- The value of rare and vintage whiskey has risen more than 500 percent in a decade
- Experts fear sneaky companies promoting low-quality investment opportunities
- Since whiskey is a luxury rather than a financial product, it is outside FCA regulations.
As one of the world’s most-loved alcoholic beverages, whiskey has a habit of appreciating in value.
By one measure, the value of rare and vintage whiskey has increased by more than 500 percent in a decade.
Export markets are booming too, with the Scotch Whiskey Association estimating that 36 bottles of the spirit are exported every second.
Liquid assets: Rare and vintage whiskey has increased in value by more than 500% in a decade
Thousands of Britons collect and sell rare whiskeys, yet Money Mail has spoken to experts who fear unscrupulous companies are using the spirit to promote low-quality investment opportunities on unsuspecting savers. Is doing.
In recent years, there have been stories of collectors making significant profits from selling whiskey they had purchased years ago.
The specialist nature of collectors’ markets makes them great for people who know what they are doing. But they are also perfect for scammers.
In 2016, the Financial Conduct Authority (FCA) warned of a rise in fine wine scams—where savers were duped into buying excessive or nonexistent wine.
how to spot con
Most experts agree that one of the favorite tactics of scammers is the use of high-pressure phone calls.
By forcing potential victims to make decisions, scammers increase their chances of making a sale.
Of the whiskey websites advertised on Google, many offered a free investment guide in exchange for your contact details.
After entering my details across three websites, I received over 14 calls and four emails in one afternoon.
When I answered the call, a friendly salesman was eager to talk about a rare investment opportunity: buying casks of a new whiskey for £2,000 each.
‘We say on the website that you can expect to make about 10 pcs a year,’ he said. ‘But I personally think this is a conservative estimate.’
An independent whiskey expert reported that a nearly identical cask – from the same impromptu distillery – was sold at auction earlier this summer: for the princely sum of £900.
These scams thrive on the Internet, with data showing that 96 percent of investment fraud begins online – often through ads on search engines and social media.
Anti-scam campaigner Mark Taber says he has seen an increase in online ads about investing in whiskey casks.
He says many of these share characteristics of classic investment scams — including offering guaranteed returns, and asking visitors for their telephone numbers.
He also believes that scammers may be using whiskey to stay ahead of regulators.
For example, the search engine Google has introduced strict rules for anyone advertising financial products to UK users to be registered with the FCA. However, since whiskey is a luxury item rather than a financial product, it is outside the purview of the FCA – and is not subject to these new regulations.
Mr Tauber says: ‘A red flag for me is that these ads are intentionally targeting people looking for investment advice, not people looking to buy whiskey.
‘There is also a danger that companies will sell on the details of potential victims, who will then be targeted by more specific investment scams.’
Another telltale sign of an investment scam is the promise of high returns without mention of risk.
MoneyMail visited the websites of four companies advertising the opportunity to invest in whiskey.
The four were offered the opportunity to purchase casks of ‘new make spirit’ – a clear alcoholic liquid that eventually matures into whiskey.
According to the companies’ websites, buyers can expect to sell their casks for a healthy profit — about 10 percent per year — once their spirits have matured.
In addition, as Cascade whiskey is classified as a ‘wasting asset’ (i.e. something that depreciates over time), the gains will not be subject to capital gains tax. You can see why such an offer might sound tempting. But whiskey experts are more cautious about the quality of these opportunities.
They state that, while it is true that casks are exempt from capital gains tax, returns are not guaranteed.
Andrew Lang is co-owner of Ardnahoe, the latest distillery to open on Islay – the Scottish island loved by many whiskey fans.
Experts warn on online ads that offer a chance to buy mature whiskey casks and claim highly questionable returns of around 10 percent per year.
It is one of several distilleries that sell casks of whiskey to private investors – ranging in price from £2,000 to £12,000.
‘We would never tell anyone that they should expect a certain price or return,’ he says. ‘It’s much more about the experience of owning your own whiskey, rather than a specific investment.’ Mark Littler, an auctioneer-turned-expert whiskey appraiser, believes even some companies that advertise online are misleading investors.
He says: ‘Caps can be a good investment. But if you are expecting 10 per cent returns annually, then you will be disappointed.
‘The value of whiskey doesn’t always increase in a linear way, and you won’t make any money until you sell your cask outright.’
He advises that anyone buying whiskey directly needs to know what they are getting – and seek an independent appraisal where possible.
They should also take into account potential additional costs, such as bottling the whiskey as it matures. If you’re looking for less elaborate ways to invest in the growing demand for whiskey, there are alternatives.
FTSE beverage giant Diageo owns several high-end whiskey brands — including Lagavulin and Talisker — and has been growing its export markets in recent years.
Its shares are 56 per…