Single grain whisky is the lighter, sweeter sibling of single malt whisky. Until recently single grain has been overshadowed by the staggering performance of single malt whisky and as such has been largely overlooked by investors.
However in 2019 the Single Grain SG100 index outperformed the Single Malt SM100 index. So is now the time to switch focus to single grain?
Single Grain Whisky In Numbers
Over the last five years the value of single grain has increased more than 900% (RW101 Full Year Review 2019, pg 30). So why are investors only just noticing?
When you analyse single grain beside single malt that you can see why it has been overshadowed by its high-performing cousin:
- The average price for a bottle of single grain whisky is less than half that of single malt.
- The market share and volume of single grain is just over 1% of volume and less than half a percent of market value. (Rare Whisky 101, 2019 end of year report)
The current performance of single grain
However, RW101’s internationally recognised index for monitoring the performance of single grain; the SG100 Index, increased by 8.29% in 2019 (RW101 Full Year Review 2019, pg 32).
By comparison the SM100 index increased 40% in 2018 but just 5% in 2019 (the SM100 index is the equivalent for single malt whisky (The Wealth Report 2020 pg 90-91). Which means that in 2019 the growth of single grain actually outperformed that of single malt.
The future performance of single grain
Erdington Beam Suntory are forecasting an increase in single grain sales volumes of of more than 100% between 2018 and 2022. That is faster growth than the gin category.
They are expecting that volume to translate into in excess of £42million of sales by 2022, up 95.9% on 2018 (The Whisky Yearbook, Edrington Beam Suntory).
The Brand of Single Grain
We have discussed the importance of branding on whisky in a separate blog. And while that article was looking at the branding of specific distilleries the same principle can be applied to single malt versus single grain.
Single malt has the brand appeal which drives demand and prices. But as the gin category has shown in the last 10 years, the market can change.
We do not expect single grain to suddenly start outperforming single malt. However there is potential to be exploited in single grain. This is thanks to a combination of marketing factors, including the single grain ‘sub-category’ benefiting from the general market status of whisky alongside the significant specific investments that have been made into the ‘brand’ of single grain over the last few years.
A good example of sub-category marketing can be taken from gin.
The market rise in gin over the last 10 years was largely instigated around craft gin but the performance increases have not been limited to just the craft gin sector; established brands such as Gordons and Tanqueray have also seen a dramatic increase in sales (27.8% and 19.1% respectively between 2017 and 2018). This is because brand marketing and repositioning is not done in isolation and has a knock-on effect across the category.
As such the general increase in the popularity of whisky benefits the whisky industry as a whole. It gives consumers the opportunity to be open to alternatives within the industry (i.e. experimenting with a new brand if it is marketed correctly to them), and also provides options in terms of different price points and aspirational products (i.e. exploring single grain or other more accessibly priced products).
As mentioned in the Whisky Yearbook,Haig Club are the industry leaders in rebranding and re-marketing single grain. Specifically they have created an aspirational product, crucially one that appeals to young drinkers in a market that had previously been heavily focused on older drinkers.
Haig have invested significantly into brand image over the last 5 years. Including their brand ambassador David Beckham. While investment like this directly benefits Haig, it also indirectly raises the profile of single grain, which has a knock-on effect on the overall demand for and performance of single grain whisky.
That investment is reflected in the performance of single grain over the last five years: the value of single grain has increased more than 900% (RW101 Full Year Review 2019, pg 30).
The industry indicators suggest everyone is expecting that performance is to continue. Which gives a fantastic opportunity to make a strategic investment in single grain whisky.
The Price of Single Grain Whisky
Whether you are looking at the price of a cask or the value of a bottle on the resale market, single grain is cheaper than single malt.
The average price of a bottle of 30-year old single grain is £111, compared to £443 for the average price of a 30-year old single malt.
When looking at casks, a 30-year old cask of single grain can be around £5,000 whereas you are probably looking at ten times that for an equivalent cask of single malt.
However once again we risk dismissing a potential investment because of making a basic comparison between single grain against single malt.
Importantly the relative increase in values between different ages can be just as significant as single malt, if not bigger.
For example, looking at the numbers in the infographic above, the average price difference between a 20-year-old and 30-year-old is 82% for single grain compared to 240% for single malt (RW101 Full Year Review 2019, pg32). Single malt outperforms single grain, but an 82% increase is not to be sniffed at.
If you compare the increase between a 30-year-old and 40-year-old you find that single grain is actually outperforming single malt; single grain is rising 112% whereas single malt is rising 62% (RW101 Full Year Review 2019, pg32).
Clearly with single malt the absolute values are bigger. However, single grain can perform two roles in the whisky investment industry.
- Single grain provides the potential for a complimentary investment alongside single malt
- Or it can provide an entry level investment with good returns but reduced initial output
Is single grain the next ‘big thing?’
The value of single grain whisky may have increased 900% over the last 5 years but it is still only 1% of the single malt market.
As such, we do not expect single grain to exceed single malt any time soon.
Single grain whisky may not be the next “big thing” when you compare it to single malt, but it still offers a potential investment opportunity. Especially if you look at the lessons to be learned from the gin industry.
The active marketing into the brand of single grain, alongside past performance and future forecasts within the industry gives the single grain sub-category solid potential as a complementary alternative investment.
If you have any questions regarding the sale or value of single grain whisky, please get in touch. You can send us an email or call the office on 01260 218 718.
