Talk about a liquid asset! Last year whisky soared by a staggering 40 % in value according to Knight Frank’s annual tracker of the ultra rich. It left classic cars standing on the grid and was nearly four times as good as the nearest rival coins. Wine and art – traditional SWAG assets – limped into fourth place notching up a mere 9% increase.
Coincidentally, a day after the Global Wealth Report was published, Bonhams in Edinburgh sold a bottle of very rare 1926 Macallan malt for £615,000.
Describing the whisky, Bonhams expert Martin Green said: “It is dark honeygold in colour, and is almost inconceivably smooth with a luscious hint of dry-sweetness in the malt.” Estimated at £500,000-700,000, it belonged to a collector who for 33 years had resisted the obvious temptation to sample it.
But there was more to the whisky than the taste – it was one of only 12 bottles with a label designed by Sir Peter Blake, co-creator of the cover for the Beatles album Sgt. Pepper’s Lonely Hearts Club Band.
Impressive as the price seems, it was actually less than the hammer price for a 1926 ‘Peter Blake’ Macallan fromthe same limited series sold by Christie’s Hong Kong in May 2018 – so if Bonhams had been in the know about the Wealth Report, their hope of setting yet another record would have failed. Indeed, the price was well short of the current record holder, also a 1926 Macallan with a hand painted design by Michael Dillon which Christie’s sold for £1,200,000 in November 2018. “That particular bottle came from Fortnum and Mason and was sold for £20,000 back in 2002,” says investment expert Andy Simpson of RW101. Simpson and his co-director David Robertson set up Rare Whisky 101 in 2007 and are world experts in brokerage, valuation and data intelligence.
photographer
Fraser Band
07984 163 256
www.fraserband.co.uk
Despite the appearance that the art on the label plays a part in the inflated prices, Simpson says that only rarity and scarcity drive prices. “For whisky collectors, the fact that it is from the Rolls Royce of distilleries and is exceptionally old is all that matters, not the artwork.”
“Some distilleries have experimented with bejewelled bottles covered with diamonds with the liquid being of a secondary nature and they dive bombed. The same was true for Macallan’s Masters of Photography collection where they released whisky along with famous photographs. Whisky collectors are not interested in crossasset trading.”
Simpson also cautions against the somewhat deceptive prices that are published because they do not reflect the premiums that auctioneers charge, which are a moveable feast but can inflate the ‘real’ price by 40% when buyers, sellers and VAT are included. As premiums are negotiable, it is safer to look at the hammer price. And finally, it is important to note that the Knight Frank index is a bespoke index of prices for 100 bottles ( 21% of which actually lost value). The broader benchmark index for the same 2018 period is 30%.
The growth spurt (of Q42017-Q42018) has fuelled a market in fake vintage Scotch whiskies. A BBC report last year found that a third of bottles tested were not the real McCoy. That does not mean a third of all rare whiskies are fake although that rumour circulated. However, according to Robertson, if the liquid purports to be pre-1900, it’s 99% certain to be wrong.
Using a hypodermic syringe to extract 1mlof whisky and radio carbon dating the sample to establish age (carbon leaves traces in everything organic) 55 bottles were tested, a number of which purported to be from before 1900, including an Ardbeg 1885 and a Thorne’s Heritage early 20th Century blended whisky. In all RW101 estimates that there’s a lot of fake whisky on the market.
The investors driving the growth in prices are, not surprisingly, the Chinese who love a 30-40% ROI even more than a wee dram. The importance of this market is illustrated by the story of a Chinese customer who paid £7,700 for a single dram at the swanky ski resort St Moritz last year.
When the owner of the Waldhaus Hotel Am See was alerted to the error by Robertson after he spotted the story on Facebook – and offered to carbon date the malt, the hotelier shrewdly flew to China to refund the customer.
With that sort of a price for a wee dram forget scouring the remote shops of the Highlands for bargains, everything valuable now goes to ballot. The best way to collect is to join the fan club of an iconic distillery such as Ardbeg or Laphroaig which release exclusives for as little as £150 a bottle.
The fact that you can’t ‘enjoy’ your whisky to the full will come as no surprise to watchers of the art market, where many works purchased at auctions and fairs are placed in store almost indefinitely.
Another area for collectors are rare whiskies from the ‘silent’ distilleries of Japan that closed in the 1980s and are the definitive limited edition.
Yamakazi, the first Japanese single malt, is also in huge demand. You can buy it the label in Tesco but if you want a collectors bottle best head for somewhere like Hedonism in Mayfair which has some great rare whiskies or the Whisky Exchange, Covent Garden.
Simpson, who is constantly watching the market, is all too aware of the dangers of a bubble as prices go through the roof.
His response to the question ‘will it burst’ is a well rehearsed yet Delphic: “I think that pockets of the market could be subjected to a significant retrace.”
2018, A RECORD BREAKING YEAR:
May 18:
1926 Macallan ‘Peter Blake’ bottle sold by Bonhams for HK$ 7.96. Later in the same auction a 1926 Macallan ‘Valerio Adami’ sold for HK$ 8.63.
October 3:
1926 Macallan ‘Adami’ sold by Bonhams in Edinburgh for £848,750 (HK$ 8.64)
November 29: 1926 Macallan ‘Michael Dillon’ sold by Christie’s London for £1,200,000. (HK$ 12,476)