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Whiskey is an old and much-loved spirit. It takes a long time for it to earn the name whiskey and longer still to develop the depth of flavour that connoisseurs have come to love. The longer whiskey matures, the smoother and richer in flavour it becomes. The harshness of the alcohol decreases whilst the quality of the spirit increases dramatically.

The draw of cask over bottled whiskey is that whiskey continues to age in the cask whereas this process stops once it has been bottled. Investing in casks of whiskey, both Scottish and increasingly Irish whiskey, is an attractive option for many people, with typical returns ranging from 12% to 20% per year.

Irish whiskey is enjoying an incredible boom – the Distilled Spirits Council reports that gross revenue for Irish whiskey is up more than 1,000% since 2003. Distilleries are popping up faster than ever before, from just four in 2013, there are now 18 distilleries in Ireland with more planned. Even Donald Trump’s threat of a tariff increase for imported EU goods doesn’t seem to be shaking this Irish whiskey revival.

Why should you invest in Irish whiskey?

Aged whiskey will almost always carry a higher value than a new make spirit that initially goes into the barrel. The average return, on a five-year investment of new make spirit, is around 12% per year. For those investors able to keep their casks for longer than five years, there is a huge appetite for whiskey that has been aged for eight years or longer, similar to the current Scottish whiskey market.

According to Jay Bradley from whiskey investment company, Whiskey & Wealth Club, “some people are even using whiskey investment to add a different flavour to their plans, as the use of cask whiskey has been approved for use by some self-invested personal pension schemes”.

Bradley set up Whiskey & Wealth Club with two close friends, Scott Sciberras and William Fielding, and they wanted to do something a little different. The trio of entrepreneurs buy in large bulk quantities and sell at wholesale rates. They deal with award winning distilleries such as Boann in Ireland who have The Whistler brand and Bladnoch in Scotland who have Dr Nick Savage (previously of The Macallan).

Why Irish whiskey distilleries need investors

Making whiskey requires a lot of upfront capital. Even if you have a distillery fully built, any casks will need to age for at least three years, and secure storage is not cheap. This is perhaps why more and more distilleries are opening their doors to savvy investors who want to buy a cask of new make, keep it for a few years and then sell for a profit.

Anybody who has already noticed the potential in buying wholesale cask whiskey will be reading this with a smug smile as their investments look set to outperform other more traditional investments. And for everybody else, there’s still plenty of time to get involved, the Irish and Scottish whiskey market is here to stay.

Further reading for Armchair Traders:

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Stuart Fieldhouse

Stuart Fieldhouse has spent over 20 years in journalism and financial communications, including six years as a wealth management correspondent for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong.

Stuart has worked as head of content at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Stuart continues to work with hedge funds, private banks, stock exchanges and other financial institutions on their communications, data and marketing requirements.

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