How to compare whisky cask ownership programmes
Whisky cask ownership an investment or expensive hobby?
There can be few whisky fans who don’t dream of buying a cask of new make spirit from their favourite distillery with the intention of bottling its contents many years later and then sharing a dram or two with family and friends at a celebratory event.
As wonderful as the above scenario sounds the additional work required for a distillery to specially manage a few individual barrels of maturing whisky amongst the hundreds if not tens of thousands of barrels they handle each year is one of the elements that makes cask ownership expensive and inefficient as an investment.
By simplifying and automating the process of buying, storing, insuring and selling maturing Scotch whisky and doing so at an industrial scale that is attractive to distillers, WhiskyInvestDirect has reduced the cost to private investors of owning Scotch whisky in a cask to wholesale levels historically only available to the biggest industry players.
Ownership of maturing whisky on WhiskyInvestDirect is proven in the audit on a monthly basis and whilst it possible for an owner to have their whisky bottled the costs reflect the additional work required throughout the supply chain to handle and produce what could amount to a few dozen bottles.
What are the costs associated with owning a cask of whisky?
WhiskyInvestDirect order board prices 25 January 2022
In contrast to ‘cask investment’ schemes, WhiskyInvestDirect enables you to buy and sell maturing Scotch at wholesale prices. That’s because the Scotch industry also uses this platform to trade large volumes of maturing spirit, still in the barrel.
Trading costs are very much lower, because this is about investing and then re-selling to the professional industry, rather than bottling yourself. As an active participant in the wholesale market, WhiskyInvestDirect provides clear and transparent price information about the value of Scotch whisky as it matures in the barrel.
Beware of cask ownership programmes which lack such transparency, most especially where you need to provide your contact details before you can even see any available casks or prices. Here are some examples of actual cask programme costs published on websites or obtained via email only price lists.
Before investigating a cask ownership programme there are a few industry terms that people should be familiar with including Litre of Pure Alcohol (LPA), first-fill and Re-gauge Litre of Alcohol (RLA) these and many more can be studied in our Glossary.
|Element or process
|Questions to ask of a cask programme
Newly distilled spirit
Malt – from £3.60 per LPA
Grain – from £1.40 per LPA
What is the volume of the cask? How many LPA?
£0 - WhiskyInvestDirect own the cask, users own the whisky
Who owns the cask itself?
What type of Barrel is it?
What was previously in the cask?
£0 – Audit confirms all maturing whisky is being stored and is available to sell at anytime
Is your individual cask numbered and do you have a photographic record of the cask and number?
Storage costs - £0.192 per LPA per year
What are the storage costs per year?
A regular bill for storage should be provided to prove cask ownership.
£0 – included in the storage costs
Is your cask covered by insurance as you the owner will be different from original distiller and warehouse owner?
Can an insurance certificate be provided each year?
1.75% to buy or sell any volume of whisky at any time 24/7
Is it possible to find a buyer for your cask other than the original distiller?
Is it possible to sell the cask at any time?
What are the costs to sell the cask?
Duty is not chargeable whilst maturing whisky is stored by WhiskyInvestDirect in a bonded warehouse
Duty is currently £31.64 per LPA
Duty is chargeable once a whisky from a cask has been bottled and is based on the percentage of pure alcohol.
A cask programme should provide reliable estimates of how many bottles are expected to be produced and estimates of duty to be paid
VAT is not chargeable whilst maturing whisky is stored by WhiskyInvestDirect in a bonded warehouse
VAT is currently 20%
VAT is charged on the purchase price including the Duty of a bottle of Whisky.
A cask programme should provide reliable estimates of how many bottles are expected to be produced and the costs including Duty to enable VAT to be calculated
How to efficiently invest in Scotch whisky
If your goal is to have a small number of bottles of excellent Scotch with personalised labels, you may find it more economical to have adhesive labels specially designed and printed and then apply them to the bottle of your favourite brand of Scotch.
If your objective is to invest in maturing Scotch whisky the most important factor is to minimise your purchase, storage and sales costs.
You can even scrutinise the performance of three actual accounts that have been made public to show how the WhiskyInvestDirect platform works and actual returns on maturing whisky since 2015.