In recent years, rare whisky has gained popularity among luxury collectors and investors for its huge appreciation potential. According to the Knight Frank Luxury Investment Index, in the 12 months leading up to June 2019, rare whisky prices increased by 25%, making it the best-performing luxury asset among the 10 assets tracked in the index. The supply of aged, rare whiskies is extremely limited as most get consumed over time. This scarcity coupled with rising global demand from whisky aficionados is driving rapid price increases. For investors looking to diversify their portfolio, rare whisky represents an attractive alternative investment with exceptional returns.
Rare Macallan 1926 fetches record $1.9 million at auction
In October 2019, a 60-year old Macallan 1926 sold for a record £1.45 million ($1.87 million) at a Sotheby’s online auction in London, smashing previous wine and spirit auction records. Coming from a private collector’s ‘Ultimate Whisky Collection’ of over 390 lots, the sale realized total proceeds of £7.6 million, well above the £3.3-£4.6 million estimate range. Other highlights included a 48-year old Bowmore from the closed distillery selling for £54k, over triple its highest estimate of £18k. Auction results like this validate the investment worth of rare whiskies.
25% annual price appreciation leads luxury assets
According to Knight Frank’s data, rare whisky prices were up 35% year-over-year at end of Q1 2019 before moderating in Q2. For the 12 months through June 2019, rare whiskies appreciated 25%, the highest among the 10 luxury assets tracked by the Knight Frank Luxury Investment Index. Coins and art rounded up the top 3 with 12% and 10% gains respectively. The index as a whole rose 4% versus the same period last year. Jewelry and classic cars were laggards, falling 7% and 5%.
Strong fundamentals support further long term gains
Rare Whisky 101’s Andy Simpson noted the Q2 slowdown was mainly due to The Macallan prices correcting sharply and improved supply conditions. However, he predicted the market would recover strongly for the rest of 2019. With global demand expanding steadily while supply remains highly constrained for aged whiskies, prices are likely to surge over the next decade. Knight Frank forecasts long-term 10-year returns of 190% for classic cars and 540% for rare whiskies – the top performers among the index’s luxury assets.
With 25% annual gains in 2019, rare whisky clearly outperformed all other luxury collectibles. Fundamentals around scarcity and rising demand point to solid long term appreciation potential. Whisky represents a differentiated alternative asset to consider for portfolio diversification.