By Steve Dinnen
There are many ways to enjoy fine Scotch whisky — by the glass, with just a touch of ice to cool it a bit, or maybe a bottle if you care to share. But by the cask? As an alternative investment, a 200-liter barrel may not be the best idea.
I recently had a conversation with a whiskey broker from England who is marketing investments in whiskey distilled in Scotland. (Yes, we call it scotch; in its homeland, it’s just whiskey). The idea is to hold the whiskey for a time, let it appreciate in value and then sell it for a profit.
But there are pitfalls. For starters, you have a storage fee. You have to insure it. You lose some of the product over time to what is called the “angels’ share,” the 2-5% that evaporates naturally as it sits in those casks over the course of a year.
And then what? The company that distilled it won’t buy it back. And it’s not like you can easily set up a bottling line and take it to market yourself. And only in the rarest instance will you even be allowed to use the name of the distiller who sold it to you. From what I gathered, the whiskey sometimes is sold back to the marketer, who then markets it under a different label.
There is a bit of a tax dodge to this, thanks to that angels’ share. Whiskey casks are often classified as a “wasting asset” by the British government and any profit from their sale likely is exempted from the country’s capital gains tax.
In a testimonial, a British investor noted that he had bought some barrels, sold them back to the original seller and netted more than a 10% return in little more than a year. As an alternative off-shore risky investment, that’s a pretty low return. So take a pass, and just enjoy it by the glass.
