The practice of investment is by no means strange. One might even argue that farming was the first example of investment observed in human history. A farmer had to assess the arability of the soil, study climate conditions and factor in the viability of the chosen crops. And if said farmer played his/her cards right (along with a measure of luck), then the harvest could be bountiful.
Modern investing in stock markets are no different in theory, albeit with different factors and variables. In recent times, however, the financially savvy have begun exploring alternative investment vehicles. Whisky is a rising star in this evolving landscape, and this has led to the eminence of brokerages such as Rare Finds Worldwide (RFW), which counts rare single malt Scotch whiskies as their speciality.
RFW has announced plans for a bespoke rare whisky brokerage service in Singapore, alongside a new private whisky equity fund. In anticipation of this, we thought it prudent to speak with Murray Holdgate, general partner of RFW, to learn more about whisky as an investment.
What contributed to whisky becoming a popular alternative form of investment?
Whisky is a viable asset unrelated to market volatility. Unlike wine or many other investable commodities, its value appreciates steadily and ages only in the cask as a natural hedge against sale price.
There is limited availability due to the scarcity of age and supply. From 30 to 50 years ago, many premium distilleries had to sell their stock to stay afloat during difficult years and not enough stock has been put into casks for ageing. They just weren’t able to predict future demand.
Very simply, demand is far outstripping supply at the rare end of the market. Asia is a fast-growing and young consumer market that is quickly developing a taste for drinking and investing in rare whisky.
Statistics indicate that Asia-Pacific is the fastest-growing market for whisky production and consumption. How has this affected the scene in Singapore and Southeast Asia?
The Asia Pacific has shown an ever-growing interest in whisky over the decades. Japan, Taiwan and India have become notable producers of whiskies in their own right. Although not a producer, Singapore is a major distribution hub for Asia. It has also become an important centre for whisky transactions in the region. It imported over S$520m worth of whisky products in 2019.
Does the concept of a risk-free investment apply to whisky in the same way it does conventionally (e.g. government bonds)?
As with any other asset, investment involves risks. While whisky’s past performance has been stellar, it is not necessarily indicative of future performance. It does, however, help investors to make educated projections.
Investors should assess whisky as they would any other asset class and fully understand the risks associated. Of course, this includes an analysis of their investment objectives and risk tolerance level.
What are some of the more trending (upwards and downwards) whiskies on the market right now? Is there an observable pattern to this?
There are over 130 active Scotch distilleries, each with expansive varieties and sophisticated flavours. You have your blue-chips, and prestige brands such as The Macallan, Bowmore and Dalmore. However, there are also new rising stars such as Glen Elgin, Glen Keith, Ledaig, Benrinnes and Ben Nevis.
Are there best practices that budding whisky investors should be aware of?
One needs to understand the key factors that affect the cask price, and discern what exactly makes a whisky valuable through independent research. One key variable is the distillery, which can tell an investor a great deal about the spirit quality, marketing tactics, ownership, history and reputation. Another is the age. Older whiskies tend to be rarer and will fetch a higher price.
The golden rule of whisky investing is fairly simple: rarity equals returns. Investors and collectors can leverage on our exclusive fund partnership and brokerage to acquire hard-to-find single malt Scotch whisky casks, as well as blue-chip limited-edition bottles and rare collections.
What is the best advice you can give to an investor who prefers to “fly solo”?
Don’t. Whisky is unlike other asset classes that have a more sophisticated retail offering targeted to the individual investor. Unless you’re working with a global network of whisky brokerages that specialise in the trading of whisky assets between distilleries, collectors and investors, it’s best not to go at it alone. Work with a partner fund or brokerages instead.
Leveraging RFW’s network of whisky investors and collectors that have the appetite to buy and sell products, as well as our ecosystem of high-end retail and auction houses for exit strategies, is crucial. That is the distinction between high-end rare whisky as an investment versus being just a consumer product. We are essentially a team of whisky investment specialists, partnering with alternative investment strategists that are looking to maximise returns through an unconventional but overperforming alternative asset class.