Whisky casks can be a great investment when made sensibly with the right expectations and timeframes. At Mark Littler LTD we’ve seen people achieve the full range of outcomes with cask investment; from helping people sell casks for over £500,000 to assisting people who have been scammed out of over £500,000!
For most investors a cask investment will return between £5,000 to £30,000 over 10 to 30 years. This is based on the kinds of numbers we see helping people exit casks. Ultimately no returns are guaranteed, and a good cask investment relies on you making a sound purchase in the first place and starting out with the right expectations and time frames.
Unfortunately 2024 has seen cask investment in the press for the wrong reasons, but that does not mean that all cask investments are negative. If you are interested in cask investment but would like to reduce the risks here are our top four tips.
1. Casks Are For The Long Term
The best way to make a whisky cask investment successful is to aim for a long term investment. If you are buying new make (0 to 3 years old) or young casks (4 to 12 years old) then your minimum investment term should be ten years. However, you want to get your whisky to roughly 15 to 20 years old for the best returns. That means, if you’re buying a new make cask of whisky you need to be aiming for at least a 15 year hold.
You can aim for a roughly ten year hold by paying a little more for a “young cask” aged four to 12 years old. It’s not to say you cannot sell your cask sooner if circumstances change, but it is our suggestion for getting the best potential returns from a cask investment based on the data we see.
Why not shorter? Simply put, casks increase in value slowly due to scarcity and a perceived increase in quality as they age. They don’t have big jumps in value at certain years, and the older a cask is when you buy it the proportionally more you’ll pay. Our data and experiences suggest that ten years plus is the best and most reliable way to make money with whisky casks, so that’s what we advise.
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2. Full Ownership Will Give You The Best Security
Casks are a tangible asset, but they’re also stored remotely by a third party warehouse, which is often not the company you buy from (unless you’re buying direct from a distillery). In order to ensure you have full control over your asset and have the assurance that the cask you are buying is what you have been told it is, you should aim to get the cask stored in your name at the warehouse.
Direct ownership, confirmed by the warehouse, is recommended by the Scotch Whisky Association. Usually this is done via a delivery order (some warehouses may accept something else, the important thing is to get confirmation from the warehouse itself if you’re being offered something else).
If you are buying a cask without a delivery order then you may not be being scammed, but you are significantly increasing the risks associated with a cask investment. Unfortunately in 2024 we have already seen two cask investment companies that sold casks without a delivery order go into liquidation. The situation has left people who bought casks through those companies with the difficult task of proving they own the casks and that they should not be used against the companies’ debts.
3. Naming Rights Will Make A Difference
One question I often get is about the significance of naming rights. At Mark Littler Ltd we only sell casks with naming rights, but buyers are often confused about why we insist on this when whisky without naming rights is produced in the same way and is the same quality as the official casks from a distillery.
The answer lies in the way that value is generated in the whisky industry. You get an increase in value with age, but the brand carries a disproportionate amount of value within the single malt market. So even though a cask without naming rights is the same quality as one with, because the lack of naming rights means the distillery’s brand cannot be written on the bottle, you lose a potential way of generating value. This limits the future value of a cask and therefore we don’t offer it as a private cask investment.
What’s more, the non-official names used for casks without naming rights are not usually trademarked. This means that they do not offer a suitable way around the official brand name as some other entity can come in and take that name for themselves. This is what happened with the alternate name for Bunnhabhain, which before they used Staoisha used to be Ardnahoe. When the Ardnahoe distillery trademarked the name anyone who owned a cask of Bunnahabhain whisky without naming rights could also not use the Ardnahoe name, meaning it could only be bottled as a cask of generic Islay whisky, which ultimately caps the value you can achieve for that cask.
This graph shows the average price of bottles of whisky at different ages. It acts as confirmation of how the value of whisky increases gradually with age rather than having big jumps at certain anniversaries. Graph: Mark Littler Ltd. Data Collected 2024 from online whisky retailers.
4. Don’t Get Lured Into Paying Too Much
By far the biggest issue we see with cask investment is where people have paid too much.
Casks increase in value with time (although keep in mind that whisky evaporates in a cask and that scotch must be above 40% to get the premium so there is a limit to this trend). As private buyers buying a few casks you pay a premium over trade, but this should not be significant enough to impact your returns over a long term investment.
If you buy from a dealer/broker who prioritises their short term returns too heavily then in the best case you need to hold the cask longer to make a profit. The worst case scenario is paying more than you can reasonably expect to make for the cask in the future.
How do you as a consumer know what that balance is when there is little publicly available data available for the value of casks of whisky? You can get a second opinion from another cask dealer/broker. Or you can use our cask calculator, which will help you turn the cask price into a per bottle cost price, which you can then compare to widely available bottle prices.
As a very rough guide, for a private investment we suggest £4,000 to £8,000 is a good starting point for a young cask (four to 12 years old, barrel to hogshead) of whisky from an established distillery. You may pay more than this for a large format cask. New make should start around £2,000. If you’re buying a cask over 12 years old then you may want to get a second opinion on the price being offered and the health of the cask (RLA and ABV).
