Scotch whiskey, you may have heard, is a fantastic asset. And it’s accurate! Rare whiskey outperformed all other luxury assets from Q2 2010 to Q2 2020, per the Knight Frank Luxury Investment Index. Its value rose by a mind-boggling 535%, more than two times as fast as the next best-performing luxury item, automobiles.

The Question is Why Scotch Whiskey is So Sought After?

The problem of scarcity comes first. From over 200 in the early 1900s, currently, there are barely over 100 distilleries in all of Scotland. Scotch whiskey has also seen an increase in popularity around the world. Scotch whiskey has a robust market in Europe and the United States, and new markets are emerging in Asia.

As a result of all of this, there is currently insufficient Scotch whiskey on the market to match current demand. The severity of the shortage is expected to worsen over time, driving up the price of currently available supplies.

Scotch Whiskey is Becoming Increasingly Popular Around the World

Scotch whiskey has a robust market in Europe and the United States, and new markets are emerging in Asia.
The increasing value of rare and expensive whiskey on the secondary market is indicative of this trend. An adage goes something like this: “History repeats itself, but it never repeats itself the same way twice.”

One recent record-breaking sale was the £1.2 million paid in Hong Kong for a bottle of Macallan 1926 Fine & Rare 60-year-old. There is an increasing demand for such rare and expensive whiskies, as this bottle was one of only 40 ever manufactured.

Reduced Market Uncertainty

Scotch whiskey is appealing to investors in part because it is a stable commodity. The demand for Scotch whiskey tends to be more consistent than that for other luxury assets like fine art or wine, which can be affected by fads and trends.

For instance, the value of luxury items like art and wine plummeted when the markets collapsed during the global financial crisis of 2008. However, the price of expensive Scotch whiskey rose by 18%. We observed a similar pattern during the Covid-19 Pandemic. Rare Scotch whiskey prices have risen by 14 percent while those of many other luxury goods have fallen. Scotch whiskey is a good investment for people wishing to preserve and develop their wealth due to its low volatility.

Low Starting Cost

Scotch whiskey is a comparatively low-risk investment compared to other categories on the Knight Frank Luxury Investment Index, such as fine art and wine. This is because of the vast selection of bottles offered at varying price points. In comparison to the excess of $20,000 for a bottle of Macallan M, you can pick up a bottle of Highland Park 12-year-old for roughly $50.

As a result, a wide variety of investors can get into the Scotch whiskey market. Whiskey is a more accessible investment than, for example, a Picasso artwork, which may cost tens of millions of dollars because you can buy a bottle for less than $100.

Scotch whiskey is another liquid investment option. Bottles of Scotch whiskey tend to sell more swiftly and easily than paintings, which can sit on a gallery wall for months or even years before being purchased. Scotch whiskey is appealing to investors because it is a tangible, consumable asset. Whiskey, unlike equities or bonds, is something that can be physically opened and consumed (though in moderation). Because of this, many people find it to be a more pleasurable form of investment.

The Cask Market

The whiskey cask market is one of the most distinctive aspects of the luxury asset market. The price of bottled whiskey rises as its scarcity and demand grow. But while it’s in the bottle, it won’t get better or more expensive. The value of a whiskey bottle immediately drops as soon as the cork is broken.

However, whiskey casks retain their age and worth even after being sold. Collectors and long-term investors will find them to be a good bet because of this.

The Secondary Market

The existence of a secondary market is another distinctive feature of the whiskey industry. Investors in the art or wine markets, for example, typically have to sell their holdings back to the primary market to liquidate their investments. The secondary market for whiskey, however, is highly active and liquid.

This frees up money for investors to reinvest elsewhere or liquidate their whiskey holdings on the secondary market. This facilitates the sale of investments at any time the owner chooses.

Whiskey Industry Projections for the Future

The whiskey industry has a bright future as the global economy begins to recover from the Covid-19 pandemic. Money is, and will likely remain, flowing into this promising asset class for the foreseeable future. Scotch whiskey, then, maybe the best choice if you’re searching for a high-end investment with substantial profit potential.

Scotch Whiskey Is Coming Out on Top

Scotch whiskey has established itself as a superb asset with enormous development potential. The fact that it outperformed every other luxury asset on the Knight Frank Luxury Investment Index is a testament to its worth. Scarcity, growing worldwide demand, and strong markets in Europe, the United States, and expanding Asian markets have combined to push prices up and supplies down. It is anticipated that this scarcity would grow over time, leading to future price increases.

Scotch whiskey is an attractive investment option due to its steadiness in the face of economic downturns like as the global financial crisis and the Covid-19 outbreak. Scotch whiskey offers a low-risk entry point for investors due to the broad variety of bottles available at varied price points. Long-term value retention and simple liquidation are made possible by the whiskey barrel market and the busy secondary market. The whiskey sector has a bright future and is drawing more investment as the global economy improves. Scotch whiskey, as a high-end investment with significant profit potential, stands out as a great option.