James Scott is no stranger to investing. By day he is a property investor but in his spare time his taste for whisky has turned into a profitable passion. We talked to him about how he first got into investing in whisky casks.
“The interest first and foremost came from my love of whisky, I’ve been into whisky for a long time. I first became a bottle investor but I guess as my appetite grew, it turned into hundreds of bottles and I had issues of storage and cataloguing. It became less fun so I moved into cask investment, which is much clearer and cleaner,” says James who still collects bottles for fun and particularly enjoys drinking heavily peated whisky. James explains he first started investing in whisky casks 18 months ago. “I started investing in casks only a year and a half ago so I am a fairly new cask investor. I decided investing in bottles was just becoming troublesome in terms of the logistics, plus the market was flattening a little bit compared to the previous 5 years. When whisky is in the bottle it doesn’t age, whereas when it’s in the cask you can leave it for a couple of years if it’s not the right time to sell,” he explains.
The pitfalls
James’ first experience of investing in whisky casks was not great. He advises fellow investors to work with a reputable company who understands the market and the detailed processes involved. He says: “I bought a cask which, thankfully, I managed to sell at a break even cost but it was a very full price. Companies out there sell things at huge mark ups for no reason and therefore it will be a long time before your whisky investment sees any return, let alone any profit.”
Portfolio management
James, who admits to have invested in a lot of casks, says: “I think if you are going to invest in an asset class you should do it properly. If you are going to invest in something you may as well go into it strong. As I get to know the market much better I am making more opinioned purchases.” He adds: “I’ve bought over 25 casks and sold about 10% of what I’ve bought and the reason for that is portfolio management. Someone offered me a profit on one and there were some I didn’t think I would make much profit on in the next couple of years. As you buy more you look at your portfolio mix very carefully.”
Why Cask Trade?
“Cask Trade was one of the first fully legit companies I’ve come across. I now see Simon as a friend and I’ve been to a whisky tasting at his house. He got into it in the same way as me - from a love of whisky, to collecting bottles and then investing in whisky casks. The team Simon has assembled really know the market inside out and it’s a great way to do business. It’s not just a business to buy and sell, it’s a ‘look after your customer’ kind of business and they have been happy to advise me on other casks I’ve bought elsewhere,” says James, who adds: “They are able to buy for you, sell for you and even bottle for you.” Another reason James works with Cask Trade is because of the world class stock list and access to exclusive, hard-to-source casks. “You control your own stock which means no-one else has that list. For example, I was offered a cask at £3k and the most expensive I saw same cask for was £6,000, which is a massive difference. If you own that stock that’s not happening. You are in control of that price,” he explains. (Register or message us and we'll get back to you with the latest stock list)
Return on Investment
James says buying casks started out as a hobby but now admits to it being a small obsession. “I have recently sold some casks that showed a healthy 20% net return over 12 months, which I think is fair enough. Those were the casks I didn’t want to hold onto, so to see a 20% profit in a year is very healthy,” says James.
Alternative investments
“Whisky is much more liquid as an asset class than property”, says James, adding: “In terms of cask whisky investment, it’s dealing on mass with smaller items. For example, I could sell a cask today if I wanted to realise some cash, you can’t do that with real estate as that could take months and months at a minimum.” James has entered a cask into the next online auction taking place from 14th August. Auctionyourcask.com allows private owners and investors to sell their cask to independent bottlers and other investors all around the world. To sign up to bid in the live auction, register here: https://www.auctionyourcask.com/members/login