Coronavirus seems to have impacted on every aspect of normal life, from going to supermarkets to commuting to work. It is also impacting on the value of luxury assets.
Whisky in 2019
2019 was a good year for whisky, with the value increasing 5% over the year. Whisky has continued to break records at auctions, with bottles of 1926 Macallan 60-year-old selling for US$1.5 million in 2018, and US$1.9 million in 2019.
Casks were also in high demand with more and more people looking to invest in a cask as an alternative long-term investment.
The corona virus pandemic has had and continues to have an impact on the whisky industry both rare bottles, casks and the current bottles.
According to the Knight Fran Index (who track the value of assets of passion) the value of whisky has gone up 3% since January. Rare Whisky 101’s Andy Simpson has suggested buyers are already becoming hesitant to spend vast amounts of money on one bottle or cask due to having less disposable income at this time.
However our own conversations with buyers and with contacts in the whisky industry suggest that buyers and sellers are still active and that prices remain buoyant.
How is Corvid 19 affecting whisky production?
Many Scottish distilleries have been forced to scale-back operations or close down temporarily. The Scotch Whisky Association website lists the Scottish distilleries that have closed their visitors’ centres, but not a list of the distilleries that are still in production or who are operating on reduced production. This means that it is somewhat difficult to predict what the effect on the whisky industry as a whole may be in the new few years.
As any whisky lover will know, Scotch whisky must be matured for at least three years before it can be bottled and marketed as Scotch whisky. If production has stopped at some of the distilleries then that means that the impact may be delayed. It may be that in three years whisky prices may spike, or it may be that the distilleries will be able to manage stock to prevent an impact.
There is also a slight risk of over-supply if the distilleries move to catch up on production. It is, of course, difficult to say at this point.
The half yearly rare whisky index is due later in 2019 and this will take a more in-depth look at how the value of whisky has been affected. However, it must be remembered that the index only looks into the value of rare whisky, and not the industry as a whole. For example, sales of Bell’s blend in supermarkets are not taken into account.
In addition to the problems within the industry, the fact that pubs, bars, and restaurants are currently closed means that a good percentage of the buyers for retailed whisky are not currently purchasing and this will certainly have an impact on distilleries and retailers in 2019.
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Looking On The Bright Side
During all of the uncertainty around Corvid-19 there are some potential upsides for the whisky industry.
For example, pound sterling is relatively weak at the moment, which could mean that more buyers outside of the UK may be interested in buying from here, eager to grab a bargain. Some auction houses remain open for their regular online auctions and currently couriers are still able to collect and deliver bottles from sellers and to buyers.
In addition, furloughed workers or business owners who suddenly find themselves with more time on their hands may be more likely to use some of that time to attend these online auctions and investigate alternative investments. This will increase the value of the whisky, as buyers continue to show interest.
These are unprecedented times, but as whisky has shown to be a buoyant market, it is more than likely that the value will recover should we ever see it drop.
If you have any questions or concerns about the value of whisky during this crisis, please do get in touch.