whisky Archives

Whisky…. What on earth is going on!!

While this grand title may suggest some clairvoyant insight, sadly, I can’t promise that. However, I hope to offer some common sense, which seems to have been a bit lost over the last decade (or more, depending on who you ask) in the ever-popular area of whisky investment and collecting.

Whisky has rarely been out of the news in the last ten years, with bottle prices surging, being redefined as an asset class, and various million-pound-plus casks (including the £16m Ardbeg cask) delivering remarkable returns for sellers.

As with any market, this upward trend could not last forever (although it seemed never to slow!), and for some, it has ended very badly. However, this current downturn in cask prices is not just due to a shift in demand for the drink but also stems from a far more sinister cause.

As with many markets that have boomed in the past, unscrupulous dealers, so-called experts, and brokers have flooded in, seeking a quick profit (and it seems they are getting it!). Sadly, it appears that casks of whisky were the asset they had been waiting for.

It should also be remembered and clearly stated that this market has existed for decades, even centuries, before these issues arose. There are many fine, honest, and trustworthy sellers of casks who have weathered the ups and downs of the market and will continue to thrive.

The recent BBC documentary, Disclosure: Hunting the Whisky Bandits, aired in late March and exposed to a wide audience the practices that now appear to have been prevalent in certain parts of the market.

The tactics used seem, at best, misleading (though they could be considered fraudulent) and, at worst, criminal. People are now facing the loss of life savings and pensions, with little chance of recouping their investment, let alone the vast profits that were, essentially, promised.

So how could this happen? Frankly, there are too many factors to cover here, but two stand out to me.

Firstly, the genuine returns some casks have brought since their purchase in the mid to late 1990s are enormous. Stories of Macallan casks bought for £2,000, forgotten until a dusty receipt is found, then sold for over £1m, are true – though rare, but true. Scammers can use genuine past data to project a forecast for the future, but no market’s past performance is a reliable guide to its future. This has allowed for gross overselling.

The market then and now are completely different worlds, and the stocks available back then are no longer available today. The market crashed in the 90s due to the whisky loch of oversupply, followed by a boom from the early 2000s onwards, driven by a new generation of drinkers and a scarcity of stock.

But the key is that these overpriced casks are not genuine ‘greats’. A Swatch wristwatch is not a Rolex, a D-flawless natural diamond is not a D-flawless lab-grown diamond, and while some may consider them investments, they exist on entirely different planes.

Secondly, and perhaps where the real criminal activity lies, is in investing in a physical asset you never actually take delivery of or even see.

These casks must be stored in HMRC-controlled and licensed warehouses, many of which don’t deal with the public, meaning you never take physical possession of the goods. In some cases, your certificate of ownership is no more valuable than a diamond grading certificate from the Peckham branch of the Trotters Independent Trading Co. School of Diamond Grading (an odd reference, not meant to make light of the situation, but you get the point). This has led to casks that never existed being sold to people or, in some cases, casks that do exist being sold more than once. Often, this occurs alongside inflated prices, creating a double whammy.

I don’t want to dwell on what has happened or how it occurred, as there is plenty in the documentary to watch and other articles offering more in-depth coverage. But what can we learn from this, and what should you do if you’re concerned you might be caught in one of these traps?

Firstly, we must always remember that investing in anything carries risks, even buying a cask for personal consumption. There are risks involved – always drink responsibly. Don’t get caught up in the hype of promised returns; nothing is guaranteed. Only buy from a broker with proven provenance, which is a key term in any field we value. And, of course, ensure your paperwork is in order.

The best and most official guidelines for buying a personal cask come from the Scotch Whisky Association and can be found here: Personal Investment in a Scotch Whisky Cask.

But also get your cask valued on a semi regular basis. Ask for samples and regauge figures – the measure of what volume and strength is in the cask which will ultimately determine return.

If you’re concerned about a cask you own, speak to the seller and request a Delivery Order in your name. If that cannot be supplied due to warehouse restrictions, consider having the cask moved to a different warehouse. Any cost involved will be well worth the peace of mind. After all, this is your cask; you should have clear ownership and be actively involved in its journey.

I’ve been asked recently how prices have been affected. The truth is, we don’t know yet. However, it’s fair to say that the hot market of 3-4 years ago has cooled, and prices have compressed. I don’t think this is directly in reaction to the recent news, but if a glut of casks comes onto the market as a result, it could have a worsening effect.

And finally, a question I was asked only today: “If I want to buy a cask, what do I do?” Firstly, understand the risks involved by speaking to a reputable broker or distillery directly (there are only a few that sell casks). Buying a blue-chip whisky will always offer the best return and/or protection, but these casks are rare and still highly sought after.

The point many private buyers seem to miss is crucial: know your exit strategy. Are you buying to bottle for a special occasion like a family wedding, birthday, or anniversary, or are you looking to sell? Those are all very different opportunities.

As I said to one would-be investor who had it all wrong: buy a few bottles, look at them until you’re bored, and if you can afford to, enjoy them with friends. After all, whisky was made to be drunk and enjoyed!

Christmas tips from a seasoned tippler

“Any fool can serve a good wine by spending a fortune on it”, my father used to say, “but the trick is finding something delicious to drink that isn’t ruinously expensive”. He was particularly good at it and I have tried to emulate him.

With Christmas around the corner, expenditure at an annual high and entertaining on a larger scale than normal, I thought it might be helpful to share some things I have found or been introduced to by Hels, my P.A., that Serena, my wife, and I have enjoyed drinking without breaking the bank.

I am going to do this in a chronological order, starting with aperitifs, first course companions and then what to have with meat, fish and, of course, Turkey, and finally, what to drink with cheese and pudding.

I know next to nothing about spirits, so if Milk Gin is your tipple or you adore cocktails pre-prandial, forget my wine choices and go for things you like.

At times of celebration one immediately thinks of Champagne, but when it’s going to be drunk in industrial quantities, one tends to think again. Do you really want to spend between £35 and £55 a bottle for an average Champagne?.

Instead, we drink the Crémant de Bordeaux that Jane Macquitty habitually praises in The Times. It comes from M&S at £10 a bottle and has small bubbles, which I like, as I’m prone to sneezing if they get too big, and has a creamy texture. In fact, try any of the Crémants from Bordeaux, the Loire, Jura or Bourgogne. They are made the same way as Champagne but don’t come from the region so have to be called something else by French Law, and cost a fraction of the real thing.

If you don’t like fizzy drinks, you might like to try something white and light. I agree with my dear friend Ben Collins, who co-owned Bibendum and tragically died two years ago. He liked to drink thin, slightly astringent wines on an empty stomach and a more robust Chardonnay, like a white Burgundy, when accompanied by food. I like the grape varieties Sauvignon Blanc, Pinot Grigio, Torrontes, Albarino and Assyrtiko in this category, where acidity and minerality are the buzzwords.

In the under £10 price range, try Ned, a New Zealand Sauvignon Blanc from Majestic and Marques de los Zancos from Tesco, a bargain at £5.85.

Now we have arrived at the moment critique! Many of my friends have become disaffected with Turkey, as the legs (the only flavoursome bits) dry out before the breast is cooked and you can’t spatchcock a bird that is meant to be full of stuffing, they go for beef instead. Whatever meat you choose, or vegetable if you are vegetarian/vegan, try a red wine.

There is little point buying cheap red burgundy (Pinot Noir) as it doesn’t taste of anything and even when you spend £100 a bottle for red wines from this region, it is easy to be disappointed. I would go for a claret, (the red wine of Bordeaux) and my favourite in the reasonable price range is Château Beaumont. It is a vast estate in the Haut Medoc, just under 280 acres and producing, on average, half a million bottles of delicious, well-made Claret every year. Your best bet is to buy it well in advance of using it, i.e. about six years. The 2020 is readily available, although not yet drinkable for £10 a bottle in bond. You then have to pay duty, currently at £2.67 a bottle and VAT at 20% on the total, to take it out of bond, but it is well worth the effort. The 2014 is drinking now and is available from Richard Kihl in Suffolk, still at £10 a bottle in bond, which works out at £15.20 a bottle delivered.

If £15.20 is beyond your budget, you could do a lot worse than buying Cote du Rhone from Lidl at £5.29 a bottle. Like the Beaumont, it will benefit from a couple of years aging so that the tannins are absorbed, otherwise, it is totally drinkable now.

Next comes the Stilton. It has such a strong flavour that it overwhelms most wines, but not the fortified ones. So, I would recommend Port with this course. A vintage port from a great year such as Fonseca 1994 will set you back £100+. From a less good year, say 2003, you are still looking at spending between £35 and £50. However, if you plump for late bottled Vintage Port, such as Taylor Fladgate’s, LBV 2016 from Wand Wines or Hard to Find Wines for £15.99, you will find a delicious round and hearty glass that punches the same weight as the cheese.

Finally, what about pudding wine? I think that most sweet things at Christmas are so sugary – Christmas Pudding, brandy butter, mince pies that to have a sweet wine with them would be cloying. Open some more Cremant!

However, if you are serving Foie Gras or a pudding that is quite tart, a Sauternes is your answer. Of course, Chateau d’ Yquem is by far the greatest of them all, arguably the finest wine from Bordeaux, but at £3-400 a bottle for a recent vintage, you need to have a big cheque book! A bottle of the 1811 was bought for £75,000, making it the most expensive bottle of white wine ever sold.

However, there is an incredibly rigorous selection policy at Yquem and the 150 pickers go through the vines picking the grapes several times, as they ripen at different speeds due to the presence or absence of Noble Rot, a fungus that weakens the skin of the grape to allow evaporation. This makes for a very sweet wine due to the percentage of sugar to liquid. In 1964 the pickers went through the vines 13 times, only for the makers to decide the grapes were sub-standard and declared a non-vintage making no Yquem at all. This doesn’t mean they make no wine in such a year. In most years only the best grapes are used and the lesser ones go into a ‘de-classified’ wine, such as “Sauternes” from Vineyards Direct, which was selling for £16 a half bottle when released. Try and find one of these.

To end on a note of thrift, Christmas is the time to search for that bottle of wine a friend brought you and you know you would hate and had put aside for the Tombola at the village fete. This is a gift that is heavensent for mulled wine, where the wine is just a vehicle for cinnamon, orange peel, cloves and nutmeg and where the heating process ruins the wine. A glass of mulled wine on a cold winter’s day is a thing of good cheer. Enjoy it and have a very Happy Christmas.

Tag Archives: whisky

What’s Really Going On in the Whisky Market?

Christmas Wines

Christmas tips from a seasoned tippler