Purchasing New-Make Spirit – Is it as Clear as it Looks?

 

New-make spirit is the clear liquid that comes off of the still. It is usually between 68-70% ABV and will generally have quite an aromatic, pungent flavour. In this article, we are going to explore the various options for private clients and the potential upsides and downsides. 

Purchasing a new-make cask direct from a distillery 

Not many distilleries will sell a single cask to a private client, as first and foremost it is just too much bureaucracy for them to deal with. The famous distilleries like Macallan, Glenlivet, and Springbank don’t sell casks anyway, and many others don’t have the whisky to spare, as it is needed for their bottle brands.  

However, with the newer distilleries, many of them need a variety of income sources whilst they are building up their brand and waiting for the whisky to mature. For them, selling individual casks is one of those revenue streams. Keep in mind though, that these new distilleries have a cost of production that is higher than the ‘big boys’, which will be reflected in the price. In most cases, these casks are not for alternative asset purposes – they offer the whisky enthusiast the opportunity to own a cask where the distillery will bottle it at an agreed time.

The purchaser would then be liable for some significant taxation courtesy of HMRC on top of the initial price paid. The number of bottles that will be delivered to your house could vary from about 250 for a bourbon barrel to potentially over 700 for a sherry cask. This is a lot of whisky to drink/gift! We wouldn’t want to discourage anyone from going on this journey, but it is important to understand what is involved. 

Purchasing a new make cask on the open market

Many cask companies are now selling new-make spirit from a variety of different distilleries. Whilst many distilleries won’t deal directly with selling individual casks to private individuals, some of them will sell in bulk to the trade. Everybody of course wants a Macallan cask, but they are simply not for sale – the distillery needs every drop for their brand. The prices of these casks can vary widely.

So what constitutes good value? The important things to consider are: the distillery, the type/size of the cask, does the cask have naming rights, and is there any free insurance and storage as part of the deal? Through careful due diligence, you should be able to decipher if the price you are being offered is a fair one.

Another key factor to remember is that this is a very long-term investment. Are you prepared to hold these casks for 12 to 18 years? This is a serious commitment. Our advice is that diversity is the key; look for casks from different established distilleries, regions of Scotland, and aged in different types of wood. 

Why established distilleries?

There are now over 130 whisky distilleries in Scotland and at least 100 of these can trace back their history at least one or two centuries. For most of this time, these distilleries existed to make malt whisky for the blenders. However, since the 1980s, we have seen a rapid rise and interest in single malt whisky (which has accelerated in the last 10 years) amongst the growing numbers of whisky enthusiasts. Many of these distilleries now have core ranges with impressive packaging, thus it isn’t hard to imagine where these brands will be in 10-20 years’ time.

It is always worth pointing out that in 1980 Single Malt whisky was less than 1% of global Scotch whisky sales. This figure is now up to 15% and rising all the time. The value of these proven distilleries is in their history/heritage and in many cases their deep-pocketed owners, who are heavily investing in building up the brand equity. The newer distilleries have no proven track record in the whisky cask marketplace. Their sales are usually minimal and with young whisky, we have no idea how it is going to turn out when it reaches maturity. Then as a general rule with these new enterprises, not all of them will make it.  

Therefore, to conclude, purchasing a variety of new-make casks from an established distillery (and of course from a reputable cask company) can be a very savvy long-term investment indeed.

Currently, Cask Trade has in stock new-make spirit from a well-known Speyside distillery racked into an exciting variety of different casks. Please get in touch for more information.

To find out more about purchasing Whisky casks, contact the Masters today.

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