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Industry body advises prospective investors to 'speak to an established Whisky Broker'

Oct 5, 2021 11:19:44 PM / by Charles Agutter

Did you know... Scotch Whisky makes up 23% of the UK's total "food and drink" exports?

That's over £5 billion in annual global exports, the vast majority of which is exported as (or for the purpose of producing) Blended Whiskies. This is a good opportunity to introduce the industry's two key players; Distillers (companies that produce single malt / grain whisky) and Blenders (companies that produce blended whiskies from two or more single malts).

In order to satisfy global demand, both distillers and blenders need to lay down huge amounts of maturing whisky in casks, years (sometimes decades) in advance, before they can turn it into cash for their business.

This is where whisky investors come in. Investors allow producers to unlock future revenues, tied-up in working capital (i.e. non-matured whisky tied up in barrels) and generate cash which can be used today, allowing Distillers and Blenders to invest in the equipment, infrastructure and people they need to grow their business.

Opportunities to invest in casks have been promoted by a number of companies both in and outside the industry in recent years. And in many respects, Whisky casks are no different from other commodities, whose values rise and fall according to supply and demand.

However, where Whisky does differ from standard commodities, is in selection of particular casks that are most likely to deliver returns that outperform the "general market", and even growing in value when the rest of the market is falling in value.

This is where Whisky Brokers come in. Choosing the right broker is the key to unlocking maximum returns, whilst minimising your exposure to the risks of the market.

The Scottish Whisky Association, which represents Scotch Whisky Distillers and Blenders, published guidance last year, on what to think about when considering a personal investment in cask whisky. One of their key recommendations to investors was to 'speak to an established Whisky Broker', in order to help navigate complexities of the market, such as:

  • • Identification -  An experienced broker will ensure you understand clearly, the whisky on offer; whether it is a Scotch Malt Whisky or Scotch Grain Whisky; the name of the distillery; where it was produced; the year of distillation; and a cask reference number.

  • • Pricing & ROI - By using an established whisky broker, you can be reassured that the offer price and any claimed return-on-investment is realistic. 
  • • Warehousing - There may be charges for storage and insurance for the time the cask is in the warehouse. There may also be charges if your cask requires to be moved or its contents measured to check, for example, its alcoholic strength. Movement of the cask under bond is strictly controlled and can only be carried out by authorised operators. An experienced broker will manage this complexity and minimise your exposure to unnecessary risks and / or costs. 

  • • How and when to sell - Choosing how and when to sell your cask is a decision that can be influenced by several factors. Your broker is your expert investment partner, and will be able to talk you through these options, and help you come to the right decision.

Introducing UKV International

UKV International AG operate a small team of dedicated rare Whisky consultants who can guide investors through the options available, using their wealth of knowledge and experience of the market, help them select the most appropriate cask investment to meet their budget and risk expectations.

Should you wish to discuss your requirements, one of our consultants can contact you personally to give you a better idea of how we can assist and what options are available. Alternatively, if you would prefer a private face to face meeting, we can arrange for you to come to our offices or if more convenient, we can arrange to meet at a location of your choice.

Click here to find out more about arranging a free, no obligation consultation.

 

Topics: Whisky, Whisky Investing, whisky investment, Scotch Whisky

Charles Agutter

Written by Charles Agutter

UKV International

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