As one of the world’s best-loved alcoholic drinks, whisky has a habit of appreciating in value.
According to one measure, rare and vintage whiskies have risen in value by more than 500 per cent in a decade.
Export markets are also booming, with the Scotch Whisky Association estimating that 36 bottles of the spirit are exported every second.
Liquid asset: Rare and vintage whiskies have risen in value by more than 500% in a decade
Thousands of Britons collect and sell rare whiskies, yet Money Mail has spoken to experts who fear unscrupulous firms are using the buzz around the spirit to push low-quality investment opportunities on unsuspecting savers.
In recent years, there have been stories of collectors making significant profits from selling whiskies they purchased years earlier.
The specialist nature of collectors’ markets makes them great for those who know what they’re doing. But they’re also perfect for scammers.
In 2016, the Financial Conduct Authority (FCA) warned about a rise of fine wine scams — where savers were duped into buying overpriced or non-existent wine.
How to spot a con
Most experts agree that one of the favoured tactics of scammers is the use of high-pressure phone calls.
By putting potential victims under pressure to make a decision, scammers increase their chances of making a sale.
Of the whisky websites advertised on Google, several offered a free investment guide — in exchange for your contact details.
After putting my details into three websites, I received more than 14 calls and four emails in one afternoon.
When I answered the call, a friendly salesman was keen to talk about an apparently rare investment opportunity: buying casks of a new whisky for £2,000 each.
‘We say on the website that you can expect to make around 10 pc a year,’ he said. ‘But I personally think that’s a conservative estimate.’
An independent whisky expert pointed out that an almost identical cask — from the same unremarkable distillery — had sold at auction earlier this summer: for the princely sum of £900.
These scams thrive on the internet, with data showing that 96 per cent of investment frauds begin online — often through adverts on search engines and social media.
Anti-scam campaigner Mark Taber says he’s seen a rise of online adverts touting investments in whisky casks.
He says many of these share the characteristics of classic investment scams — including offering guaranteed returns, and asking visitors for their telephone number.
He also believes that scammers might be using whisky as a way of staying ahead of the regulators.
The search engine Google, for example, has introduced tougher rules requiring anyone advertising financial products to UK users to be registered with the FCA. However, as whisky is a luxury good, rather than a financial product, it falls outside the FCA’s remit — and isn’t subject to these new rules.
Mr Taber says: ‘A red flag for me is that these adverts are deliberately targeting anyone searching for investment advice, rather than people looking to buy whisky.
‘There’s also a danger that companies will sell on the details of potential victims, who will then be targeted by more typical investment scams.’
Another tell-tale sign of an investment scam is the promise of high returns without the mention of risks.
Money Mail visited the websites of four companies advertising the opportunity to invest in whisky.
All four were offering the chance to buy casks of ‘new make spirit’ — a clear alcoholic liquid which eventually matures into whisky.
According to the companies websites, buyers could expect to sell their casks for a healthy profit — around 10 per cent per year — once their spirit had matured.
Furthermore, as casked whisky is classed as a ‘wasting asset’ (i.e. something that degrades over time), profits wouldn’t be subject to capital gains tax. You can see why such an offer might sound tempting. But whisky experts are more cautious about the quality of these opportunities.
They say that, while it’s true that casks are free of capital gains tax, returns are far from guaranteed.
Andrew Laing is a co-owner of Ardnahoe, the newest distillery to open on Islay — the Scottish island loved by many whisky fans.
Experts have warned over online ads offering the chance to buy casks of maturing whisky and claiming highly questionable returns of around 10 per cent per year
It’s one of many distilleries which sells casks of whisky to private investors — with prices ranging from £2,000 to £12,000.
‘We would never tell anyone they should expect a certain price or return,’ he says. ‘It’s very much about the experience of owning your own whisky, rather than a typical investment.’ Auctioneer turned expert whisky valuer Mark Littler believes some of the firms advertising online are also misleading investors.
He says: ‘Casks can be a good investment. But if you are expecting 10 per cent returns a year, you will likely be disappointed.
‘The value of whisky doesn’t always go up in a linear way, and you won’t make any money until you sell your cask completely.’
He advises that anyone buying whisky directly needs to know exactly what they’re getting — and seek independent valuation where possible.
They should also keep in mind potential additional costs, such as bottling the whisky when it reaches maturity. If you’re looking for less elaborate ways to invest in the rise in demand for whisky, there are alternatives.
FTSE drinks giant Diageo owns several high-end whisky brands — including Lagavulin and Talisker — and has been growing its export markets in recent years.
Its shares are up 56 per cent in five years, making a £10,000 investment in July 2016 worth £15,600 today.
It has also paid at least 2 per cent in dividends each year.
The company has been a long-term pick of fund manager Nick Train, and makes up 10 per cent of his LF Lindsell Train UK Equity fund.
The FTSE-focused fund has performed well in recent years, making a £10,000 investment five years ago worth £15,300.