“If you are happy, you will drink a large glass of whisky. And when you are sad, you will drink thrice more than that,” jests Alexander Knight, the CEO and co-founder of Singapore-based Whisky Cask Club (WCC) which specialises in the investment of entire whisky casks from Scotland.
“In good times and bad, people drink. And some will find comfort in a good glass of whisky. Hundreds of millions of bottles worldwide are consumed every month, from blended whiskies to single malts. Scotland alone exports around 44 bottles of whisky every second, making that nearly 1.3 billion bottles a year,” he says.
For the spirit investor, this means in as little as a year, it is possible to sell it in the open market for 15% to 20% more. “Whisky is an FMCG (fast-moving consumer goods). Supply is limited, and demand is high. It goes up in value and can be sold easily. In a relatively short time, you can make quite a lot of money by doubling your asset value after you liquidate,” he explains.
The growth of whisky on a global level is enormous compared to wine and is expected to double in the next 10 years. According to Knight Frank’s Luxury Investment Index, rare whiskies are expected to show a 540 per cent asset performance in the next decade, outperforming other luxury goods asset classes such as watches, classic cars and jewellery.
Since the launch of the WCC during the pandemic, Knight says the take-up rate for cask investments in the region (namely Malaysia, Singapore, Thailand and Australia) has been “phenomenal”. It currently manages 230 casks in various parts of Scotland – including big-name single malts like Caol Ila, Laphroaig and Mortlach — and targets to consolidate them in a centralised warehouse in time to come.
A former media man and real estate marketing specialist, Knight set up WCC with several partners this year. “During Covid, everything went a bit quiet, so a buddy in the UK and I decided to set up the Whisky Cask Club. Using the big databases we built up over the years, we targeted the subscribers to ask if they were interested in whisky as an investment, and we got a lot of positive responses from that,” he shares.
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He estimates that after five years, most clients will double their money, and after 10 years, it can go up 200%. And there is plenty to go around, with about 22 million casks aged in Scotland as we speak.
Once you have invested in your cask, you automatically become a member of WCC, which grants you full access to club benefits such as special distillery tours, collector bottles of WCC single malt, and discounts on casks, amongst other things. Soon, members will enjoy their own exclusive space to immerse themselves in all things whisky.
“Whisky demand is very high because it's a very good investment that’s unlinked to the market. It's not related to stock markets, cryptocurrency or commodity pricing like gold, which dipped recently,” he says. “It’s a tangible asset. Should everything go to hell, for whatever reason, you can just bottle it and drink it.”
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More recently, WCC worked closely with Blair Road Capital to launch Asia’s first-ever whisky cask fund, a unique platform which allows investors to trade or buy-and-sell whisky casks at competitive rates.
The fund offers accredited investors an alternative investment instrument and powerful portfolio diversification with a low correlation to traditional asset classes. The whisky cask business is a highly liquid market, offering multiple exit strategies, such as the secondary market, auctions, and bottling. This is a tax-efficient fund with a targeted annual return of a 10% cash distribution and capital appreciation.
The fund is actively managed by Blair Road Capital with a minimum investment sum of US$50,000 ($71,433.75), following guidelines set by the Monetary Authority of Singapore (MAS). The casks will be stored in secure, fully insured bonded warehouses in Scotland, open to investors' visits.
"While other funds focus on whisky bottles, our whisky cask fund increases investors’ chances of profits on the sale of their assets since casks continually appreciate over time and are highly sought after by large whisky labels. Whisky only ages when it is in casks and has a natural time capitalisation — its value increases year-on-year with the ageing and rarefaction of the barrels. As such, it shows steady growth over time as the underlying whisky matures and the number of casks decreases as they are sold and bottled for consumption. Moreover, as an underlying physical asset, it serves as a natural inflation hedge.”
In this interview with Options, Knight shares why investors should look more closely at whisky as an investment.
Why do you think whisky has enjoyed so much growth in Singapore?
Singapore is the sixth biggest importer of whisky with a big market share in terms of consumption and buying. When I first came to Singapore 16 years ago, the choices were limited — people were drinking Jack Daniels and Coke in bars. But now it’s Old Fashioned, Negronis and Whisky Sours, thanks to a growing cocktail culture.
People are drinking better these days because of affluence and spending power. They’re also more knowledgeable and show more interest in having conversations about whisky. I remember bringing single malts to parties, and my friends who only drank blended Scotch would raise their eyebrows!
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We chose to set up the Whisky Cask Club in Singapore because it’s perfectly positioned to capitalise upon the growing consumption of whisky in Asia. Singapore’s diverse population and ease of doing business here make it an ideal location to jump on this amazing opportunity to invest in whisky casks.
So how does one go about investing in a cask?
GBP10,000 ($15,955.45) will be a good budget to start with, where your cask will remain in its distillery until you are ready to sell it. We do advise clients to hold for a minimum period of a year. Most people will leave their casks to mature for up to five years, by which time your investment would have already doubled. We will also assist with the sale of your cask at no extra charge. Cask investors automatically become members of the Whisky Cask Club and will enjoy all the perks that come with it.
Is there any worry about angel share — evaporation?
Angel share is 1.5% to 2% per year, so it is not that much of an issue. You will not want to keep the cask for 50 years anyway. Most people will sell it by the fifth or tenth year.
Why did you want to introduce a whisky cask fund?
We decided early this year to start a fund to speed up the whole process of buying and selling individual casks. Rather than wait for a cask to mature three to five years, we wanted to create a fund that is constantly being traded so that clients can enjoy a yearly dividend, as well as increase the value of investors’ shares along with the appreciation of the underlying casks. We just closed the first seed round and we're starting the process of trading those casks to make the fund grow. The next round should close in December.
We also have a couple more products that are launching soon. One is a managed cask account, where we support bigger clients who have half a million pounds and above to invest. Many bigger investors, like family offices, use 20% of their buying power on alternative investments like whisky. The business may be highly liquid but it is extremely stable and inflation-proof. You buy a property and you may get a 4% return but with whisky, it is easily a 14% per annum increase.
Can you share more about the lifestyle aspects of your club?
Currently, we serve our members out of The Work Project at Capital Towers, a co-working business club by Capitaland. We are aiming to have our own space soon — an exclusive members club where we can conduct cask sales and allow members to commune and enjoy drinking our in-house whisky.
The idea is to have a social club to bring people together of similar tastes and things and create an environment where they can relax, have a cigar on the terrace, and enjoy drinking whisky. We've got a master of whisky in Scotland who we will bring over to run regular workshops. We've got various dinners and things coming up too, so we might get him over to host those as well.
What are your personal favourite whiskies to drink?
Glenfiddich is a good one — it is an all-rounder and quite straightforward. When I’m travelling, I bring along a Laphroaig to give to the host of the party. For general whisky drinking, it would probably be Glen Grant as I love Speyside whiskies — they are a little bit more fruity and less peaty. And although I am not carrying it, I do love drinking Japanese whisky.
