Getting Started Investing in Whiskey

So you are interested in investing in Whiskey, but not sure how to start? You’ve come to the right place. Whiskey can provide a truly diversified asset for your portfolio, but there are some drawbacks depending on how you invest. Why should you consider it in the first place?

Reasons People consider Whiskey Investing:

1. They like to drink it — While this isn’t a great investment thesis, it does help improve understanding of market and drivers of price if you have a consumption interest as well as investment interest.
2. Whiskey Appreciates as it ages — This is true, but only if you invest in casks where the spirit is still aging. There are some bottles that will appreciate over time based on the age of the bottling, but in most cases this is minimal impact compared to the demand and scarcity of the bottle.
3. Whiskey has great returns — This one, is true in many cases. Indexes have put returns at 10–14% per year (though that is likely biases upward). Many people have anecdotal stories about bottles that spike 4x-5x or more, this does happen, but is a rarity vs the norm. Many bottles, especially in strong segments such as Japanese Age Statement Whiskey, can achieve 4–5x returns over 5–10 years (not overnight).

So if it’s so great, what’s holding people back?

1. Whiskey investing is risky pt 1 — Like with any investment, there is risk, however, I believe that it is less risky (especially in today’s environment) than public equities. However, there are different types of risk with whiskey investing (primarily counter-party risk) that may be unfamiliar with to people who have primarily invested in stocks.
2. Whiskey investing is risky pt 2 — What if I buy a counterfeit whiskey? This is a real risk but one that is primarily avoidable if buying from larger auction houses. Deals that are too good to be true are usually actually too good to be true.
3. It’s hard to buy — The whiskey market is not as approachable as the stock market. To buy rare bottles or casks, you need to look at many auction houses. This stops many people. Additionally, if purchased, you need to figure out storage for an expensive bottle (though this is offered by most auction houses at a premium).

So, should you invest in Whiskey? Like any investment that depends on your risk profile, investment horizon and available capital to invest. I’ll follow up this starter blog with more details to help you make the decision to move forward and decide how to focus your money within the many options within Whiskey investing.

Coming Soon:
Is Whiskey investing risky?