Buying new make is the cheapest way to buy a cask of whisky. However it’s not always the best fit for everyone thinking about whisky cask investments. If you are trying to decide if it’s the right option for you, here are things you need to know before you buy a new make cask.
What Is A New Make Cask?
The minimum maturation period for scotch is three years, so you can’t technically call it whisky until its third birthday. A new make cask is the term used for a whisky cask that has recently been filled. It usually refers to a cask filled less than a year ago.
Why Should You Buy New Make Whisky?
The value of whisky increases with age. It increases slowly in the first three to ten years and so buying new make is often the cheapest way to buy a cask of whisky from any particular distillery. If you’ve got a tight budget and don’t mind a long investment period then a new make cask could be the right option for you.
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How Long Should You Keep New Make Whisky?
Ideally, if you are buying new make whisky casks as an investment then you should aim to hold them for at least 15 to 20 years. It is around 18 years old that scotch whisky becomes premium and so this dictates the minimum exit age we suggest. That means buying new make casks is only really suitable if you are happy with that super long investment time frame.
The absolute minimum hold we would recommend for any cask investment is ten years, however if you buy new make and sell it as a ten year old you are limiting your potential returns. The reason for this is that casks increase in value slowly for the first ten years of their lifetime. If you want a roughly ten year investment then we would suggest paying a little bit more and buying a young cask of whisky rather than new make.
Not All New Make Casks Are Cheap
While new make is the cheapest way to buy a cask of whisky, not all new make is cheap. Brand has such a strong impact on the value of a whisky that new make from certain distilleries can be more expensive than older casks from other distilleries.
New make barrels (approx 200 litres) start around £2,500, however you can pay considerably more than that for 0 year old casks from certain distilleries. Whether this is the right option for you depends on the starting price and your belief in the potential future value of that cask. No one has a crystal ball to know the future value of an individual cask, and if your plan is to support a distillery rather than make an investment then paying a bit more is up to you, but one certain way to reduce risk in a cask purchase is to not overpay.
As a point of reference, at Mark Littler Ltd when we are sourcing what we call “young” casks (roughly four to ten years old) we look at prices around £4,000 to £8,000. So if you are being charged more than this for a cask that isn’t whisky yet, make sure you are confident in the price you are being asked to pay.
Should I Get A Delivery Order When Buying New Make?
Yes. In fact, given that new make should be a super long term hold of 15 or more years a delivery order is even more important. A certificate, deed or title is not a delivery order. You can read more on delivery orders here, but don’t just take our word for it. This is what the SWA say:
“If the cask is located in a warehouse that belongs to someone other than the seller, you should ensure that the transfer of ownership is properly recorded and acknowledged by the warehousekeeper. Traditionally this was done by way of a delivery order, a document setting out the details of the cask to be transferred, signed by purchaser and seller and then delivered to the warehousekeeper. Nowadays other documents may suffice but you should check with the warehousekeeper what documents they require to record ownership in your name and ensure that the seller can deliver them to you before completing the purchase.”
Understanding Risk In Cask Investment
It is a good idea to familiarise yourself with the whisky maturation process and the inherent risks in the process. In fact, it’s so important that the ASA specify that all companies offering cask investment need to ensure their customers are aware of this side of things.
The three most important considerations are:
- All casks experience natural evaporation, which you’ll sometimes see described as the angel’s share. This means on average between 1% and 4% of your whisky will evaporate every year.
- The alcohol content of a cask maturing in Scotland also drops and the threshold for scotch whisky is 40%.
- Casks can leak and often this cannot be insured against.
Evaporation levels and alcoholic strength should not be an issue when buying new make casks (as the casks should be full and are usually filled around 63.5% ABV). However these are both figures you should aim to monitor, especially as the cask gets older.
We suggest doing a “regauge” on your cask every three to five years. This will allow you to keep track of the rate of evaporation and drop in ABV. This health check should be part of your investment plan.
Always remember that casks are just like any other investment; values can go down as well as up. Cask investments are currently unregulated, meaning as a consumer you need to do additional due diligence before buying a cask.
