Personal Investment in Scotch Whisky in cask

Scotch Whisky Association pamphlet


Scotch Whisky is Scotland's most enduring natural asset. Its roots are firmly embedded in Scottish history and traditions where it is an intrinsic part of Scottish life. Its origins may be lost in the mists of time, but the Scots have successfully taken the natural ingredients with which their country is abundantly blessed - barley, cool clear water, peat clad hills, clean fresh air - and created the world's leading international spirit drink.

Today, the reach of Scotch Whisky is phenomenal. Distilled in more than ninety distilleries dotted around the highlands, islands and glens of Scotland, it is subsequently blended and bottled, and then exported to more than 200 markets around the world - an unrivalled reach for the product of one cou ntry.

Scotch is consistently listed amongst the United Kingdom's top five export earners, and regularly year by year beats its own export earnings records - all of which creates considerable interest in Scotch, whose appeal as a drink of style and quality is amply demonstrated by its export success.

A Personal Investment Opportunity?

A number of companies outside the industry are promoting Scotch Whisky as a worthwhile and potentially lucrative investment for individuals.

The Scotch WhiskyAssociation is not in a position to offer any advice on the purchase or se/e of Scotch Whisky as an investment. Neverthe/ess, it believes that potential investors, in order to assess these offers, should understand something of the structure and operating methods of the Scotch Whisky industry

Scotch Whisky and its Market

World sales of Scotch Whisky are currently in excess of 85 million cases - more than a billion bottles. In order to meet this demand, Scotch Whisky blenders, whose requirement is for whiskies aged over different periods, contract with individual distilleries for the supply of the malt and grain whiskies they will require, laying down their stocks several years in advance.

It is on the basis of this way of doing business that Scotch Whisky distilleries are able to plan and maintain production at viable levels.

As a resu/t, there is no external market for matured or maturing Scotch Whisky, no "Whisky Exchange", no officially published list of buying and selling prices for whiskies from different distilleries and of different ages, no established mechanism for selling. Scotch Whisky is not a regularly traded commodity on an open market: it is traded within the industry, sometimes through Scotch Whisky brokers, primarily by contract between blenders and distillers, who will sometimes swap stocks, with no money changing hands.

It is perfectly possible, subject to availability from distillers, and their willingness to sell, to purchase Scotch Whisky, either newly-distilled or maturing, for personal use. Both new fillings and maturing whisky are also purchased from time to time as a form of speculation, with the intention of re-selling them at a profit.

However it should be emphasised that only an extremely small proportion of the total amount of whisky distilled in Scotland is bought and sold in this way.

Thus, any investment made by an individual with a view to selling it on at a profit must be made on the basis of his personal assessment of the risk, and the va/ue of the investment to him.

The Promotion of Investment Opportunities

"Opportunities to invest" have been circulated, most commonly as loose inserts placed in magazines and newspapers. It is clear from enquiries by individuals to distilleries that potential investors have been encouraged to believe they can expect some spectacular appreciation rates - as much as 18 per cent a year - from their whisky investment.

Whisky, however, is no different from other commodities, whose value rises or falls according to supply and demand. The only certainty about owning a cask of Scotch is that it will lose roughly two per cent of the contents through evaporation each year. Everything else in this context is pure speculation.

Liability for Excise Duty

If the investor ultimately decides to bottle his investment, he should be aware that it is at the bottling stage that excise duty becomes payable at current rates, ie at the rate applying at the time of bottling, not at the date of purchase. Thus, the purchase price is only the initial outlay.

Today's rate of duty (1996) is £19.78 per litre of pure alcohol (to which VAT must be added).

Assuming that a cask of 250 litres of maturing spirit, at a typical strength at maturity of 60 per cent alcohol by volume, matures for ten years, the duty (excluding VAT) at today's rates would require further expenditure approaching £2,500, over and above the original purchase outlay, to say nothing of the cost of bottl ing, if a bottler can be found willing to handle one cask.

All the time the cask is in the warehouse, annual storage and insurance charges are likely to be levied, increasing the cost of the investment.

Digest Before you Invest

Those considering making a personal investment in Scotch Whisky may wish to take the following actions.

Check that the details on the Delivery Order are correct, countersign it and send it on to the warehouse at once. The warehousekeeper will then have a record of the purchaser's signature against which any Delivery Order issued can be compared. In due course, the warehousekeeper should issue an acknowledgement confirming that he has received the Delivery Order.

NB: Neither the Delivery Order nor the warehouseman's receipt is a document of title. Ownership is determined by the contract of sale.

Trade Marks

Those who bottle their whisky for resale should bear in mind that the names of certain distilleries are also trade marks, belonging to the distillery. These might be infringed by their use on any label.


Those who invest in Scotch Whisky for their own personal use will in the future derive considerable pleasure and enjoyment from drinking their own selection when it comes to maturity.

On considering their investment decision, potential investors should be aware of the unique nature of the trade in maturing Scotch Whisky.

They should recognise that there are risks involved, both as regards the potential value of their investment, and the opportunities to dispose of it in due course.

The Scotch Whisky Association
20 Atholl Crescent Edtnburgh EH3 8HF
Tel: 0131 - 229 4383