Whisky’s a go-go as an appreciating asset

An unusually intriguing press release fetched up in an NBR inbox the other day, announcing the launch of a “much anticipated whisky investment service” by an allegedly UK-based outfit called Fairfax Whisky.

Investing in whisky has a centuries-long pedigree, the company’s come-on claimed but, until now, it’s been limited to insiders.

But that’s set to change, according to Fairfax Whisky, with all investors now able “access to this lucrative opportunity” thanks to its new service, which is “dedicated to helping investors understand investment-grade whisky and its place in a diversified portfolio ... at a time when whisky investing is growing in popularity.”

Interest piqued, NBR approached Sam Snead, whisky expert and enthusiast – and proprietor of Auckland’s House of Whisky – to get a steer on whether the release’s claims were on the up and up.

Although Mr Snead has never heard of Fairfax Whisky or its offering [on which score, readers are urged to read the comment from NBR’s Tim Hunter below], he confirms that whisky is a legitimate investment class – indeed, he says, “The sky’s the limit – I know it’s a cliché but it’s true.

“It’s very, very unusual for a single malt whisky to actually go backward in value.”

As an indication of how rapidly these, ahem, liquid assets are appreciating, Mr Snead cites the fact that “two years ago you could buy a Macallan 12-year-old for, let’s say, $120. Now if you find it for less than $300 you’re very, very lucky.”

Another example is Port Ellen single malts: “Four or five years ago you could easily find a Port Ellen for $300-$400; now, if you find a Port Ellen for less than $1000, you’ve done yourself pretty good.”

In the case of Port Ellen product, that meteoric increase in value is because it comes from a distillery that’s been shut down – what they call “a silent still” in the trade.

Port Ellen Distillery closed down in 1983 “and the further we get away from that closure date, the more valuable that whisky becomes.”

Supply dries up as demand explodes
Special releases also rapidly rise in worth – every year, for example, Ardbeg does a special release on ‘Ardbeg day’ (May 30). “Pretty much the very next day it’s worth twice what you paid for it because it’s a limited release,” says Mr Snead.

Another key factor driving the appreciation of single malts is the widening of the global market for whisky over the past decade and the attendant interest from investors.

While demand began to “really take off in the United States in the mid-to-late ’90s,” the developing interest in whisky in China, India and Japan since the mid-noughties means it now far outstrips the global supply of aged whisky.

Outfits offering to sell you “investment grade whisky” by the barrel should be treated with caution, however – despite being a whisky trade veteran, it’s beyond Mr Snead how one would get hold of legitimate single malts in anything other than bottled form.

“Good lord” he says, “you’d probably have to give your first born to get it by the barrel.”

For the full interview with Mr Snead, click on the special audio box at the top of the page.

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