How to Buy Whisky Casks?

*We have used Scotch whisky as an example throughout this article, although it can be applied to whiskey from anywhere around the world.

Provided you’ve got patience, buying a cask whisky can make a great alternative investment due to its ability to increase in value during times of economic instability.

A cask of single malt Scotch Ardbeg Islay, for instance, was recently sold to an Asian private collector for 16 million. That very special cask of single malt had managed to withstand every bit of economic unrest since 1970 and had even sold for double what the entire distillery —that made it in the first place— cost to build. However, that length of steadfast patience when it comes to whisky maturation is not necessarily required in order to benefit from cask whisky —unless, of course, you’re in it for the long haul.

To be classed as “Scotch”, a barrel of whisky, need only mature for 3 years; however, the longer a cask is left to mature, the more value it builds. Ultimately, the maturation timeframe is down to the investor and will likely be determined by storage costs, insurance costs, and personal investment goals/aims.

In learning how to buy whisky casks, investors should also be aware of the duty and VAT implications associated with the cask purchase. It is important to remember that the initial purchase price is just part of the equation when planning for a return on investment. Transparency is vital, and knowing the total cost of your investment will be crucial. Always ensure that you only deal with reputable sellers of casks by undertaking your own research before you part with any money.

Ensuring there is a healthy market for the cask you buy is also something to be aware of. In 2021, the Scotch Whisky Association reported that exports of Scotch Whisky rose by 19% to £4.51 billion, with demand from Asia accounting for the largest proportion of that rise.

These results perfectly highlight the demand for Scotch Whisky enduring in times of economic unrest. For instance, among a wide array of negative economic impacts created by Covid-19 between 2020 and 2022, the pandemic caused a drop in GDP by 9.7% in 2020, the steepest drop since records began in 1948. Despite this, in 2021, Scotch Whisky exports still rose by 19%.

Whilst there remains a devoted fanbase around the world, demand has also been partly fuelled by the rise in popularity of cocktails that include whisky, such as single malt Scotch whisky, rye whisky, unpeated spirit, barley and malt whisky, as a base ingredient.

Overall, it would be fair to say that the figures are promising but never guaranteed as it takes a certain level of knowledge to reduce the risks associated with cask investment —no matter how great the market is performing.

With that in mind, if you would like to buy a cask of whisky for investment and this is your first time, then please see below for a range of options available to you.

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How to Buy Whisky Casks - Use an advisory Service/Broker

In a similar sense to a financial consultant or advisor, an advisory service will act as a middleman between an investor and the seller. They can either operate as a firm or an individual but only ever act on a cask investment with the say-so of the investor, not on their own. There are generally two types of advisory services. The first sources the whisky casks when the investor is ready to buy, and the second pre-purchases the whisky casks themselves and places them into their own storage.

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Benefits

• Advisory services often operate with their own insurance, which means that you don’t need to worry about searching for and comparing the best insurance quotes
• They also source and manage warehousing for the investments they sell.
• Advisory services are experts in their industry, meaning they have knowledge that the investor can tap into to fill in any gaps.
• An investor is (should always be) 100% in control of their investment and no transaction can take place without the investor’s agreement.
• When an advisory service has pre-purchased its own stock, it shows that they have already invested in (what they consider to be) quality casks. That means the only transaction that an investor ever needs to make is between them and the advisory service. What’s more, it also means that the advisory service has already put its own money on the quality of the cask and, therefore, stands by the investment.
• An advisory service can assist with all of the paperwork involved in Scotch Whisky investment and is especially helpful for investors with large portfolios.

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Drawbacks

• It’s possible for an advisory service to give biased opinions. Ultimately, the decision to invest is down to the investors themselves, so relying on one “opinion source” such as an advisory service is not always in an investor's best interest. That means that carrying out due diligence and research as an initial investor and then building trust with the advisory service is the safest method of investment.
• There are typically fees associated with each transaction.

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The type of investor that the advisory service/broker suits

The type of investor that the advisory service/broker suits range from the newbie to the seasoned investor. For newbies, advisory services can help those who make their first steps to cask investment and narrow the knowledge gap to reduce risks. That said, an advisory service can also assist seasoned investors with researching and sourcing great investments, reducing admin time and helping to manage large portfolios.

Trust is key to making the relationship between investor and advisory service work here so, if you are an investor, always do your research before signing any contracts and parting with your money.

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How to Buy Whisky Casks - Investment Funds

Investment funds are a popular option amongst whisky investors, especially for those interested in new whisky distilleries. In 2014, an organised fund with an initial investment of $12 million managed to generate net proceeds of $26 million seven years later. Returns, therefore, can be lucrative and the combined wealth of knowledge and funding can give investors access to investment opportunities that would otherwise not be accessible to them. Whilst investment funds for individual casks are available, an investment fund will often diversify its portfolio with a range of cask types and bottles in order to mitigate risk.

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Benefits

• Combined knowledge is power and investment funds can benefit from a range of investors working together for the greater good of the investment as a whole.
• Access to higher quality investments is possible due to pooled resources.
• Less admin time for the investor as all of that is taken care of.
• Storage and insurance are all taken care of by the investment fund.
• More relationship-based industry connections can be tapped into in order to source quality investments as opposed to investments with a single broker or advisory service.

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Drawbacks

• There is minimal control available to the investor.
• The investment is for a fixed term.
• There are fees associated with funds as well as fees associated with the profit on the product itself.

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The type of investor that the advisory service/broker suits

Again, this type of investment strategy can benefit both the newbie and the expert. A newbie investor, who is interested in how to buy whisky casks with little effort, has the benefit of pooled resources and expert advice, reducing risk and ensuring that any money spent has the best possible chance of a return, and an expert has much of the hassle and admin associated with investment reduced.

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How to Buy Whisky Casks - Sole Investment

Sole investment is a great option for those who feel confident enough to take on the challenge and can include purchasing from distilleries or online auctions. With so much information published on the World Wide Web these days, it’s possible to learn everything you need to know online and then jump straight into your first cask investment. However, a word of caution, always ensure that you take your information from both multiple and reliable sources to reduce the risk of acting on bad information.

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Benefits

• Complete control over choices.
• No middleman fees.
• Can exit the investment at any time.

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Drawbacks

• Longer admin time.
• Higher risk of mistakes being made if new to the industry.
• Need to have negotiation skills.

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The type of investor that sole investment suits

Sole investment in cask whisky, including cask ownership, can be a profitable route for investors when learning how to buy whisky casks. With a high level of dedication, it is possible to learn the ins and outs of the business. Provided time isn't an issue, sole investment in casks can yield significant returns as you can deal directly with a distillery or seller of a cask. Your outlay is split between the initial purchase price, covering ownership, warehousing and insurance, and the final bill when the cask is released – duty at the prevailing rate per litre, plus VAT (if you’re buying within the UK) and bottling costs.

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Learning how to buy whisky casks yourself is easily the most profitable route to take to cask investment, but for a newbie, it can overwhelming. If you're short on time or lacking in knowledge, then an advisory service or whisky investment fund is easily the best option to choose. Stay safe and always ensure that you receive a certificate of ownership from the person that you are buying the barrel from.

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Q&A Roundup

Where can I purchase whisky casks?

Whisky casks can be purchased from various sources, including distilleries, investment funds and brokers. Online marketplaces and auctions also offer opportunities to buy whisky casks. It's important to research and consider factors like quality, provenance, and price before making a purchase.