At the Scottish Annandale Distillery, 9,000 oak barrels are stacked floor to ceiling. Aged whiskey smells while the small amount of alcohol slowly evaporates and the casks continue to increase in value.
Employees stir among the large casks, most of them old 200-liter bourbon barrels, watching for any leakage.
All this whiskey adds up to at least £30 million (about $37 million) “at the price at which they were filled,” explains the director, David Ashton-Hyde.
But its value increases over time and “most barrels sell for twice the fill price after 5 years, and triple that after 10 years,” he explains.
Investing in whiskey, sometimes described as “liquid gold”, is gaining popularity, raising hopes of higher returns to offset high inflation.
But some advise caution, given the potential for deception, scams, and counterfeiting.
Ashton-Hyde admits that he is occasionally approached by concerned investors who want to make sure that his whiskey is in secure warehouses bearing his name.
“The world of whiskey investing can be a bit murky at times. It took us a long time to find the right partner.”
In recent times, the area’s popularity has been fueled by record-breaking announcements: last year, for example, the Glenmorangie Company (LVMH)-owned Ardbeg Distillery sold a cask for an unprecedented £16m.
The market for rare bottles of whisky, according to wine and spirits specialist Bordeaux Index, saw an average annual price increase of around 20%.
“Whisky has always been a well-performing asset class,” says Benjamin Lancaster, co-founder of VCL Vintners.
This London-based company specializes in investing in the whiskey markets Annandale cask.
Whiskey as an investment product has advantages compared to the stock market, “marked by waves of volatility” due to inflation and increases in central bank rates, says Susannah Streeter, an analyst at Hargreaves Lansdowne.
But great returns “are often specific to a rare type of whiskey,” he cautions. and because of a “lack of transparency and regulation” and because proof of ownership of casks is “often difficult”, he considers investing in whiskey to be “high risk”.
Annandale, a distillery established in 1836, and for a time run by the Johnnie Walker firm, closed for nearly 100 years before being revived in 2014.
Each week, he produces some 48 casks, which can be sold to individuals for as much as £3,000 and whose value increases with age.
“The main attraction of aged whiskey (…) is that the supply is limited. Most of the product was created decades ago,” explains Tommy Keeling, Head of Spirits at IWSR Drinks Market Analysis.
In his view, rising wealth in Asia, ease of access to credit and lockdowns during the pandemic – which gave consumers time to develop their own whiskey culture – also boosted demand.
His cabinet estimated that the global whiskey market was worth $87 billion in 2022, and that it should reach $105 billion by 2027, driven primarily by Scotch but also by other producing regions such as the United States and Japan.
Keeling sees growing interest from Chinese and Indian investors in particular, while VCL Vintners says the area attracts investors of all ages and budgets.
Investment growth in rare whiskey bottles has slowed in recent years, according to a study by Knight Frank Cabinet. But in ten years they were far more profitable than expensive cars, fine wines or luxury watches.
VCL Vintners, which saw an increase of over 40% in inquiries from potential customers last year, assures them that the return on investment in barrels is between 8% and 12% per annum.
On its part, Annandale does not promise any returns. “It’s not our business,” says Ashton-Hyde, who says he wants to focus on making “amazing wine.”