As with fine wine investment, whisky investment is not regulated, and Farr Vintners is not a financial institution. As such, we cannot give financial advice or any guarantees about the potential increase in a whisky’s value. However, using our extensive network of contacts in the wine and spirit industry, we can give you our informed opinion as to whether a whisky has the potential to accrue value.
As with all investments, the value can go down as well as up and Farr Vintners cannot be held responsible for any market fluctuations.
All casks must, by law, remain in a bonded facility in Scotland. Only once a cask is bottled may the liquid move outside of Scotland (and at the point it leaves the Scottish bonded warehouse, taxes will be due).
Farr Vintners does not charge a management fee. If you decide to buy and sell an unbottled cask of whisky, the only money that you will pay will be your purchase price and an annual storage amount, payable in arrears (this amount includes insurance at replacement value). The storage charge is based on the size of the cask. As examples, a barrel or hogshead is £25 plus VAT and a sherry butt is £35 plus VAT.
The only exception to this is if you decide to draw a sample from the cask or have the cask re-gauged or have the cask re-racked. Specific quotes for these charges will have to be obtained in each instance. If you decide to bottle the cask, there will be bottling charges applicable as well as duty and VAT. Estimates of these fees are available at any time.
There is no official index for whisky prices and therefore all valuations are estimates. These estimates will be provided by Farr Vintners, once we have consulted with several specialist companies in the whisky market.
Broadly speaking, there are three points of maturity for a cask. Early (holding the cask for 3-5 years), Middle (holding the cask for 5-10 years) and Late (holding the cask for 10+ years). Each cask can be bought and sold at any of these stages although the significant exit points are when the whisky is 8, 10, 12, 15, 18, 21, 25 years old etc. We can provide our opinion as to the best option to suit your needs. Again, this is an opinion formed around having taken expert advice.
Much is made about the potential for returns with cask investment and rightly so. However, there are many companies that will quote return rates that are simply unrealistic. Many of these companies will be buying or broking the cask so far down the supply chain that much of the cask's potential will have been eradicated by many people's profit margins. And that is before they have added their own unnecessarily aggressive margin. We source our casks as close to the beginning of the supply chain as possible, therefore allowing you to as much opportunity at as much profit as possible.
Instead of promising x% (which is impossible as every cask is different and therefore the potential return differs from cask to cask), we can show you some actual trades to give you an example of what can be done.
Glen Ord 2015, Barrel (127.9 litres of alcohol, 63.8% ABV).
Purchased February 2019 for £1,879, resold in August 2020 for £3,600 via auction.
Percentage increase over 18 months = 91%
Orkney Malt 2007, Hogshead (151.5 litres of alcohol, 62.5% ABV).
Purchased February 2019 for £6,250, resold in January 2021 for £10,000 to an independent bottler based in the EU.
Percentage increase over 23 months = 60%
Bunnahabhain 1991, Hogshead (70.9 litres of alcohol, 51.4% ABV).
Purchased May 2019 for £25,300, resold in May 2020 for £32,500 to an independent bottler based in the US.
Percentage increase over 12 months = 28.5%
There are three main exit strategies. The most common is to sell the unbottled cask, normally to an independent bottler via a cask broker. The broker will take a commission, normally around 15% of the sale. The second option is to put the whole cask in to auction. Normally, there is no fee to pay for this, as the commission is paid by the buyer. The third option is to bottle the whisky, with a view to selling individual bottles. There are bottling charges and taxes due with this option (see below). For all three options, Farr Vintners can put you in touch with the very best in the business to get your cask sold. Please note that we do not charge any fee for facilitating the sale of your cask, nor do we take any commission when you sell the cask.
Angel’s Share – This is the name given to the evaporation of alcohol and water over time. This is an entirely natural occurrence, is part of the maturation process and cannot be controlled. It is why all measurements (alcohol percentage, litres of alcohol, bottle turn out etc.) are estimated from the outset. On account of this natural occurrence, it is highly unlikely that a cask will produce the estimated numbers.
Sampling/Re-gauging the cask - Depending on the cask’s age and the type of wood used, we may advise you to have a sample drawn and assessed by an expert after a few years, just to check on the maturation process. There is a charge for this service, and that charge varies depending on the warehouse within which the cask is stored. An estimate can be provided at any time. Equally, when you come to sell the cask, it may need to be re-gauged
Bottling and Labelling – If you decide to bottle and label the whisky, then you will have to pay additional charges. Farr Vintners can either organise this for you or put you in touch with our preferred bottler. Bottling and labelling is anywhere between £2 and £4 per bottle (this fee includes the glass bottle, the cork and foil as well as a label). If a bespoke label is being created, then it will need to be approved by the Scotch Whisky Association. The more elaborate the label and packaging, the higher the cost. If the bottles are to be delivered to a UK address, then duty of £28.74 per litre of alcohol is payable, along with VAT. If the bottles are to be exported outside of the UK, then no UK duty is payable, but taxes will be due in the destination country.
Type of Cask – There are many different types of cask used for whisky and the type of wood used has a huge impact on the flavour and style of the spirit. There are two main types of oak used for casks – European and American. European oak is harder to come by and therefore often commands a premium but often repays that premium when resold. American oak is used for most of the blended whisky in the market. Another consideration is what liquid has been in the cask before. For example, sherry casks give the whisky a richer, fuller flavour whereas Bourbon casks provide sweetness.
As a very general rule, younger whiskies tend to be stored in newer casks, as they can absorb the more aggressive nature of the wood more easily. Older whiskies are better kept in a refill cask, which has been used before, is therefore less aggressive and reduces the risk of the flavour of the spirit becoming too wood dominated. Common terms you will hear pertaining to the cask size will be Barrel (200 litres), Hogshead (250 litres) and Butt (500 litres).
All this information is important when considering which cask to buy, but can only be considered alongside the investment strategy (length of investment, budget etc.) Farr Vintners can help guide you as to which type of cask is best suited to your investment needs.
All figures are estimates and are based upon our consultation with experts within the cask whisky industry
© Farr Vintners Ltd. 2021