Whisky Business

This article is contributed by Rickesh Kishnani

I have been a collector, an investor, and overall whisky enthusiast for several years. Through the years, I have discovered that single malt whisky has several unique attributes. For one, aged single malt whisky takes decades to produce which means distilleries have no way to produce new supply of old whisky in the short term.

Whisky has no shelf life and never goes bad. As a distilled product, once in the bottle, aging stops completely. In addition, storage of whisky does not require temperature or humidity control, making it cheaper to store and easier to transport, compared, for example, to wine.

In general, all kinds of whiskies (bourbon, blended whiskies, single malt, etc.) have seen an increase in demand over the last five years across the US and Europe. Most recently, it has gained popularity in Asia.

Market Fundamentals

The principles of rare single malt whisky are simple supply and demand economics. Producing an aged single malt whisky such as the Macallan 18 Years Old takes a minimum of 18 years. All the aging happens in the cask while the whisky is still at the distillery.

Back in the 1980s and early 1990s, distilleries simply did not put enough whisky into casks for long term aging in order to meet the demand we see in the world today. The global lack of supply coupled with rising demand has led to a steady increase in prices for rare single malt whiskies over the past five years.

The Rise of Japanese Whisky

While its popularity is more recent, the Japanese whisky industry has been around since the early 1920s, boasting a unique heritage. Masataka Taketsuru, the descendant of a sake-brewer, had come to love Scottish whisky so much he spent two years studying the craft of whisky making in Scotland. He then moved back to Japan to help start the Yamazaki distillery. Eventually, he left the distillery to start his own company, Nikka.

The history of Japanese whisky was turned into a TV drama series in Japan, which made domestic demand for the tipple sky rocket. It was around this same time that Jim Murray declared the Yamazaki 2013 the best single malt whisky in the world in the Whisky Bible, which continued to propel demand from around the world.

What to Buy

Whether you are buying rare whisky to collect, consume, or invest, always look for these three key attributes:

1. Limited Supply

The whisky needs to be produced in limited numbers. Choose a single cask bottling of whisky or purchase from a silent still, also known as a closed distillery. Examples of popular silent stills include Rosebank, Port Ellen, and Brora.

2. Demand

Opt for popular brands that have a strong history of price appreciation and past performance in the whisky auction market. Examples included Macallan, Springbank and Karuizawa.

3. Provenance

Lastly, find out the origins of the whisky. Only buy whisky from a trusted source and make sure you know exactly who does the authentication.

Rickesh Kishnani is the Fund Manager of the Whisky Investment Fund, which is structured as a Cayman Island 7-year closed-ended fund and launched in June 2014. US$12m has been raised from private investors and US$9m deployed so far into 14,000 bottles. The Fund plans to distribute the whisky through an exclusive distribution partnership with Quintessentially, the world’s leader in insight, data, and services for the global affluent audience.

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