Craft Whiskey: A New Way to Invest

Looking for something exciting to put your money into? An investment that will not only promise big returns, but protection against inflation in an ever-growing market? Whiskey could be the answer.

Now more than ever, investors are turning their attentions to “the water of life” due to its potential to yield large returns and strength as a tangible asset to diversify their portfolios. Here, SWM takes a deep dive into the craft whiskey market to uncover why it’s the next big asset in investing.

Proud SWM partners The Craft Irish Whiskey Co. are an expert whiskey producer combining the historic art of craft whiskey making with 21st century science to create luxury Irish whiskeys, from the rarest whiskey in existence to the world’s best Irish single malt. Their products are amongst the most sought-after in the luxury whiskey market.

Their latest campaign with Whiskey and Wealth Club and KPMG Ireland outlines simply just why whiskey is a legitimate alternative asset, how accessible the market is, and how much it is set to grow in the future.

An Asset In Demand

Today the global whiskey market is worth close to $70bn, and is forecast to hit $125bn by 2032. KPMG surveyed 200 high net worth individuals and investment advisers to understand attitudes to and knowledge of whiskey investment. They found that whiskey is the most popular form of luxury assets with 27% of respondents indicating they are planning to invest in whiskey within the next three years, compared to art (26%), jewellery (20%), wine (15%) and classic cars (14%).

The growing interest in Whiskey as an investment is driven by the prospect of attractive returns, macroeconomic uncertainty (foreign exchange rates, inflation etc), investor’s desire for diversification, and the relative accessibility of the process. In simple terms, the main stay to whiskey investing can be described in four ways:

• Production: Distilleries produce freshly distilled unaged spirit (commonly referred to as “New Make Spirit”) and lay it to rest in casks for maturation. This process represents an inventory cost to the distillery, tying up capital that could be used elsewhere.
• Wholesale purchasing: The investment vehicle can buy a negotiated amount of the whiskey at wholesale rates, arranging insurance and safe storage.

• Individual investment: Individual investors can purchase casks holding approximately 400 bottles of whiskey, at a price covering the spirit, the cask, and bonded storage and insurance for a specified term.
• Exit: After a suitable maturation period (often five years or more), investors can look to exit their investment via a range of routes, including selling to existing whiskey brands, private investors, independent bottlers, or via auctions. Since investors own the whiskey entirely throughout, they may also bottle it themselves, or may sell the cask early if desired.

Key Things to Consider in Whiskey Cask Investment

Investment objectives: cask whiskey offers investors an opportunity to diversify portfolios and avoid the volatility in more traditional markets.

Performance: according to data from the Whiskey and Wealth Club, a wholesaler and investment company, casks of Irish whiskey have achieved a >10% pa ROI over a five-year time horizon.

Asset class features: casks of whiskey are a physical, tangible asset, not tethered to the regular financial markets which reduces risk. They are a fully turnkey asset, most attractive for investors willing to hold onto their investments for a considerable amount of time.

Exit: investors have a range of options to sell their casks, including distilleries and brands, collectors, independent bottlers, and auctions. Brokers and cask investment companies can help individual investors to secure a strong exit price.

Tax treatment: in the UK, cask whiskey is exempt from capital gains tax as it is classed as a ‘wasting asset’ (i.e. an asset that has a predictable life span and is expected to decrease in value over time). Casks that remain in bond are not subject to duties, further enhancing the tax advantages for investors.

Risk: as with any asset class, cask whiskey is subject to risks, including a slowdown in demand, market oversupply, warehouse fires, evolving regulation, and supply chain issues. Whilst responsible dealers and investors will do everything possible to mitigate such risks, returns cannot be guaranteed. Investment in cask whiskey is not currently regulated by the Financial Conduct Authority but is subject to relevant HMRC regulation.

Cask Whiskey or Bottles?

If you’re looking to enter the market with a smaller budget, investing in whiskey bottles is a viable option as opposed to full casks, offering greater liquidity and more flexible investment time horizons. But it’s worth noting that casks are often a more tax efficient asset than bottles; in the UK, for instance, casks are not liable for capital gains tax, nor are they subject to duty as long as they remain in bonded warehouse and are not taken out of the cask.

According to the survey, out of those that already had an interest in whiskey investment, 42% would opt for a blended portfolio of bottle and cask investments, reflecting the attractiveness of cask investments’ tax efficiency.

A Bright Future

Volume of global sales of Irish whiskey increased by 100% from 2014 to 2024, making it the fastest growing spirits category in the world. As a result, whiskey investors have seen handsome rewards in recent years. The Craft Irish Whiskey Company recently broke records by selling a bottle of The Emerald Isle single malt for $2.8m. Based on data from Whiskey and Wealth Club’s own inventory, casks of Irish whiskey have achieved a >10% pa ROI over a five-year time horizon.

The future is therefore bright for the whiskey market across the world. From an investment perspective, the survey shows that whiskey represents an attractive proposition compared to other luxury assets, especially a blended portfolio of cask and bottled investments.

If you’re interested in investing in Whiskey, The Craft Irish Whiskey Co.’s luxury products are amongst the most lucrative and sought-after on the market, luxuriously presented and perfected. Get in touch with us today to begin your investment journey.