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First time investors’ guide: How to invest your first £5k in the Scotch whisky market

If you want to dip your toes into whisky investment but you’re unsure of where to start, here’s an expert guide on how to invest your first £5k in Scotch whisky.

By LLM Reporters  |  March 5, 2022
Glass of good whisky on oak barrel

Words by Louise Robinson, operations director at Whisky Investment Partners

As an industry, Scotch whisky is currently worth £4.5 billion a year in exports and whisky’s popularity is on the rise around the world. Recent articles demonstrate the quick recovery in whisky exports following Covid-19 and the impact of the US Tariff, as export value jumps back to the pre-pandemic figure and rising by 19 per cent, according to Scotch Whisky Association (SWA).

The Scotch whisky industry is continuing to grow in more than 100 global markets – making it an appealing investment that shows no signs of slowing down. While Scotch whisky production and exports were briefly affected by Covid-19 restrictions, there’s been no sign of any significant impact on the value of whisky casks or bottles. Indeed, it has continued to rise because as a commodity that gains value as it matures, it’s still considered to be a safe port in a storm.

Someone holds a bottle of 16 years aged Lagavulin single malt whisky
As an industry, Scotch whisky is currently worth £4.5 billion a year in exports and whisky’s popularity is on the rise around the world. Image credit: Serge Bertasius Photography/Bigstock.com

Investing in rare whisky bottles can be lucrative, however, if you’re starting out, you can’t expect to make a huge profit overnight from a £5k investment in bottles, so investing in casks could be a smarter choice.

Casks are a wise investment because they’re one of the safest tangible assets, along with gold, to invest in as they’re less likely to be impacted by fluctuations in the market. Assets like Scotch whisky have shown that they can ride out such storms and continue to offer value for money.

Crucially, as whisky casks are defined as a wasting asset by the HMRC due to the natural evaporation that occurs during the maturation process, they are not subject to capital gains tax, which gives investors more opportunities to maximise their profits when they choose to sell. As the whisky matures inside a cask, it becomes smoother, richer and more valuable. A great example of this was seen in 2019, when a cask of 1989 Macallan was bought in Hong Kong for £441,000, setting a new world record.

Additionally, with the cost of living rapidly escalating, UK inflation set to rise to a staggering seven per cent by spring, and the recent increase in interest rates, knowing how and where to invest money is a challenge faced by many consumers. But with an unprecedented second-year freeze on alcohol tax announced last year and global Scotch whisky consumption forecasted to continue in growth by 8.2 per cent by 2023, cask whisky ownership is fast becoming an extremely attractive alternative.

top view wooden barrels. High quality beautiful photo concept
Investing in rare whisky bottles can be lucrative, however, if you’re starting out, you can’t expect to make a huge profit overnight from a £5k investment in bottles, so investing in casks could be a smarter choice

One important factor to take into consideration when purchasing cask whisky is the standard of your wood casks. Not only do you need to make sure the liquid is good, but the wood itself also needs to be of strong and high quality to avoid risk of leakage. Therefore, you need to research well and ensure the wood cask you’re purchasing is of the highest quality, and that proper storage requirements are met to store the wood cask.

Another reason why cask whisky makes an ideal investment for your first £5k is that each cask is also totally unique because of the nature of the process. After three years and one day – the minimum investment period for a New Make Spirit whisky cask – you can choose to bottle the whisky or leave it to mature further, giving you added flexibility which is hugely appealing to any investor.

And it doesn’t matter your age (though you must be aged 18 or over to invest in cask whisky) or experience; younger investors are getting in on the action now more than ever. In a recent white paper, Whisky Investment Partners’ research found that 11 per cent of its investors are aged between 25-34, and 17 per cent between 35-44, and of its current customers, one in three are in the millennial age bracket. When asked about having other luxury investments, 64 per cent of customers surveyed in the Whisky Investment Partners 2021 White Paper said their only luxury investment is in whisky, but 36 per cent of millennial respondents spoke about the other luxury investments they hold, including watches, classic cars, wine and art.

Glass of good whisky on oak barrel
If you want to begin your investment journey, cask whisky represents a safe route to profit, particularly when dealing with rare, collectable casks such as Macallan and Highland Park

In fact, younger investors opting to invest their funds in tangible assets, as opposed to traditional investment funds, stocks and even property, is one of the biggest contributing factors pushing the growth of the whisky investment market. It is believed this is because millennials are increasingly interested in investing in something they can own outright and do their own due diligence on, as opposed to giving control of their money to a traditional investment house.

If you want to begin your investment journey, cask whisky represents a safe route to profit, particularly when dealing with rare, collectable casks such as Macallan and Highland Park.

For more information on how to start your investment journey, visit whiskyinvestmentpartners.com.