Single-Malt Scotch Whisky Cask Investment
There is clearly a demand at present that is being driven global economic uncertainty, which in turn is being driven by the pandemic and the impact it's having on traditional asset classes from clients seeking non-correlated asset-backed safer alternatives.
An opportunity exists for investors to purchase Single Malt Scotch Whisky casks to hold for the medium to long term to sell in the future for a profit and without any capital gains tax (CGT). I’m sure you’re well aware, whisky increases in value with age.
Rare Whisky Vault Ltd is fully licenced and authorized by HMRC to buy, store and sell casks as an investment. We have agreements in place with distilleries in Scotland to purchase a select number of casks on a wholesale basis. These sales offer the distillery an alternative income stream as they would usually have to wait many years to see a return on their own investment i.e., once they have bottled their casks and sold them on the retail market. This can be 15 years in most cases. Our option “helps keep the lights on” as they say.
The simple answer is that every client should hold a diverse range of products including non-correlated alternatives. These will help protect portfolios during turbulent times. This is especially relevant during the current crisis we find ourselves in at present.
There is a limited number of distilleries in Scotland. As such, supply simply can't keep up with the global demand. Scotch whisky exports grow consistently, year on year at an average of 5.8% with new emerging markets opening up all the time. The export value alone in 2019 was worth £4.8 billion pounds (GBP). We did however see a drop in exports in 2020 due to the impact of the restrictions and lockdowns from the pandemic, which was to be expected. The knock-on effect from this though has significantly benefitted whisky investors as during this time we saw production drop by up to 70% which has created an even bigger demand on a lower supply.
Scotch whisky has a proven track record of appreciating in value every year as it ages and this is there for anyone to see. You only have to walk down the drinks aisle in your local supermarket to see that a 25-year-old whisky costs more than a 3-year-old and the reason it costs more is, the older spirit costs the bottlers more to buy. This rise in value can increase exponentially after year 7 as only 15% of the 20 million casks currently laid down maturing in Scotland are over this age marker.
Cask owners benefit from full, outright ownership, unlike bonds, funds, or securities. Once purchased the ownership title is passed to the client. While maturing, casks are stored in secure, HMRC-approved bonded warehouses, fully insured against fire, theft, and damage. Insurance is adjusted annually to ensure the appropriate level of cover is always in place.
· Projected Returns - 8% - 12% PA
· Minimum Investment - £2,200 (GBP per cask)
· Non-correlated sector
· 100% full ownership
· Fully insured against loss, theft or damage
· CGT exempt
· Stored in HHRC approved bonded warehouses
· Multiple exit options
· Open to all investors. No, restrictions
When it comes to the time to sell casks, this could be in 3, 5, 7 or even 30 years’ time, we sit down with clients and discuss the various options available. We can, through a network of blenders and bottlers, broker a sale for a small 2% fee, or we can purchase the cask back from clients directly. Alternatively, clients can make their own arrangements either by, selling at auction or bottling the product, whichever option they decide best meets their needs, we will advise through the whole process.