Investing in whiskey barrels has become an increasingly popular alternative investment in recent years. As global demand for premium whiskies continues to grow, prices have risen steadily, attracting investors looking to cash in on this lucrative market. However, like any alternative asset, whiskey investing comes with its own unique risks and challenges. This article will examine the potential returns and risks of investing in whiskey barrels.
Whiskey prices have outpaced stocks, bonds and gold
Over the past decade, rare and aged whiskies have significantly outperformed more traditional assets. For example, the Knight Frank Luxury Investment Index shows whiskey prices rising 582% between 2008 and 2018. This handily beat global equities (196%), bonds (67%), gold (136%), and collectible cars (194%). As global whiskey demand continues to grow while supply of aged stocks remains constrained, whiskeys – especially rare Scotches – are likely to continue appreciating in value.
Maturing whiskey in barrels can produce high returns
There are substantial returns to be made by purchasing barrels of new-make spirit and maturing it into whiskey. Estimates typically range from 15-25% IRR over a 5+ year period. However, projected returns don’t always materialize due to factors like angel’s share evaporation, quality deterioration, and market demand changes.
Whiskey barrel investing provides opportunity for high returns but also significant risks. Investors must research market dynamics carefully and work with reputable whiskey funds or brokers.