Investors raise a glass to the price of whisky

Investors raise a glass to the price of whisky

We all need security for our money -and bottles and casks are becoming one of the safest places to keep it

As David Davis ends another day of intense Brexit negotiations, it would not be unreasonable for him to pour himself a glass of something smooth and reflect on his day.

The value of a glass of whisky is plain to see here – a chance to unwind as the ice slowly melts and the ‘Brexit Bulldog’ contemplates the week ahead in Brussels.

Back home, Brexit uncertainty means that businesses and individuals are keen to keep their investments safe. For companies, that can mean delaying expansions until things become clear and redirecting their money elsewhere.

For an increasing number of people the search  for a safe resting place for their hard-earned money means they are also turning to a drop of the hard stuff – but this time as a long-term investment.

With the latest figures showing the UK auction market for Scotch malt whisky has enjoyed a record run, with the total value sold at auction surpassing £2 million in each of the last 3 months of April, May and June, it is easy to see why the security of of a prized cask or bottle is proving attractive.

Whisky analyst, broker and investment experts Rare Whisky 101 has some astonishing figures to back that up. It says the secondary market for rare Scotch malt whisky has achieved its highest ever average price per bottle of £286.

21,617 bottles were sold on the secondary market during this record-breaking period, versus 12,638 in the same period in 2016, a 71% increase.

A cumulative total of £6.18million has been spent on rare whisky at auction compared to £2.80M in the same period in 2016, an increase of 121%.

The figures underline the continued trend of value growth exceeding volume growth. In the past month (June) alone, RW101 has noted a 54% increase in volume and a 94% increase in value of Scotch malt whisky sold at auction, compared to June last year.

The figures point to another very strong six months’ performance for the UK’s secondary rare whisky market, when RW101’s half year report is published later this Summer.

Analyst Andy Simpson said: “Any question as to whether the recent increases in the rare whisky market would begin to plateau can, for now, be summarily dismissed. Even we wondered whether the market could continue to expand at such levels, following another record braking year in 2016. The performance of Scotch malt whisky at auction over the past three months has been nothing short of phenomenal.

“The growing popularity of online auctions, combined with recent moves by traditional rare whisky retailers to set up their own auction sites, continues to drive demand.  By joining the secondary market sector, these “bricks n mortar” retailers have finally realised that they can’t afford to lose rare whisky customers to the auction market.

“Anecdotally we have seen growing demand from North America and Asia over recent times.   We have also experienced a dramatic increase in enquiries from Asian and USA professional buyers looking to set up new supply agreements to capitalise on this dynamically growing market.”

Another example of the rising market in whisky sales comes with the growth of Perth-based whisky auctioneering website Whisky Auctioneer, which has secured funding from Barclays to acquire larger premises and increase its workforce.

With growing interest from overseas markets, Whisky Auctioneer had acquired a tenancy for larger warehousing facilities to accommodate its increased stock requirements. A £145,000 commercial mortgage and support from Barclays means the company can now purchase the space outright within 12 months of taking on the tenancy.

Founded in 2013, Whisky Auctioneer is an online resource specialising in auctioning fine, old, rare, collectable and affordable whisky. Whisky retailer Iain McClune identified a gap in the market for an online auctioning site and started the business from a small two room basement office. As sales grew, Iain gradually employed more staff and relocated to larger property. Initially featuring mainly domestic Scottish whiskies sourced within the UK, Whisky Auctioneer quickly grew to attract interest from buyers and sellers located worldwide, diversifying its auctions with Irish, American and Japanese whiskies.