2019 was a tumultuous year for the whisky industry. After the record-breaking sale of a hand painted bottle of 1926 Macallan in October 2018, the consensus was unanimous: we had reached ‘peak whisky.’ And yet, despite seeing an expected drop in prices over the first half of 2019, the third quarter peaked with a record-breaking bang when another bottle of 1926 60-year-old Macallan smashed the previous record by more than £300,000 to sell for £1.5million at Sotheby’s.
So, what did happened to the whisky industry in 2019? We will examine the background of that record breaking Macallan 1926 and discuss the effects of Brexit on the whisky market.
The Top Sales of 2019: The Inexorable Macallan
It is difficult to talk about the whisky market without talking about Macallan. Indeed, they seemed entwined with the whisky market itself; Macallan’s 2019 tale of flattening followed by peaks also sums up the general whisky market in 2019.
Following the record-breaking sale of a £1.2million bottle in October 2018 bottles of Macallan 18-year-old and 25-year-old (two of their most popular collectors’ bottles) showed a slowing of value of around 4-6% through the first half of 2019*1. At the time this was accepted as the expected slowing of the whisky market as we finally reached ‘peak whisky’. Indeed, a general flattening of values was felt across most whisky brands at this time; collectors started to slow their purchasing even as a flood of bottle hit the market as people tried to ride Macallan’s boom and sell their own collections.
Then in autumn 2019 prices at whisky auctions started to creep back up and bottle prices spiked rather unexpectedly. Finally, the inexorable Macallan emerged with another bottle of 60-year-old whisky from 1926, this time the Fine and Rare label style. It sold at Sotheby’s in October 2019 for a record breaking £1.5million. So what was going on?
There are a few factors at play here that complicate the rare whisky bottle market:
- There are four different bottle designs for the Macallan 1926 and only 40 bottles in total.
- The whisky market is international and value and demand are therefore also impacted by political and economic factors, like Brexit and the week pound.
Macallan 1926 60 year old
Let us discuss the implications of the bottle designs first. Collector’s like sets and the Macallan 1926 series is the ultimate set because of the age of the whisky, the highly limited nature of the bottles and the four different bottle designs.
There are only 40 bottles from the famous 60-year old cask 263, and it was bottled in four different bottle designs: a classic Macallan style bottle and designs by Peter Blake, Valerio Adami and Michael Dillon. The three bottle designs by designers were a limited edition of 12 except for Michael Dillon who was only commissioned to produce one bottle; the bottle that sold for £1.2 million pounds in 2018.
This one of a kind exclusivity was what was assumed to drive the October 2018 price to record breaking levels. In March 2019 a Macallan 1926 with the Peter Blake designed label sold for just £625,000. That’s a lot for a bottle of whisky, but it is more than £100,000 less than the auction price a Peter Blake design achieved in May 2018. In hindsight it is likely that our collector already owned the Peter Blake designed bottle that went on sale in March 2019, as the same design had been sold for a record price in May 2018 at an auction in Hong Kong.
In our opinion, the record-breaking price achieved on the classic style bottle in October 2019 is likely because two collectors were looking to add to their set. With such a limited number of each bottle available (and that is assuming none have been drunk) and the classic style bottles appearing at auction so rarely, then both collectors were keen to secure the bottle for themselves and their collection.
In addition, this was Sotheby’s first whisky sale and the first ever sale from a single collector. This will have added to the ‘auction fever’ of the sale and likely contributed toward the heady prices achieved in the sale.
What that likely means is next time the classic style bottle comes to auction there will only be one high roller bidding on the bottle and the price will be significantly less. It also means that this is probably the effect of a single unicorn bottle, rather than a gauge for the general whisky market.
Macallan 1926, 60-year-old: The most expensive bottles & where they were sold
- Classic Fine and Rare bottle: £1.45million Sotheby’s London, October 2019
- Michael Dillon hand pained design: £1.2 million Christies London, October 2018
- Valerio Adami design: £848,800 Bonham’s Edinburg, October 2018
- Peter Blake design: £751,703 Bonhams Hong Kong, May 2018
Whisky and Brexit
The second factor that impacted prices in 2019 is Brexit. While Brexit was ultimately postponed, the impacts were still felt throughout the last half of 2019 in terms of the strength of other currencies against the pound. Simply put, international collectors were able to get more pound for their money when the pound was weak and could therefore bid higher in sterling than they might otherwise have been able to before the pound weakened. This may have had an impact on the price that the bidders on the Macallan 1926 were willing to go to. This may have also impacted the prices seen at UK whisky auctions in the later half of 2019; looking back at prices a spike there is an observable spike in bottle values around October.
The other side of the Brexit impact that would certainly coincide with the autumn peak is panic buying.
It wasn’t just in the UK where people were stock piling certain things in case of a no-deal. Whisky accounts for 21% of all UK food and drink exports*2, and a lot of that ends up in Europe. In the case of a no deal Brexit it was possible that there may have been a ‘whisky drought’ in mainland Europe as bottles became stuck at country borders and large tariffs were automatically placed on alcohol moving from the UK to the EU. This may have caused drinkers and collectors to rush to get their dream bottles while the threat of a no deal Brexit was still real.
What it all means for the future of whisky?
When the pound is weak we are likely to see strong prices in UK based whisky auctions as collectors strive to get the most whisky for their money. Unfortunately, that means that economic and political instability are likely to be the key to rising prices in whisky. Otherwise the key is to keep an eye out for emerging distilleries and limited release bottlings.
The distilleries to watch in 2020
The top single malt distilleries have shown little change in 2019 with bottles from Macallan, Bowmore and Ardbeg continuing to dominate in terms of market value and market volume.
That isn’t to say that there cannot be change within the whisky community. Royal Lochnagar was the whisky used in the House Baratheon release of the Game of Thrones series and the distillery also released a 30-year-old limited bottling run at the end of 2018 that has proven very commercial. As a result, Royal Lochnagar saw an increase in its market share by over 400% through the first half of 2019*1. While that impressive leap doesn’t even get it into the top 30 distilleries of 2019 it does show that good marketing can go a long way even in today’s established market and reminds collectors of the benefits to be had from keeping your eye out for potentially popular releases.
The top five distilleries weighted equally for market value and market volume as per Rare Whisky 101 Half Year Review 2019.
*1 Rare Whisky 101, 2019 Half Year Review
*2 Scotch Whisky Association