Investing in Scotch Whisky Casks

Why Invest in Whisky?

Scotch Whisky casks have become a hot topic in the world of investing recently, with the asset offering solid double digit returns to investors. Distilleries, Scotch, barrels and hogsheads are on many an investors lips at present.

Though questions we are often asked are “how do I invest in Whisky?”, “is it easy to invest in rare Whisky?” or “how do I select which Whisky to invest in?”. The short answer is that if you want to invest in maturing Whisky Casks, speak with the right partners to assist, advise, guide you and answer any questions you may have along your Whisky investment journey.

Image by Piotr Miazga

Any investor looking to invest in Scotch Whisky casks must do their due diligence and engage the correct partners to assist them, as there are numerous factors to consider. To access the market, a partner with the appropriate knowledge, regulatory licenses, access to investment grade casks at the right price are all paramount to unlocking the growth which maturing Scotch Whisky casks offer investors.

There are several topics which you must consider before investing in Scotch Whisky, namely the Whisky you are investing in (distillery, region and age of the spirit), the wood (known as the cask or sometimes barrel) which can be of varying sizes, quality and type, and most importantly, the price at which you invest.

Here at Altvest Capital Partners, we have over 30 years collective experience in managing investment portfolios to deliver exceptional returns for our clients, with a strong focus on Single Malt Scotch Whisky. We have partnerships with key industry partners offering investors exclusive access to the best quality, investment grade Scotch Whisky casks, held safely and securely in Scottish bonded warehouses and in adherence with Scotch Whisky Regulations. We offer a fully managed solution to suit investors of all kinds access the growth, enjoyment and excitement which Whisky offers. Whether you are looking to enter the market as an individual investor from as little as a few thousand pounds, looking to build a robust Whisky portfolio or are an institutional investor looking to diversify their portfolios, Altvest can assist, guide and advise you. We have many satisfied clients who are happy to share their experiences, why not have a look here.

With bases in both the UK and Singapore we work with clients across the globe, so rest assured whether you’re based in London, Singapore, Hong Kong, New York, Cape Town or Amsterdam, Altvest can help you invest in your favourite dram!

Download our Whisky Investment e-guide or contact us to find out more, though we have answered some common questions below.

Frequently Asked Questions

Do I own the physical cask?

Yes, casks are owned by you and held in Government approved bonded storage in Scotland. Under Scotch Whisky regulations, Scotch must be filled, matured and bottled in Scotland to be considered Scotch. Whilst held in bond, the casks are exclusively held in bailment under the required UK Government licenses for you until such time as you wish to sell, bottle or take the cask from bond. If you would like to bottle the cask for consumption or take physical ownership of the cask directly, we are happy to arrange this, though please note that the Whisky would not be able to use the name Scotch Whisky if bottled outside of Scotland.

I’ve seen very high growth figures quoted, are these realistic and achievable?

Yes, historical data supports claims of investment returns consistently in the 10-20%p.a. range. However, this is very dependent on the right purchase price being secured.

How do I know that the cask exists?

When Whisky is filled in the cask, it is given a unique cask number and is logged with HMRC, who follow its progress until it is removed from duty suspension (bonded storage), when tax and duty become due. As Whisky is a key commercial market in the UK, the seller, purchaser and storage facility are all under the watchful eye of HMRC directly. In addition to the purchase agreement which details all aspects of your investment, you will receive an ownership certificate which details the specific cask details, including the exact location of where the cask is held. You can also arrange to visit your cask or for a sample to be drawn from the cask should you wish.

Can Casks be held in joint names, by a company or by a trust?

Yes, casks can be held in an individual’s name, jointly, under a company or by a trust company.

How long does the purchase process take?

Once you have decided which casks you wish to invest in, the process is straightforward and can be completed within a couple of days.

Can Altvest assist me in deciding which casks I should invest in?

We hand pick investment grade casks to offer our clients, based on the criteria above, so you can rest assured that the casks which we have available all pass our strict quality controls. We are happy to advise or provide options to suit your specific needs and investment goals, feel free to ask.

What about evaporation, will the Whisky simply disappear?

As casks are made of oak, they are porous. Evaporation occurs as the spirit interacts with the wood, though this is a positive as up to 80% of the flavour comes from this process. Evaporation is commonly known as the “Angels Share” and is minimal, accounting for a loss in bulk litres of around 1-2% per annum, with a loss of ABV at around 0.5% per annum. At filling, casks are filled at a higher ABV rate to allow for this process to take place, as well as casks being regularly checked to ensure that everything is in order. Recent RLA/ABV figures are provided at time of purchase and we can regauge casks at any time.

What risks are associated and how can I protect against them?

Casks are fully insured against damage or theft of an individual cask, or something happening to the storage facility itself, this is revalued annually and mitigates the risk of something happening to your investment. As casks mature, they sit in a specialist warehouse and may never leave the facility where they lay, meaning that the risk of something happening to a cask is minimal, though these risks are protected against. Another risk would be a severe downturn in the consumption of Whisky, though the consumption and export figures suggest that this is highly unlikely. The spirit within the cask must be bottled and consumed at some point thus the cask will always have an inherent intrinsic value based on the spirit it holds and the number of bottles which it will produce. The key risk to consider and one which we come across often is the price you are paying for the cask. Due to the large volume of casks which we transact coupled with the expert partners we work with, here at Altvest we offer market beating prices by purchasing at wholesale (with discount in many cases) ensuring that our clients receive the best possible value for their investments. Our casks are regularly price checked against others on the market and consistently come out on top.

If I bottle my cask, will the Whisky still mature?

No. Whisky only matures in the cask, not in the bottle (unlike wine). Therefore, once bottled the Whisky will not continue to mature.

I’ve seen that a lot of investment has gone into increasing distilleries production recently, does this present a risk to me?

Under Scotch Whisky regulation, Scotch must mature for a period of years in Scotland, in fact, the spirit is not officially Scotch Whisky until it has matured for a period of 3 years. The Whisky market is a key commercial market, driven by supply and demand. The age-old dilemma for the industry is that you can’t have a 12 year old Single Malt without allowing it to mature in a warehouse for 12 years, meaning that the supply is based on demand 12 years ago and distilleries can’t simply create aged spirit today which they can sell tomorrow: Time is key. Thus, investment into production by distilleries does not affect already ageing stock and we see the supply and demand gap remaining for years to come, despite investment. With 90% of all Scotch Whisky being bottled or blended by the time it reaches 12 years old, demand for well-aged spirit further outstrips supply, offering a unique opportunity to investors. Growth markets such as India, Africa, South America and Asia have seen double digit growth in exports, showing that the market is buoyant.

Has COVID-19 or Brexit affected the market, should I be concerned?

COVID-19 disrupted the consumption and the supply of Scotch Whisky though the reduction in out of home consumption was largely counteracted by an increase of in home consumption and overall consumption figures are widely expected to outstrip pre-pandemic levels as lockdowns around the world ease further and economies open up again. Similarly, Brexit had an impact on exports to the EU, though the USA is by far the largest importer of Scotch Whisky and with the relaxing of US tariffs on Scotch Whisky imports largely coinciding with the timing of Brexit it added a welcome boost to US bound exports and softened the impact of Brexit. We have also seen unprecedented growth in exports to countries such as China, Taiwan, India, Mexico and even Latvia.

As of August 2021, overall export figures were up 30.59% on 2020’s figures and just 10% off 2019’s all time high. Overall, consensus is that we will be seeing new all-time highs in the near future as post Brexit/pandemic support for the industry kicks in coupled with the profile of Whisky drinkers Worldwide expanding, with younger Millennials now considered a key consumer market. We see this as a time for investors to be excited by the prospects within the Whisky market, rather than concerned.

Are there large costs for upkeep, storage and insurance?

No, the cost to store and insure a cask is only £40 per cask per annum. We also include the first year of storage and insurance within the purchase price!

Are there any other costs or taxes?

All purchase costs are included within the purchase price and other than the ongoing storage and insurance, there are no other ongoing costs. As casks are held in duty suspension (bond), there are no other taxes to consider until selling the casks, unless you wished to remove them from their bonded storage, to take physical ownership or bottle.

Do I have to sell my casks via auction or bottle when I wish to sell?

When you are looking to sell your casks, in most cases we recommend that you sell the casks whilst still in bond, therefore you don’t need to rely on selling via auction or to bottle to realise your investment. Of course, should you wish to then you can. The Whisky market is a commercial market, therefore provided that casks are priced correctly, the market is often “willing buyer, willing seller” with multiple points of sale available.

When I’m looking to sell my casks, what is the process and are there large fees involved?

Our team will find a purchaser and negotiate the best price for you. We have an extensive network covering both institutional and private investors, distillers, private bottlers and collectors. Provided that you are happy with the price offered we will complete the sale and all paperwork. This process takes a maximum of around 1 month to complete though is often much less. To sell the casks, we simply charge 5% of the profit made. What’s better, this is not charged if you have a buyer who you are selling to directly, or if you are reinvesting the proceeds into new casks with ourselves. This fee is significantly reduced on industry standards which range from 5-15% of total transaction value, ensuring our clients receive the best possible value from their Whisky cask investment.

I’ve been quoted cask prices in another currency (other than GBP), is this normal?

As mentioned in other questions, Scotch Whisky is a commercial market, with casks being held in Scotland and transacted by corporate entities in Pounds Sterling. Therefore, we would recommend being wary if you have been quoted in a currency other than GBP (unless it is simply used to illustrate the cost in local currency rather than transacting in another currency) as the cask must have been originally purchased, and will be sold, in Sterling. We have seen casks priced in other currencies regularly, though generally these prices have been highly inflated on market value, therefore we always urge our clients to conduct proper due diligence. If you would like our opinion on cask prices or would like to discuss our available casks as a comparison then please get in touch with one of our team.

What is the recommended investment timeframe or hold time?

Casks can be sold at any time, though the spirit does need to mature to increase in value and offer growth to investors. As a guide we recommend a hold period in the region of 3-5 years as a base, though in certain circumstances this can be reduced. Of course, the longer that a cask matures, the higher the value will increase, so for longer hold periods growth is often inflated further.

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“Like the majority of people in the world, luxury asset investment has never been top of my agenda due to knowledge and affordability. I met Chris and Byron of Altvest during virtual business training sessions in lockdown. At a follow up meeting we very quickly recognised our joint interest in the whisky industry. I made enquiries about their cask investment portfolio and decided to buy from them if I could afford to do it. I am pleased to say I have made my first ever investment in a cask of whisky and I can add that the knowledge, integrity and enthusiasm of the guys made this purchase an absolute pleasure. I have no hesitation in recommending their services to anyone."