Roll out the barrels!

With the explosive expansion of the Scottish whisky market, and indeed the global market, one of the things that is becoming more popular in the world of whisky is the purchasing of casks as an investment. I am often asked if this is a good idea. While I cannot profess to be an expert on such matters, let’s look at the issues that surround such an endeavour.

Before I go any further, I would strongly recommend that you pay attention to the disclaimer at the end of this post. Any investment is at your own risk.

Many distilleries whether or not they produce and bottle their own product will in some way release their own casks for sale. Some of the more uncommon Scottish malts are only seen through this release of stock, as are some silent distilleries still in the hands of the former operators. Independent bottlers such as Gordon and Macphail, Signatory and Douglas Laing are well known and will source casks using this method and have their own bonded warehouses, but this is intended whisky for bottling and eventual consumption.

Sleeping Beauties – dunnage warehouse

It is becoming more prevalent for new distilleries to offer cask spirit for sale as an investment, and this can be a popular choice, as well as a way of supporting a newly founded business. These new distilleries are often founded by people who have been in the business a long time, but there are still many variables to consider.

1/ Purchase price.

The price of a cask can vary immensely with size. A Hogshead is typically 250 litres, a butt 500 litres. Prices required for investment may range from a couple of thousand pounds up to several thousand.

2/ Whisky Type

Are you just being sold the standard distillery output or can you choose to have a malted barley that has been dried with peat?

3/ Cask type.

What sort of whisky do you hope to have as an end result? Do you have a choice of cask types? In Scotland the law dictates these must be Oak casks, but these could be previously used for Port, Sherry, Wine (usually red), Rum, Cognac or most common is ex Bourbon casks.

Do you get a chance to pick the amount of charring the casks have? This can have a great affect on colour and flavour, as well as an effect on evaporation rate as charring increases the amount of wood surface area the spirit can reach.

4/ What type of storage does the cask have, and where is it stored?

Is your cask going to be kept in a traditional earthen floor dunnage style warehouse or a modern rack style warehouse? Is the location of the warehouse coastal or inland? This will also play a big part in the taste of the final spirit. Remember as the Angels Share of spirit evaporation goes through the wooden casks, the porous wood will also absorb moisture in the outside air. Coastal distilleries often have a maritime note of salt air in their taste.

Casks await their turn

5/ How long do you want to keep it in storage?

If you have invested a significant sum in a cask, you have to be prepared to wait. By law, it will not be whisky for three years after it was distilled. Even after three years, the whisky may not be ready for drinking. Over the course of your ownership, the cask can be sampled to ensure things are on track, as a bad barrel can have a disastrous result on your investment. The barrel can also be re-gauged to assess current volume and level of alcohol content.

The minimum age of storage I would suggest is 10 years, but the longer the better. Just remember your alcohol and volume will be evaporating away. It is important with older whiskies to be sure of the alcohol content, as to be called whisky, it has to be 40% alcohol or above. A good way of calculating what you lose to the angels share is to allow about 2% a year.

Some whisky cask sales may not include storage costs and this has to be factored into the cost of your investment. This leads into my next consideration –

6/ What do you hope to achieve with the cask?

Here is where it gets truly complicated. It can be made simple if you simply sell the cask on, either back to the distillery or you sell it through an auction with the barrel never leaving the bonded warehouse. The latter may be the best way to maximise your investment.

If you choose to remove it from the bonded warehouse for bottling, you will then be liable for excise duty. Current UK duty for spirits is £28.74 per litre of pure alcohol. So if you have a 2o0 litres of liquid in cask of whisky at cask strength of 50%, the duty payable is £28.74 x 100 (50% of 200). Plus 20% VAT. Oh, lets not forget the 20% VAT of the initial cask price, as buying a cask is tax deferred goods.  There is unlikely to be any capital gains tax, as currently whisky casks are seen as wasting goods. However this could change in the future, so best keep your accountant sweet.

What will you do with the bottles? It is possible, depending on the size of cask bought to obtain a yield of around 250-500 bottles. And here is the rub – you can’t sell them unless you have the correct licences. This will be at the very minimum a Premises licence for your premises, and you will also have to hold a Personal Licence as the premises manager, unless you already own your own licensed premises. Not so easy, eh?

The option of selling via an auction may be the path to take. However prices are not guaranteed and just depend on who is viewing the auction, and the level of demand. You may only see a decent return from an older whisky, a whisky from a distillery with good provenance or a combination of both. Selling by auction has a further problem of that you may struggle to sell more than a few bottles at a time. Flooding the market with the same bottling will drive the prices down if you try to sell more than a handful of bottles at a time, even spread across several auction houses. Here is where you need to have a whisky at an age, strength and with a popularity that will garner enough interest and therefore demand. Selling at multiple auctions will also expose you to more expenditure to auction fees, reducing any potential profit. Ideally, if you are going to sell at an auction, sell the unbottled cask. This let somebody else deal with the headache of bottling and spirit duty. You will have to consult how to do this with the distillery you have stored it in and a reputable specialist auctioneer – see my previous blog about on-line whisky auctions here or contact auction houses such as McTears in Glasgow who regularly sell whisky at auction.

Personally I feel if you are intending to bottle it, then investment isn’t really your end goal unless you are able to sell them. A lot of people use their own bottled whisky to give away as a celebration of a life event such as a marriage, significant birthday etc., and therefore make no profit.

What’s in your cask?

7/ Provenance.

The whisky is only worth something if there is a demand for it. For younger distilleries, people may not be so familiar with the brand, and therefore the demand and the price may stay low. Some might buy on the history of a distillery, such as Lindores Abbey, where the first production of whisky in Scotland was recorded or a silent distillery where the supply of New Make has ceased and available bottles are limited. The kudos of having a cask from the first runs of a distillery may also be a good bet, however as I have bought two bottles from the first cask of whisky made at a Perthshire distillery, I can say I’ve not made anything on them yet as the distillery hasn’t had time to mature decent stocks and isn’t well known on a global stage. It may finally increase in value once the reputation of the brand increases.

On the other hand, distilleries with a proven provenance reduces the chance of a bad whisky, and increases the chance of a return, as brands like Glenmorangie, Macallan and Glenlivet are well known world wide – people know they will get a quality dram out of them, although I and others find Macallan often trades on their reputation, and many recent non age statement releases have been insipid to my taste. It will be enough to say the initial cost of the investment maybe a lot higher for these brands.

There is however some food for thought on this matter. The February auction at Whisky Hammer saw a Hogshead of whisky distilled in 1989, making it just shy of 30 years old, with 156 litres remaining at 44% abv sold for a hammer price of £161,500. Add auction fees, the final cost is £181,000. With a potential yield of 220 x 70cl bottles, that places the spirit in the bottles at £822 excluding any excise duty and VAT before bottling costs and other expenses.

Would the whisky live up to that price? Possibly. As somebody who has tasted a nip 60 year old 1938 Macallan and paid over £200 for the privilege, it was superb with a taste I’ll never forget and an even greater, smooth finish, but that was a one off and truly part of whisky history. However you have to be able to sell the whisky in your cask to realise your investment, and that is the big risk in tying your money up for years and potentially not a great return if you are not careful in selecting what whisky to invest in.

Your cask will also be one of a kind, as no two casks are exactly the same. Where and how it was stored will all make a difference, so you will be depending on distillery reputation.

Continuing on the concept of provenance, 10 years is enough time for brands to fall out of favour and demand to trickle away. Like any stock exchange, the value of your investment can go down as well as up, and luxury items are the one thing to go down in value during recessions, and choosing a brand leader name is no guarantee of safeguarding the value of your cask.

Lastlyy ou also have to bear in mind that you have no brand – you can’t label the bottle or even describe the whisky as something like ‘The Glenlivet’ as these are trademarks. You will only be able to say where it was distilled. This takes away a bit of provenance compared to an original bottling, and will not be worth as most as such. This is why independent bottlers often are able to supply older whisky a lot cheaper than the equivalent distillery bottles.

8/ Whisky Brokers

With all this considered, there is another option that may be available to you, and that is dealing with a whisky broker. That way you may be able to purchase a share in a cask, reducing the cost of your investment, but then you are putting the trust in the broker for cask selection. The cask that you buy into may not be New Make spirit, but a whisky already old enough to bottle. If it is from a reputable distillery, you are more likely to see a return – having shares is makes it cheaper to get a cut of an older whisky, and you can spread the amount you are prepared to invest across more than one cask.

My personal choice is to not invest in casks, but rather bottles, where it is easier to see trends in prices and you often do not have to wait years to realise a profit. It is also easier to sell of portions of your investment as needed, rather than having to sell a whole cask. The purchase of whisky bottles as an investment has its own pitfalls, but that’s another article……


I am not an expert in whisky cask investment, and this article only discusses the potential issues you may have in such an enterprise. Please consult an expert if you are thinking of such a purchase, and hopefully the information here will enable you to make intelligent queries. Be aware that the value of any investment in any commodity can go down as well as up, and always factor in the potential extra costs before you proceed.

Please consult HMRC regards any tax liabilities. Information regards spirit duty and Capital Gains Tax is correct at the time of writing (March 2019)

Regulations for the sale of alcohol is taken from the Licensing (Scotland) Act 2005. I do hold a Personal Licence for the sale of alcohol in Scotland and am aware of licensing implications. Be aware that different regulations apply in England & Wales, Northern Ireland and world wide. You are committing an offence if you sell alcohol without the relevant licence, or if you do not use an appropriate licensed business to sell on your behalf (auction, merchant or broker). Please consult with your local licensing board for further information.

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