Analysis of Storage fee changes
As we announced recently, from 1st March the storage fees we charge to hold maturing whisky will be increasing from £0.175 per LPA per annum to £0.192. We have explained here why we feel this change is necessary given the general increases in cost of storage that the industry has seen over the past year. However, the other factor that we must consider is how greatly these changes affect investors.
Our considered opinion is that the change will not be too harmful to returns on investment, and we hope to present some analysis here to inform your own view.
We have two resources that we typically refer to when looking at the performance of whiskies on the WhiskyInvestDirect platform. The first are our example accounts - these are three real accounts set up when the platform first launched in 2015, in which we made initial deposits of £10,000 and used that to purchase maturing whisky. The accounts have been treated in exactly the same way as a customer account, and they do not actively trade - therefore they represent an accurate indication of how the whiskies held within them have performed over time. You can find more information on how these accounts work here.
In the following table, we show how the example accounts have performed (under the current and previous storage fees) and compare it to how they would have performed had they been charged the new £0.192 storage fees for their full history. As you can see, while the difference is material, it does not drastically change the profitability of the accounts.
WID Example accounts (actual performance):
WID Example accounts (performance under new storage fees):
The second resource we use is our analysis accounts. These are theoretical accounts which extend the concept of the example accounts, but using whisky launched on the platform in each of the subsequent years. Each account starts with £10,000, and invests in all whiskies released in that year while retaining sufficient cash to pay storage up to the current day. You can find more information on how we performed this analysis here.
Again, we have very simply gone back and historically adjusted the storage fees to give a side-by-side comparison of how those accounts would perform with both the original storage costs and the new rate: