Hello. It’s been a while. How are you? Excellent.
Anyway, what could have roused me from my dirge of work to come and spill my thoughts upon these pages once again? As you might have guessed I’ve been quite busy as of late which is why I haven’t written anything here in quite sometime. Unsurprisingly it is frustration that has drawn me back here.
I don’t know how many of you have listened to the recent June 3rd episode of whiskycast. If you haven’t then drop in on it and have a listen to the interview between Mark Gillespie and Ian Buxton at about 34 minutes in. They are talking about a subject that seems to be rearing its mottled head all over the joint these days. Or maybe it just seems that way to me because I work in an auction house. Nevertheless the topic of whisky as an investment is ringing in my ears with bewildering regularity. It was no doubt boosted initially to the whisky public’s consciousness by the efforts of Andy Simpson of Whisky Highland and has since garnered its fair share of supporters and denouncers. I was moved to write this post, not by any particular passion for the subject (which may sound odd coming from someone whose job it is to advise people on these matters) but by my deep frustration at listening to two men of generally firm renown and stature in the whisky world participate in a crushingly ill-informed conversation about a topic on which they seemed, rather self-congratulatory and overly assured about. They even managed a jolly good chortle over Mark’s phrase ‘investment grade bullshit’. I’m sure he’s quite proud of that little chestnut. So it has moved me to lay out on this cutting edge, digital ‘wipe clean’ paper upon which you are currently gazing, my own thoughts about whisky as an investment.
First and foremost it’s important to get one thing clear, I don’t really believe in whisky as an investment. Odd I hear you say, surely working in an auction house as a whisky specialist makes it a pre-requisite. Well… not really. Perhaps I should have said I don’t believe in it anymore. You see the thing that makes whisky valuable, the point that Mark and Ian so comprehensively failed to raise, is that the vast majority of a bottle’s value is afforded to it by its contents. If enough people desire to drink it then bottles will be opened, quaffed and spoken of in hushed whispers in the sweaty corners of European whisky festivals. The number of these bottles will diminish and those dwindling few that remain and bob up at auctions with ever decreasing frequency will be fought over tooth and claw by those that are willing and able to afford them. Desire defines value with whisky. Of course there are exceptions, but I’m not talking about the crazy Macallans and Dalmores of this world that are released with prices that are more about marketing ploys and rich boys toys than anything else. I’m talking about the majority of bottlings that find their value through their notoriety and quality. I’m talking about Ardbeg Manager’s Dram, Lagavulin 21yo, Laphroaig 1974 for LMDW, any Springbank Local Barleys, any Longrows from 1973/74, Black Bowmore, Caol Ila Manager’s Dram. These are all classic bottles where demand by drinkers has driven their prices though several roofs. This in turn has made them showpieces for the few remaining dedicated, non-drinking collectors. And, lets not forget, it means they very quickly became hot targets for those interested in creating a stockpile of whisky as an investment for the future, this only pushes prices up further. It also means that those sharp sighted folks that bought them 10-15 years ago will make a big profit by selling them now, yes even with auction commission charges I hear you say. The auction market for whisky is so diluted now that if you’ve got good bottles and you shop around you’ll be able to wrangle a good commission deal somewhere. Or you could keep hold of them another 10 or 20 years and sell them for even more dosh. (Unless of course civilisation has collapsed in on itself by then which is not too hard to imagine. So drink up!)
If you were smart, like many were, twenty years ago, you could buy a lot of great bottles for relatively little money. Brora Rare Malts 1972 was sold though Oddbins for around £45 in the mid 1990s, now it’s knocking on the door of £1000 a bottle at auction. These are all extreme examples I’m giving but look at the majority of bottles by Signatory and Cadenhead in particular from the 1980s and 1990s, the majority in their main ranges have more than doubled. The blue chip ones have skyrocketed. If you go back even further, perhaps to the late 197os and 1980s, if you were smart you might have gone to Italy and bought bottles with names on the label like Samaroli, Bonfati, Edward & Edward, Sestante or Intertrade. These bottles have no real set value anymore because their appearance at auction is so rare that prices are so hard to determine, all I know is they are fucking high.
So I suppose what I’m getting at is that investment in whisky was easier years ago because there was a plethora of truly great quality bottlings to be had for fair prices. Nowadays, it’s a different story, modernisation has largely flatlined the quality of whisky, the consistency is better and the quality is good, but the appearance of astronomically amazing drams is virtually non existent now. Or when they do appear they are priced directly into the pockets of the wealthy. I’m sure this is a point on which Mr Buxton in particular would strongly disagree, being a firm critic of scoring whiskies and someone whose taste in whisky seems to lean more on the side of modernity. I suspect if I were to say that he doesn’t know enough about these old, world class whiskies to fully grasp the principles of value in whisky the answer would be something along the lines of ‘yes but it’s just your opinion’. Very true, but take Caol Ila London Scottish by James MacArthur, an infamously incredible dram amongst those fortunate enough to taste it, I never encountered anyone who wasn’t utterly spellbound after trying it. It is just my opinion, but it’s also a lot of other people’s opinion, and when those opinions converge on a single bottle, wallets can get thin pretty quickly in the fight to obtain that bottle. Not everyone likes the Beatles but they still shift rather a few records every year because they remain undeniably popular, people want to hear their music. Just as people want to drink these gorgeous old drams. If only we could download some 1960s Bowmores from Itunes.
None of this was touched on in that particular episode of Whiskycast. It’s very easy to talk about buying shares as the only true form of investment but it strikes me that the reason for their negativity towards the principles behind whisky as investment springs from this age old nugget of passion that whisky is for drinking not collecting or hoarding. I’m pretty sure I’ve written about this before on these pages but lets just go over it again for fun. I absolutely believe whisky is for drinking, you’ll not find a greater advocate of this principle that me. However, like many whisky lovers these days, I love to open and drink older bottles, artifacts, liquid time capsules, whisky from yesteryear that shines a light on the production styles and industry culture of decades gone by, I like to call it ‘the dark side’. So, where do we procure these incredible bottles from? I can tell you one thing, it certainly isn’t from legions of little old ladies in the highlands of Scotland who one day discover a chest in the attic filled with their long dead husband’s whisky and decide to flog it so they can sod off on a cruise to Benidorm with the local stud who works in the post office. That is a myth, it happens from time to time but it’s rare. The reason we have old bottles is because of collectors. Plain and simple. We are fortunate enough to drink these incredible old whiskies because someone else kept them and looked after them for many years.
It is also worth pointing out that amidst all the hullaballoo about investors and collectors being the bogey men, the majority of people who buy whisky at auction buy it with a very open mind to drinking it. Most people who buy with us at Mulberry are people who do collect but who also, very often, open bottles as well. This is somewhere that I struggle with Andy Simpsons ideas about investing, I just don’t believe there are that many people actively building a portfolio of whisky as an investment, I know for a fact that there are those that do this, and their number is increasing all the time. It’s still nothing though compared to the amount of people that buy with a much more personal type of investment, those that collect, gather and, ultimately, drink. Why do you think bottles like Macallan Anniversary 50yo still show increasing value at auction even after all these years? There’s only ever going to be less of them, occasionally one gets opened and adored and that imperceptible wee flicker of liquor ripples out and nudges up the prices.
So where does that leave us in these times of ever spiraling retail prices and homogenized flavour and quality? It has made investment a nightmare. You can still buy the old classic bottles even though most of these have found their value already and are increasing at a much slower rate. The only problem is that to get into buying these kinds of old style malts you need some serious capital to begin with. The value in these bottles will never disappear, because there will never be more of them and they will always be adored. In fact the sharp increase in prices in recent years is largely due to a surge of what you might call panic buying. Many people who believe that this is their last chance to acquire these bottles before they go totally crazy have helped bring about that exact eventuality. There are also those that believe China is coming and when it does the prices we see now will be pocket change compared to what will happen when the Chinese marry whisky knowledge to their buying power. For the majority of us however we have to contend with a market utterly swamped in mediocre whisky that will acquire nothing like the kind of increase in value that the old bottles have done. There are some exceptions, some Macallans such as the excellent Easter Elchies range, the recent Springbank 21yo, Lagavulin Jazz Festival and any particularly good casks that get a rather inspiring review on Whiskyfun. The regularly excellent German bottlings by the likes of Carsten Ehrlich for instance are considered by many to be the Samaroli’s of the coming decades. For the most part however those that want to seriously invest should not be fooled by seeing high prices on great old bottles, the chances of the majority of modern bottlings, independent or official, performing in similar fashion is incredibly small. More bottlings depreciate more than you might think. The greatest key to investment in whisky is not so much money but knowledge, knowledge of whisky, what makes a great whisky, why people want to drink it and how to be quick off the mark at spotting and attaining these bottles.
I believe that investing in whisky in this current day and age, unless you have pockets like the diving end of swimming pool, is much harder and more complicated than is being made out by those that promote it, but certainly not the dead end that its detractors claim it to be. Like a great whisky the answer lies somewhere in the middle, balance as they say. But don’t listen to me, I’m just a blogger, and bloggers, as a well renowned whisky writer once told me, are the lowest form of writer.