Whiskey investment - An asset class on the move

Table of Contents

• Interest is at an all time high
• The wealthy, the worldly & the rest of us
• Nascent technologies & their potential

The value of a warming Balvenie on a cold winter's night may provide the perfect transactional value for the setting, but for a new generation of individuals the potential upside of investing in whiskey comes from treating these desirable consumer goods as a store of value, an appreciating asset and a hedge against market volatility (sound familiar crypto investors?). 

For many years, the distilleries that curate and craft these products have been orienting themselves to fuel this market with limited editions, small batches, restricted bottling, alongside creative marketing and merchandising, which has created pockets of value to be revealed and revelled in.

Let’s find out a little more about why whiskey as an investment asset class, is really going places.

Interest is at an all time high

There is a perfect storm brewing for whiskey investment interest. 

If we had to merely look at three of the key market conditions to illustrate our point, they would be:

• Product quality and diversification
• The demographics of new wealth
• Post-COVID economic instability 

The standard of craftsmanship in the world of whiskey is an obvious part of the reason that interest is so high. From the Macallan to Bowmore, Lagavulin to Ardbeg, the quality of product coming from these distinguished distilleries is second to none. However, this isn’t isolated to historic single malt names, there are a growing range of collectible and rare whiskeys emanating from Japan, Ireland and the United States from the likes of Yamazaki, Midleton and Van Winkle. As the market grows in terms of Whiskey type, history, profile and value, so does the interest base both in key geographies and in growth regions.

As the product set diversifies, so does the money that might flow towards these distilleries and their stores of value. The incumbent CRM activities and community management of traditional whiskey aficionados previously focused on a key cohort in the age range 50-80. However, that is starting to change. 

Whether it is successful business owners, newly inherited wealth, tech start-up c-suites or crypto millionaires, there is a growing segment of young gen Xers and millennials, who are newly adapting to managing significant personal wealth portfolios. They have a discerning palate, a thirst for knowledge and clout to further grow the whiskey investment market.

Whiskey has proved over the last 100 years that it is an asset that can flourish during uncertainty. Casks, which can average 12-20% growth per annum can be seen as consistent and secure assets.

The wealthy, the worldly & the rest of us

The audience for whiskey investment has always been within a cohort of people who live a life of discernment. They understand what is good, why it’s good and why it will grow in value. In many cases they will have access to some of the most knowledgeable and connected people in the industry to get the inside take on what is looking like a good investment and who/what is worth keeping an eye on.

Similarly to the world of crypto, where a small group of seed investors know who to invest in and why, the inner-sanctum of whiskey investing has created the kind of brand-led, desire focused frenzy that has built outward from the aged amber liquid to objet d'art.

These individuals and the assets they invest in, are found in auction houses and in partnership with the relevant middle men. But with the travel restrictions and Zoom event ubiquity of the pandemic becoming normal, even ultra high net worth individuals will become reluctant to pay out fees that they don’t have to.

Alongside these traditional high net worth whiskey aficionados, there is a massive wealth market ready and waiting for their opportunity to invest. These might be a range of two comma traders or the wider retired upper middle class, but one thing is for sure… more money means more interest, means heightened awareness and fear of missing out. But a new generation of retail trade will ask:

• Why can’t the global whiskey investment space be 24/7? 
• Why can’t it be 365? 
• Why can’t it be peer-to-peer? 
• Why can’t it be fractionalised?

Nascent technologies & their potential

The difficulty with casks, bottles and objet d'art is that they are real world, physical items that are heavy, intricate to store, costly to insure and more.

What if these items had a digital counterpart that could be traded, coveted and sold to the highest bidder without the auction house, the temperature controlled transport and white gloves?

Enter the team at DramEx. 

By creating a NFT marketplace for whiskey investment, the team are solving many of the problems that we as investors have faced and that many distilleries face, day in, day out.

Just like finding your favourite DeFi project in crypto that you knew had the right blend of individuals, expertise, market niche and protocol efficacy. You and your fellow crypto investors can find the next generation of whiskey collectibles in a decentralised marketplace that raises up talented new distilleries and the artisan producers of tomorrow’s store of value. Starting a collection and benefitting from the flexibility of the space, will have never been easier.

It is our belief that we are only just starting to see the first green shoots of what the whiskey investment market will become over the next 10 years. The Balvenies that might be shared at Christmas, may have to stay under lock and key for another Winter, whilst you drink a perfectly good off the shelf Redbreast whilst watching the snow flurries... and as you quietly mint an NFT on Xmas day.

Written by Ernest Cantillon, CWO and Co-Founder of DramEx

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.