If you are thinking of buying a cask of whisky you may have come across the term “new make,” which is the term used to describe freshly distilled or very young spirit before it is formally whisky. Buying new make is usually the cheapest way of buying a cask, as whisky tends to get more expensive with age. However it’s not always the most cost effective way to start a whisky cask investment.
If you are thinking about buying a cask of whisky you are probably being given a lot of information about what’s available, but not much on how to make a decision. So if you are still wondering what exactly new make whisky is or whether you should buy it over older casks, then this is the article for you.
What Is New Make?
In the scotch whisky industry the term “new make” is used to describe whisky when it has recently been distilled. Scottish whisky regulations mean that you can’t actually use the term “whisky” to describe scotch that is less than three years old, as that’s the minimum maturation period. In cask investment the term “new make” will usually refer to whisky less than one year old, however it can be used to describe any cask of scotch less than three years old.
What Are The Advantages Of Buying New Make Whisky?
New make whisky aged zero to three years old is usually the cheapest way of buying a cask of whisky. That’s because the value of whisky tends to increase with age, and so the younger you buy it the cheaper it is. Value increases very slowly in the first ten years of a cask’s lifetime, so there aren’t huge leaps in value between zero and three years old.
How Long Do You Need To Own New Make Whisky?
You may have expected the section following on from the last to be called “what are the disadvantages of new make whisky?” I’ve not called this section that because for some people the length of an investment might not be a disadvantage.
The above graph is created from the average price of a cross section of bottles at different ages (data at the end of this page). This isn’t a way to predict the future value of a specific cask or suggest ROI or annual % returns (which don’t exist). What we can use it for is to see the average profile of change in value for bottles of whisky. This shows us what we can already see looking at a supermarket shelf—the value of whisky bottles starts to go up more rapidly in the late teenage years and into the twenties. The end point of all casks is bottles, and so we can use this graph to suggest a profile for the increase in value of whisky in a cask over time.
We use the graph to help show the optimum period for entering and exiting a cask investment. Ideally you want to be buying when the whisky is cheapest and exiting when the product becomes premium. The profile shows us that ideally if you are buying newmake you need to hold onto that asset for 15 to 20 (or more) years.
You can pay a little bit more and get what we call “young” casks of whisky, less than 10 years old. This allows you to get the time frame down as you are still aiming to exit around circa 18-year-old. However, if you are happy with a 15 to 20 year investment then new make is the cheapest way to purchase casks.
For some people buying casks for christening presents or who are happy to own a cask as a super long term hold that time frame is ideal. If you want a ten year or shorter investment then new make is not the option we would advise.
Do I Need A Delivery Order To Buy New Make Whisky Casks?
A delivery order is used to transfer ownership of casks at the warehouse level to ensure you own your cask. The Scotch Whisky Association suggests either getting a delivery order or checking what alternative documentation is accepted by the warehouse where the cask is, or will be stored.
The SWA guidance, updated July 2024 states, “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.”
A certificate, deed or title is not a delivery order and will usually mean that your cask is technically owned by someone else. If you are not certain then make sure you check whether the cask will be in your name at the warehouse.
Buying new make whisky casks should be thought of as a very long term investment of 15 to 20 years. Given the timeframe of the investment it is imperative that you have clear ownership and a direct contact with the warehouse where your cask will be stored. If you want to know more about delivery orders you can read more here.
Send me my free cask buying guide
Cask Investment And Understanding Risks
Before we get onto the fun side of cask sizes and types (in the next sections), if you are thinking of buying new make whisky casks then it is a good idea to familiarise yourself with the whisky maturation process and the inherent risks in the process. We have written a lot of articles covering all aspects of cask ownership and you can explore those in our cask buying home.
The most important aspects to understand about risk and cask investment are all what’s known as “inherent vice” of maturing whisky. These are:
- Natural evaporation, which you’ll sometimes see described as the angel’s share
- The 40% threshold for describing scotch whisky as whisky
- Leaking casks
All three are linked to how whisky matures in Scotland and the cask itself. Casks are hand-made wooden vessels, wood is permeable and its structure allows evaporation. This is a crucial part of how whisky matures and improves with age. But it does mean that some whisky is lost due to evaporation. This averages at around 1% to 4% per year, you’ll often see it shown as a 2% average.
The SWA states that for a spirit to be bottled and sold as scotch whisky it must have an alcohol content of over 40%. The climate of Scotland results in a drop in ABV of around 0.5% per year.
The evaporation of your total liquid volume and the drop in ABV over time means that all casks have to be bottled at some point – you cannot mature a whisky indefinitely. You should take this into account when you’re planning your investment.
We also 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.
Storing your cask in a warehouse used to dealing with privately owned casks and responding quickly to any emails from your storage warehouse can help alleviate some risk. However almost all casks are hand coopered and this combined with natural variation in the material of individual staves means that there is always at least a small risk of leakage. It’s important to understand that leaks cannot usually be insured against.
What Cask Size Should I Choose?
The cask can impart as much as 80% of the final profile of a whisky but cask size and finish can also be important considerations for a whisky cask investment. Generally speaking, the smaller the cask the faster the maturation and the larger the cask the slower the maturation but we’ll run through this in more detail.
When buying new make whisky casks as an investment we would always suggest looking at barrels or larger as your starting size. If you are buying a new make cask as an experience with an aim to drink it then you can go smaller for faster results.
Barrels (200 litres)
A whisky barrel is roughly 200 litres. If you are investing in a new make cask then this is the smallest size we’d suggest starting with. That also makes it the cheapest.
Barrels have the biggest cask surface area to whisky/spirit ratio of the standard size casks, which means you are going to get strong to moderate cask influence over 15 to 20 years. You can make it stronger or weaker by choosing first fill or re-fill casks (which I’ll explain below).
Hogsheads (250 litres)
A whisky hogshead is traditionally a barrel rebuilt with additional staves to make it roughly 250 litres. At 25% bigger than a barrel you’re going to pay roughly 25% more for the liquid compared to barrels. However because they contain more wood the actual cask is often a little more expensive as well so the increase like for like may be a bit more than 25%.
Barrels have a slightly smaller cask surface area to whisky/spirit ratio compared to barrels. You are still going to get moderate to strong cask influence over 15 to 20 years. And again, you can control the strength of that influence by choosing first fill or re-fill casks.
Butts and Puncheons (500 litres)
A whisky butt or puncheon usually holds around 500 litres of whisky. Clearly that means they are going to be at least twice as expensive as hogsheads based on liquid alone. However they are often a little more expensive because these larger cask sizes use more wood and have a premium attached to them.
Larger casks like butts, puncheons, pipes etc. have a much smaller surface area to spirit ratio, so have a slower influence on the spirit as it matures. Larger casks are fine for a 15 to 20 year investment in new make, however if you are thinking of a super long 20 to 30 year investment in a cask they are the better option. That’s because all casks experience evaporation as they mature, so if you’re starting with a bigger volume of whisky you have more scope to deal with the drop in volume and alcoholic strength while still getting long term returns.
What Does A First-Fill Or Re-Fill Cask Mean?
In Scotland whisky has to be matured in oak barrels for a minimum of three years. The barrels can be virgin oak or have been used to mature something else previously. Ex-bourbon casks are the most common casks in the industry today although we increasingly see a variety of previous uses.
The rules are simply that it has to be something that would usually mature in wood. A quick non-exhaustive list of potential casks types might be: bourbon, sherry, red or white wine, cognac, rum and even occasionally grain whisky. Drinks and spirits that wouldn’t traditionally be cask matured are things like gin, vodka or beer.
First-fill means that this is the first time the cask has been used to mature scotch whisky and usually indicates that it has been used to mature another spirit. The previous use is often specified, so you could get first-fill rum or first-fill bourbon etc. Ex bourbon casks are by far the most used cask in Scotland because they are relatively plentiful and therefore cheap and also provide a good balance of flavour to the eventual scotch whisky.
Re-Fill or Second-Fill casks are those that have previously been used to mature scotch. For example, if you see re-fill sherry then the cask was likely seasoned with sherry first, then used to mature a scotch whisky once already before being filled again.
Virgin oak means that the cask is brand new and never been used before. This isn’t a very common cask type for scotch whisky.
First-fill casks impart a stronger influence to the whisky over a shorter time frame compared to re-fill casks. What to go for depends on your preference and intended investment time frame. Your choice may also depend on what cask type you are selecting. For example, first fill sherry casks tend to impart a strong influence very quickly, this combined with a small cask means it may not be an ideal combination for a starting cask type due to the risk of over-influencing. However you could change to this cask type later in your investment time period, known as re-racking.
Re-Racking A Cask Of Whisky
Re-racking is the industry term for changing the type of cask you are using during the maturation period. The process is very common within the industry and you will see many official releases that are “finished” in different cask types to create a desired profile.
As a private investor in whisky casks you can also re-rack your cask. This also gives you the flexibility to benefit from market preferences at the time of exit. For example, sherry casks currently command a premium, however that may not be the case in 20 years time. By starting with something neutral and re-racking your cask closer to the end of your investment you can choose a finishing cask suited to your whisky and that will give you the best potential returns as well.
How Much Does It Cost To Own A Cask Of Whisky?
As well as your initial cask price you will likely also have some ongoing costs to consider. The actual value of these costs vary from warehouse to warehouse and may also depend on the cask size and age.
Storage is likely to be your biggest ongoing cost. For private individuals we have found storage costs start around £100 per year for barrels and hogsheads.
You will also need to get your cask regauged. We suggest a regauge every three to five years to keep an eye on the losses from evaporation and the drop in ABV. At the absolute minimum you will need to re gauge your cask when you come to sell it. We have found the fee for this service starts around £35 +VAT.
Samples are not a necessity but they can be a nice way to see how your cask is maturing and are useful if you are thinking of changing cask. You don’t always need a sample when you exit, often it depends on the cask and age. A standard 200ml duty free sample starts around £35 +VAT. If you want a full size (700ml) bottle you will also need to pay duty and tax at the rate when the sample is taken.
If you own a cask at the warehouse level you will need to get your own insurance. We have found insurance to start around £350 per year. This covers up to £100,000 of whisky across multiple locations, but for many owners of new make casks this is disproportionally high compared to the purchase costs. Ultimately it is down to your individual attitude toward risk and you can read more on the subject here.
Buying A Cask With Naming Rights
At Mark Littler Ltd we only sell casks with full naming rights. Casks without full naming rights will always be worth less than those with naming rights. If you are thinking of buying a cask without naming rights then that should be reflected in your purchase price as well as your future expectations.
This is because of the impact brand has on the value of a particular whisky, and therefore on the future value you can obtain for a cask. In addition if you have no specific brand of whisky you lose the potential for brand driven increase in value during your investment period.
We hope you have enjoyed this introduction to buying new make whisky casks as an investment. You can download our free PDF cask buying guide and explore our whisky cask buying homepage for even more information on buying whisky casks.
Always remember that casks are just like any other investment; values can go down as well as up, and that cask investment is unregulated, meaning you the consumer need to do additional due diligence before making a purchase.
Source data for the graph provided above.
