auction prices for single malt Scotch whisky, as the volume of rare bottlings on the market also continues to rise.

According to Whisky Highland, a firm that provides Scotch whisky valuations and investment advice, 2012 saw a “record number” of 14,150 full sealed bottles of single malt Scotch whisky sold on the open market, an increase of 62.7% on the previous year.

With the first quarter of 2013 seeing 3,789 bottles sold, a 34.5% increase on the same period last year, this growth trend looks set to build further on the returns noted by the drinks business in a whisky auction focus last year.

Highlighting figures from its Whisky Highland Investment Grade Scotch index (IGS1000), which tracks the top performing 1,000 bottles, the company reported a 23.27% value increase during 2012, representing an uplift of 123.01% since 2008.

Again, early indications from the first quarter of 2013 – typically the quietest period of the year – show a continuation of this growth trend, with the IGS1000 increasing by 6.05%, compared to 2.68% for the same period of 2012.

Commenting on this performance, Whisky Highland’s founder Andy Simpson observed: “With this rapid increase in supply we would have expected to see a stabilisation or even a slight decline in overall values. Quite the opposite has happened, with rare and old bottles of whisky continuing to outperform many other alternative asset classes”.

Within this index, the top 10 performing single malts (the IGS10) yielded a 542% increase on its 2008 level during the first quarter of 2013, which Whisky Highland attributed to the release of “rare bottles from iconic distilleries.”

Among the distilleries included in the IGS10 are “silent”, or closed, operations such as Port Ellen, Brora and Glenury Royal, although it also features high profile producers The Macallan, The Dalmore, Balvenie, Ardbeg, Bowmore, Highland Park and Glenlivet.

Of these silent distilleries, Whisky Highland reported “unprecedented demand for an ever decreasing pool of both bottles and whisky still in cask.”

As for the distilleries that are still operational, Whisky Highland highlighted The Macallan as being particularly in demand. It cited the example of The Macallan’s 2011 ‘Royal Marriage’ limited edition bottling to mark the wedding of the Duke and Duchess of Cambridge, whose original retail price of £150 has now soared to “around £900.”

Despite these increases at the top of the market, the company also pointed to steady value declines among the worst performing bottles. These would have yielded a loss of 28.65% between 2008 and the end of 2012.

Hailing these results as a a sign of “rare Scotch’s credentials as a viable alternative investment,” Simpson offered guidance to those considering a move into this market.

“I still maintain whisky should be viewed as a long term investment of 10 to 20 years although clearly short/medium term increases are being experienced at the moment,” he concluded.