Interested in buying yourself a barrel of whisky?
Well we are not the only ones, there are many opportunities worth exploring in the world of whisky. Just this year in February it was reported that single malt scotch exports topped £1 billion. So the Whisky industry is undoubtedly growing, we see here in the UK several new distilleries opening up, and along with them new opportunities. Here I will talk about things to take into account when buying casks and give you a heads up on a distillery that is selling casks.
Where to find them?
New Distilleries. When a distillery first starts up, they need capital. In order to raise funds some distilleries decide to sell raw whisky (new spirit) in the cask to individuals. The idea is that it’s an investment for the buyer, as after the distillery has established its self and becomes more popular, demand for their whisky becomes higher – making your cask of whisky more valuable; you could then sell this and make a healthy profit.
So whats the catch…
Not everyone who buys a cask understands how it works. When you buy a cask you are buying new spirit that has been put into a wooden barrel. Now for it to become whisky it needs to be in the cask for at least 3 years and 1 day, however this doesn’t necessarily mean that it’s going to be palatable or ready in 3 years. Usually 10 years is about right, so this is a long term investment.
The problem is that after 10 years you lose a large amount of your precious whisky. In order for your new spirit to become whisky it needs to mature and this requires some heat, however this also results in evaporation. In order to reduce this evaporation the cask is stored in a cool warehouse, however you still lose a decent amount – in the UK a cask can usually lose approximately 2 – 4 p/c a year; leave this for 10 years and you see what’s happening? In 10 years you could lose up to 40 percent of your whisky.
So here is an example of a distillery that has casks for sale:
There are two different casks to choose from: a first fill Bourbon Barrel or a second fill Bourbon barrel, both have the option of being peated or un peated spirit: and a price tag of £2100 Unpeated or £2300 Peated (which includes insurance and the ten-year storage of your 200 Litre cask). Sounds good! However you might ask yourself how much whisky will you have left after 10 years and what will it be worth?
If we assume that the casks will lose 4 p/c a year then after 10 years you will have approximately 120 litres of 10 year malt whisky for just over £2K. This equates to something like 170 bottles of 10 year Single Malt and each bottle will have cost you approximately £12.
£12 for a bottle of single malt is excellent, however make sure you take into account that what isn’t always included in the price of your cask is bottling fees, and this can be quite expensive – in fact I know of numerous cases where individuals have bought casks and not realised how high the bottling costs were, when it came to the bottling they had to sell their casks. This may not be the case with all distilleries so make sure you check first. Annandale distillery has this covered; before the cask can come out of bond you must pay bottling and labelling costs, including VAT (Value Added Tax) and Excise Duty.
So overall it depends on what you’re wanting it for, if you want to buy a cask, wait the 10 years and have a nearly infinite supply of whisky then great, if you want it for investment purposes you might have to shop around and find an affordable way of bottling and transporting it.
My recommendation is that you read all the small print when buying a cask, and that you make sure you have a plan for when the big day arrives when your cask is ready.
You could always just roll the cask home I suppose….