Whisky has never been a more popular or in-demand spirit. Yet, it’s more than just a spirit, more than just Scotland’s national drink; it’s a global passion that transcends borders and cultures, captivating connoisseurs, collectors and investors around the world.
And buying whisky, particularly whisky casks is an exciting and increasingly popular way to diversify a portfolio while indulging in the world of fine spirits. In contrast to traditional assets, the value of a cask of whisky is inherently tied to its age and rarity, making it less susceptible to market volatility.
Here, we’ll explore why whisky casks make an excellent alternative asset because our mission at Golden Dram is to help you make informed decisions in this unique and rewarding market.
Whisky is a distilled spirit made from fermented grain – usually malt, rye, wheat or corn – that has been aged in a wooden cask.
Whisky must be aged in an American or European oak cask for the minimum of three years and one day in Scotland, for it to legally be called Scotch whisky.
A whisky cask is a barrel, made from American or European oak, used for maturing new-make spirit – the clear spirit that runs off of the still – into whisky.
In Scotch whisky making, the cask will have previously held another alcoholic spirit – most often bourbon, sherry, or wine – which imparts unique flavours, colours and characteristics to the whisky during the maturation process.
The biggest and best-known producers are in Scotland, Ireland, the USA, and Japan, but whisky is now made all over the world.
The origins of whisky began with the practice of distillation, which was developed in China in around the 10th century to make essences, balms and perfumes.
From China, the art travelled westwards through the Middle East, Ancient Egypt and then into Europe. From there the knowledge is thought to have been brought to Ireland by missionary monks in around the 12th century.
Initially, the practice of distilling whisky, or ‘aqua vitae’ as it was known then, was primarily kept within the walls of Irish monasteries, but occasionally, the monks shared what they knew with local farmers in exchange for the barley needed for distillation. Somewhere along the line ‘aqua vitae’, in Latin meaning ‘water of life’, also became known by its Gaelic translation of ‘uisce beatha’.
Whisky distilling soon made its way to the shores of Scotland, where the very first documented evidence of whisky making was recorded in The Scottish Exchequer Rolls in 1494. The records show an entry reading: ‘To Brother John Cor, by order of the King, to make aqua vitae VIII bolls of malt.’ John Cor was a Tironensian monk based at Lindores Abbey in Fife.
Over time aqua vitae (or uisce beatha) became to be known as ‘usky’, which eventually evolved into the word ‘whisky’.
Although originally distilled by farmers, whisky really began to take off commercially in Scotland and Ireland in the late 18th and early 19th centuries, when most of the big-name whisky producers we know today were first established under new licenses. Distilleries such as Glenlivet, Macallan and Glenfiddich sprung up and began exporting their precious malts across the world.
Soon, whisky-making was grasped in America with the advent of rye whiskey and bourbon in the late 19th century, by Japan in the early 20th century, and more recently in places as far flung as New Zealand, Australia and Taiwan, to become the global phenomenon it is today.
Today, the global whisky industry is a multi-billion-pound business.
Whisky is the fifth most commonly consumed alcohol in the world and is growing steadily. The global whisky market was worth $67.9 bn in 2023 and is predicted to grow by 5.3% (CAGR) to $109.8 bn by 2032.
In the UK, the Scotch whisky industry alone contributed £7.1bn to the economy in 2023. It exports to 180 countries around the world and supports 66,000 jobs in the UK.
So, why do whisky casks make such a great alternative asset? These are just some of the benefits.
Maturation increases the value of a whisky cask by enhancing its flavour complexity, rarity, and desirability, as older whiskies are more sought after and command higher prices in the market.
Generally, whisky casks tend to increase in value over time, making them a valuable asset for an investment portfolio focused on long-term wealth preservation and growth.
Whisky casks make unique gifts to mark milestones or to celebrate births, marriages, anniversaries and other special events. Additionally, these assets can be passed down through generations, providing a way to build and maintain family wealth.
In the UK, whisky casks are classed as a depreciating asset because of evaporation over time (known as the angels’ share) so if you sell a whisky cask, it is exempt from capital gains tax, making it attractive from a tax perspective.
WASTING ASSET EXEMPTION:
A wasting asset is an asset with a predictable life not exceeding fifty years at the time when it was acquired, TCGA92/S44(1).
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg76901
The worldwide demand for premium, high aged or rare whisky is growing, with limited supply, creating a favourable market for cask owners.
Whisky has a well-established secondary market, with auction houses and private buyers constantly seeking out aged casks, allowing for liquidity when needed.
Your whisky cask will be stored in HMRC-approved bonded warehouses, a safe and secure storage facility, until it’s ready to be bottled. Here at Golden Dram, we offer full ownership in the form of a Delivery Order. This means that the cask is stored in your name ,as the owner, at the warehouse.
Like other tangible assets, whisky casks can act as a hedge against inflation, holding their value as currencies fluctuate.
Whisky casks offer a distinctive and rewarding opportunity for those seeking an alternative asset with long-term growth potential.
With global demand for aged whisky on the rise and the inherent value of whisky increasing as it matures, cask ownership provides a compelling mix of financial returns and personal enjoyment.
