This year marks a significant time for the history of the whiskey industry. Whiskey produced in the year 2020 will be incredibly rare and is predicted to be highly valuable by the end of the decade.
The value of whiskey is based on three key factors: its age, the brand, and the quantity produced. This year, whiskey production took a massive hit due to the coronavirus pandemic, forcing many distilleries to close. According to the Scottish Whisky Association, at the peak of the crisis, 87% of whiskey distilleries were operating at a reduced capacity. Others had completely shut down. This has led to a significant reduction in the amount of the spirit produced this year.
As the value of whiskey is largely dependent on the number of bottles produced and sold to market, this fall in production will increase the value of whiskey produced in 2020. The fall in supply and excess demand means the alcohol produced this year will become increasingly rarer in the years to come.
2020 cask whiskey owners will be in an exclusive group
Those that own casks of 2020 whiskey will be in a relatively exclusive group of investors. 2020 has seen the smallest production year based on production capabilities in the history of whiskey. In 15-20 years’ time, it will be a profitable asset to own a bottle or, cask of whiskey that was made in 2020. To put it into perspective, not even the Spanish flu in 1918 had such a devastating impact on whiskey production.
The quantity of whiskey produced is not solely responsible for the value of whiskey. The brand and age of the whiskey also plays an integral part. It is therefore important when buying a bottle or cask of 2020 whiskey to ensure you are buying from a well-established whiskey brand. The longer an investor sits on that bottle the more it will be worth when sold.
Jay Bradley, founder of cask whiskey investment company, Whiskey & Wealth Club, explains: “We have never been in a situation where whiskey production all but completely ceased. The whiskey produced in this turbulent year will be highly valuable in the next 15 years. Investors and whiskey enthusiasts would be wise to invest in 2020 whiskey as you’ll be buying a significant part of whiskey history.”
Whiskey up over 550% in 10 years
With the current volatility in the financial markets, funds and private investors are increasingly looking to secure asset-backed investments. This year, rare whisky topped the Knight Frank luxury investment index, rising by 564% in value over the last decade. Topping coins (+175%), art (+141%), wine (+120%), and handbags (+108%).
Worldwide, whiskey sales have been rising for decades, with market values on the up. Irish whiskey for example, is the fastest growing premium spirit in the world. This is according to the IWSR global benchmark for spirit data. In addition, IWSR shows exports have grown by 300% in the last decade, with the US market for Irish whiskey worth $1bn alone.
Scotch whisky has the largest market share and remains the most valuable. It currently accounts for over 20% of the UK’s total food and drinks exports. Its export value rose by 10.8% last year alone.
For any budding cask whiskey investor, it is important that you do your due diligence. Particularly whilst demand is high.
“At Whiskey & Wealth Club we have contracts with the distilleries who all have records of each cask purchased,” adds Bradley. “Investors receive a legally binding certificate of ownership. The HMRC in Scotland and the Irish Revenue Commissioners also have a record of each cask. We have obtained a WOWGR license and an EX64 registration to ensure cask ownership is clearly tracked for the protection of our investors.”