When you think of alternative investment, the classics no doubt come to mind. Collectables such as antiques, wines, art and rare coins. Perhaps more recently, cryptocurrencies such as Bitcoin, which have taken over the alternative market as the investment of choice. However, with the current instability of the market, are these the best choice? We explore why cask whiskey investment may be the smartest option for alternative investors in 2021 and beyond.
The time for alternatives
The 2020 Cask Whiskey Buyer Report showed that Covid-19 prompted a third of investors to look to the diversification of investment. While a combined total of over 40% surveyed agreed that they were looking at ‘alternative’ investments as a means of either spreading risk, or in response to market volatility.
In total, 64% are currently seeking the reassurance of something asset-backed, while 61% take pride in physical investments. Art (31%), is currently the most appealing prospect for investors looking to alternatives, followed by antiques (28%), wine and watches (both 24%). However, all four options can be capital-intensive, come with high fees and the prevalence of counterfeits, which increase the risks.
A strong alternative investment allows investors to diversify their portfolio and spread risk. Due to the financial turbulence caused by the events of the last year, the investment market is unpredictable. This has investors seeking other stable assets to bring assured returns.
Wading against instability
The alternative investment spotlight has been firmly on cryptocurrency over the last year. Although Bitcoin has had some exciting peaks, it has one of the most volatile trading histories in the alternative market, rallying and crashing numerous times since its first price increase in 2010. Although popular, those seeking stable returns may want to look at more tangible assets.
In contrast to this rapidly moving asset, cask whiskey as an investment is becoming an increasingly appealing and stable option. While whiskey may not offer the quick returns that cryptocurrency can potentially bring to investors, whiskey’s value builds as it sits in the cask, making it a consistent, and always growing asset.
Exports of Scotch Single Malts are set to grow by 11.4% from 2018 to 2022. Also experiencing consistent growth, Irish whiskey has grown by 300% over the last 10 years. The continued expansion of both markets demonstrates the strength of whiskey as an alternative investment and its stability compared to its counterparts.
At Whiskey & Wealth Club, we purchase casks of whiskey from our distillery partners at a negotiated wholesale rate. We then offer the casks to investors at a reduced rate. Once matured, investors can then sell the casks for a profit or bottle for them for personal use. Our model allows us to purchase a percentage of the distillery’s new make production, giving them the necessary working capital for the year. It is a mutually beneficial relationship.
Key to our business model at Whiskey & Wealth club is opening up the cask whiskey market to private investors, pair new investors with one of our wealth advisors who guide them through the process of a once a highly exclusive industry.
Whiskey was a great alternate choice prior to COVID-19, and it has been getting stronger day by day under current conditions. If you’re looking for an alternative investment, that presents a stable opportunity into the alternatives market, cask whiskey may be for you. Get in touch to learn more.