Collecting whisky- Just when you think you’d reached the end….
Briefly now to recap
⁃ We know why we want to collect
⁃ We know what to collect
⁃ We know what not to collect
⁃ We know how to budget
⁃ We know how to store
If you are collecting for the purposes of drinking, then you are now on the simple path to enjoying your collection in the way that the distillery intended, enjoying the aromas, the taste and mouth feel, ending in a great finish coupled with a nice warm glow. Keep it up, as you have attained the situation of enjoying your collection. All you have to do is keep following my advice which is :-
⁃ Keep your whisky you aren’t drinking appropriately stored until you are ready to consume.
⁃ Make sure you don’t open more bottles than you can finish within a couple of months to ensure peak taste.
⁃ Remember the rate of evaporation increases as the bottle empties.
For the drinkers, this is where we wish them a bon voyage, as they have no need to continue to worry about their whisky.
For those who are storing it for investment or collecting purposes, our path has only begun. We still need to walk through a metaphorical ‘Valley of the Shadow of Death’ to ensure we can meet our goals.
What are our goals? If collecting whisky for investment or enjoyment, we cannot afford to take our eyes off the prize. This means we have to keep aware of the availability and prices. We need to know about availability, regardless of why we are gathering whisky, as availability will have a large influence on price, especially if it is no longer available in the primary retail market.
For the same reason, we need to know the prices, especially for buying within the auction or secondary retail market as we need to know if we are over paying. Being aware of price trends will make you knowledgeable if a bottle is at its top price. If you buy a bottle at this point for collecting or investment, it is not going to make much money, as it probably has risen as much as it’s availability dictates and will probably only rise in value slightly as the relative rarity rises.
For the same reason, we need to be aware when the trends are going back down, and when may be a good time to sell. I have a few bottles in my collection I know will probably not go up in value much more and therefore I have to be ready to sell. Although this isn’t a race, we need to be aware that other people will be doing the same thing and a whisky that becomes more available at auction will see a subdued price compared to one that is less common. Timing is everything.
Most value can probably be realised by buying a good quality whisky that isn’t too common that is getting discontinued. One that had a low run (ie one season) will give you lower potential numbers in the secondary market, especially if people continue to drink theirs, thus creating a demand and shrinking availability. Old Pulteney 17 might become such a whisky. Early editions of GlenDronach 18 Allardice may see a good rise. Although not discontinued yet, bottles produced at the start in 2013 would have whisky on average a lot older than 18 years old as the distillery was closed between 1996 and 2001. Bottles released now with a younger date code may not be quite so valuable.
Another way to guarantee a good return is to ‘flip’ bottles upon release. This is most common to do with whisky where it is in high demand. Some distilleries release editions specifically with collectors in mind, and this can often see prices initially way higher than the whisky is actually worth. Also, prices do often collapse down again, with those buying from flippers straight away can often overpay.
Macallan and Ardbeg seem to suffer the most from this phenomenon and it is damaging to the price. It is for this reason I do not focus on these brands. Flipping is also a subject for a future article.
No matter how good your storage, you’ll also need to tip the bottles every now and again to ensure the cork doesn’t fully dry out. A quick turn upside down is sufficient.
When you sell your collection, you should be aware of the legal implications. In the UK you legally cannot sell alcohol without a premises and personal licence. While the law may turn a blind eye to you selling a single item privately, repeated sales will risk prosecution. The only safe way to sell is to a dealer, broker or through an auction. All have their own risks, but you will get a smooth sale without the risk of not getting paid.
This is why you need to keep on top of prices, as selling to a broker or auction house may not have a guaranteed top price and will be subject to commission, which needs to be factored in when assessing potential profit.
Also, be aware that sales of some assets over £6000 in the UK are subject to capital gains tax. As I am not a financial advisor, you will need to check this out, but whisky IS such a taxable item.
Collecting whisky for investment isn’t as easy as people think, and can easily generate a lot of issues, but in summary these can be limited by
1/ Being aware of current and future availability
2/ Being aware of price trends
3/ Being aware of how to purchase at the right price
4/ Keeping records and receipts to maintain
provenance of your collection, and help preserve value.
5/ Being aware of how to correctly store your collection
6/ Being aware of how ancillary costs such as storage and packing can affect return.
Well, this is it. My ‘Magnum Opus’ completed. I do realise that I may have mentioned a few items more than once, but this is because they are important. I’ll certainly be republishing this series again in the future for newer followers of my blog, but will also attempt to update the advice as needed.
Thanks for reading, and I hope it was enjoyable and informative. After drafting the entire series on my iPhone using the Notes App, I need a drink – anybody buying one for me??
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