Investors reach for whisky as an alternative to financial markets
As a result of the coronavirus pandemic which has brought about much turbulence in the stock exchange and raw material markets, investors are now more and more often looking for more secure assets into which they could deposit their funds and wait through the uncertainty in the financial markets. The demand for asset-backed investments, such as Scotch whisky casks, has become quite visible at the time of stock exchange instability. We have been seeing a clear growth in the demand for alternative investments, and one of the quickest growing categories has been Scotch whisky casks – assets whose value is related to age thanks to which they are more independent of external factors.
High return rates on whisky investments
For many years, the rates of return on whisky investments have been very high, beating other alternative investments such as rare coins, wine or art works. One of the whisky auction price indexes – Knight Frank Rare Whisky 100 Index – has gained nearly 40% in a year, and in the 10-year perspective the increase hit as much as 582%. Another index, Rare Whisky Icon 100 Index, featuring the prices of one hundred most desired whisky bottles, has reached an increase of 495% over the past decade.
„Interest in rare bottles certainly translates into interest in whole whisky casks as private investors start looking for more and more unique assets with which they could diversify their portfolios. Their confidence in unusual investments goes up as does their awareness of exceptional factors of increase in the value of casks as investment assets – the time lapse and very dynamically increasing global demand for whisky. Simultaneously, it shows very little correlation with other classes of assets at the time of market uncertainty, clearly demonstrated by the experiences of SARS epidemic between 2002 and 2003 and the economic crisis in 2008. This stability is now again propelling the demand for cask investments. Over the past few weeks, we have been observing a large interest of customers both in the Polish and European markets, as well as in the Asian market” – says Krzysztof Maruszewski, CEO of Stilnovisti, an alternative investment company for more than 14 years.
A gradual improvement of the situation in Asia which was the first to face coronavirus started translating into the revival of demand for investment alcohols. Global trade company, BI Fine Wine & Spirits, advised that the volume sales of high class wine and rare whisky to Asia went up by 25% in March when China and some of its neighbouring countries began to relax epidemiological limitations and consumers came back to the market. While it is hard to predict the course of the pandemic and its repercussions for the economy, it can be assumed that coronavirus will accelerate the trend of increasing the share of asset-backed investments in investors’ portfolios.
