Whiskey, especially rare and aged single malt scotch, has become one of the hottest alternative investments in recent years. The Knight Frank Luxury Investment Index shows rare whiskey prices rose 25% in the year through June 2019, making it the top-performing collectible asset. Key factors driving whiskey investment returns include limited supply of aged stock, surging demand in Asia, and growing consumer affluence globally. A 1926 Macallan 60-Year Old single malt sold for a record $1.9 million at Sotheby’s auction in 2019. While volatile, rare whiskey has significantly outperformed conventional assets over the past decade. Investors must be wary of counterfeits and have long investment horizons.
Rare whiskey topped luxury investment returns at 25% annually
According to the Knight Frank Luxury Investment Index, rare whiskey saw prices rise 25% in the 12 months through June 2019, making it the best performing of 10 luxury investment assets tracked. Coins and art were the next best performers, returning 12% and 10% respectively. The outperformance of rare whiskey was driven by The Macallan until Q2 2019, when prices dropped significantly. However, the rare whiskey market rebounded strongly for the rest of 2019. A major factor was continued Asian demand and buyers seeking alternative investments.
Macallan 60-year sold for record $1.9 million at auction
A major highlight of the rare whiskey market in 2019 was Sotheby’s online auction in London on October 24. The top sale was a bottle of 1926 Macallan 60-year old single malt for 1.45 million British pounds ($1.9 million), against an estimate of 350,000 to 450,000 pounds. Sotheby’s said it was a record price for any wine or spirit sold at auction. Another sale was a rare single malt scotch from the closed Rosebank distillery for 54,450 pounds, triple the high estimate of 18,000 pounds.
Returns of rare whiskey topped all luxury assets over past decade
According to Knight Frank’s analysis, rare whiskey was added to their luxury index at the end of 2018. Over the 10 years through June 2019, the Knight Frank Luxury Investment Index averaged annual returns of 146%. Rare whiskey was estimated to return 540%, the highest among the index’s assets. Coins returned 193% and art 180% over the decade. While past performance doesn’t guarantee future returns, demand trends remain strong for rare whiskey.
Counterfeiting and long investment horizons pose risks
While rare whiskey has shown enormous returns recently, there are risks for investors. Fake whiskey is a major issue that investors must safeguard against through trusted sellers. As a long-term investment, whiskey requires patient capital. It can be volatile year-to-year and difficult to liquidate. However, for investors with appropriate time horizons, rare whiskey represents an alluring opportunity.
Rare and aged whiskey, especially single malt scotch, has emerged as the top performing luxury investment of the past decade. Returns have vastly exceeded conventional assets, driven by Asian demand and growing consumer affluence. However, counterfeit whiskey and the need for long holding periods pose notable risks that investors must consider.