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A Beginner's Guide to Investing in Whisky
By Knight Frank - The Wealth Report 2019
Friday, 8th March 2019
 

Thinking of starting a whisky collection, whether for passion, investment or a bit of both? The Wealth Report brings together leading industry experts to help get you started.

For some, investing in whisky rather than drinking it might be considered a cardinal sin. But with prices rising rapidly, many collectors are choosing to combine their passion for the spirit with a spot of speculation.

Charlie Beamish of Beamish International, a private client business focused on alternative investments and specialising in whisky, offers some suggestions on how to hunt out the best prospects.

Genuine enthusiasts are more likely to be offered a rare bottle by a specialist retailer or distiller, he says. “Go to tastings and auctions, attend shows and get to know as many people as possible.

If you’re really lucky you might even get the opportunity to purchase a cask. “These very rarely come up for sale, but when they do, they are highly sought after. Having access to rare casks directly from brand owners with the option of an original bottling is the ultimate in rare whisky collecting.”

There are around 120 malt whisky distilleries operating in Scotland and 40 or so “ghost” or “silent” distilleries that have shut, but whose aged whisky is still being released as it matures.

“The romance and rarity factor makes bottles from these distilleries highly sought after,” says Mr Beamish. When it comes to tracking the market, auction data, such as the Knight Frank Rare Whisky 100 index compiled by Rare Whisky 101, is important as it provides a benchmark for future bidding, privately or at auction – and can also help to identify the next emerging trend. However, data can only tell part of the story, explains Mr Beamish.

“The most crucial intelligence we gather is from the private marketplace. For example, knowing how many bottles of a very limited edition whisky have been drunk gives us a good idea of the potential value of the bottles that remain.”

Finally, it’s time to solve the mystery: what’s the link between angels and whisky? “The alcohol that evaporates while the whisky is in the cask is called the angel’s share,” says Mr Beamish. “If the alcohol by volume of a cask drops below 40% it can no longer be sold as whisky. So if the angels take too much, it’s pretty serious.

Know the lingo

As with any specialist field whisky has its own language and definitions. Here are the basics.

Malt whisky: A whisky produced solely from malted barley, yeast and water – whisky is essentially distilled beer. Single malts come from just one distillery, single cask malts from just one cask, while blended malts are from more than one distillery.

Blended Scotch whisky: A mix of malt whiskies and whiskies made from whole grains other than barley. Other types of whisky (or whiskey in the US and Ireland) such as American bourbon have their own specific production and grain requirements.

The angels’ share: The alcohol that evaporates while the whisky is maturing in the cask. If the ABV (alcohol by volume) of a cask drops below 40% it can no longer be sold as whisky. Whisky must be matured in casks for at least three years before it can be called whisky. Before then it is known as new-make spirit.

Charles Maclean

How to enjoy whisky and know what you’re drinking

Author of 17 books on whisky, Charles Maclean is often referred to as the godfather of Scotch whisky. He takes a break from his busy schedule of tasting and touring to share his tips on how to start your whisky journey.

There are so many whiskies and styles to choose from. How do you find out what suits your palate?

I usually say that the best thing to do is find a bar with a good selection of malt whiskies and a knowledgeable bartender and go there when it’s not too busy. Ask the bartender to choose three whiskies of different styles – I’d suggest a sweet Speyside, a smoky Islay and a sherried-style Highland – and see which you like best.

Then ask for three different types of your favourite to narrow it down further. Drink and repeat! It’s all about becoming aware that each malt is different.

What’s the best way to taste whisky?

If you’re drinking purely for pleasure, particularly a blended whisky, anything that you enjoy goes – ice, water, even mixers – although I wouldn’t advise use a mixer in an expensive single malt.

However, if you really want to appreciate a whisky there are a few things to bear in mind. The first is that flavour is a combination of three things – smell, taste and texture – so using the right sort of glass is important.

A tumbler is great for drinking, but no good for tasting. A whisky nosing glass such as a Glencairn glass has a decent bowl that narrows and tapers towards the rim, allowing you to swirl the whisky and catch the vapours.

A white wine glass or small brandy snifter will also work. Always take time to smell before you taste and don’t be afraid to add a little water. This will open up the aroma and make it easier to hold the whisky in your mouth to appreciate all the different flavours.

What part of the manufacturing process has the biggest impact on taste?

The type of water, barley and still used, plus the intricacies of the distillation process, will all have an impact, but I’d say the vast majority, even as much as 85%, of a malt whisky’s flavour comes from the time it spends being matured in its cask.

The type of oak, European or American, used to make the cask; what was in the barrel before, generally sherry or bourbon (malt whisky is rarely matured in new barrels); whether the cask has already been used to mature whisky (first fill or refill): and how long the whisky has spent in the cask will all have an impact on taste, texture and colour.

How important is age? Is older always better?

This is a tricky one. Long-aged whiskies are generally more expensive and can taste more interesting and complex, but age is not a guarantee of quality. You can produce a very good whisky in 12 years, but I’d say at 18 years you’re getting a good balance between taste and price.

If the bottle bears an age statement, it is that of the youngest component. The received wisdom is that whisky doesn’t mature any further once it’s bottled. However, once you’re halfway down a bottle I’d finish it within four months as it will change when mixed with air.

Does the true connoisseur only drink single malt whisky from Scotland?

Absolutely not. Although malt whisky is universally recognised as being the most complex spirit, I drink blended whisky for pleasure and there are some amazing whiskies being produced all around the world. They are often different to Scotch, but they are different by design.

Sukhinder Singh

How to start building a collection

With literally thousands of bottles for the budding whisky enthusiast to choose from it would be easy to start a collection by going for the names you’ve already heard of.

But to help burnish your credentials as a connoisseur The Wealth Report asked leading collector, retailer and educator Sukinder Singh to share his top tips and choose 10 lesser known options, all priced at about £50, from the regions of Scotland and the rest of the world.

Sukhinder’s top tips

  • Don’t restrict yourself to one whisky. Whisky is about emotion and feeling so you’ll need at least five to suit your different moods
  • Bear in mind whisky is produced in batches, so even the same brand can vary in taste over time. You may fall in and out of love with your favourites.
  • Learn to read labels. They contain a lot of information especially those on bottles produced by independent bottlers.
  • Keep educating yourself. Go to whisky shows and specialist retailers. The best want you to learn as well as buy.
  • Don’t assume special editions are all special. Some are great, but some are just cashing in on the surge in demand.

This article was first published in The Wealth Report 2019.

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