Scotch Whisky – Facts & History
The earliest historical record of distillation in Scotland dates as far back as 1494. Whisky production was first taxed in 1644 with the country being divided into five main regions of production; The Highlands, The Lowlands, Campbeltown, Speyside and The Isle of Islay. Mainly two types of whisky is produced; Single Malt Scotch and Single Grain Scotch.
Each region has their own signature style for producing whiskey. The Highlands is the largest region in terms of size and produce a heavier character of Scotch, whereas The Lowlands triple distil their single malt for a lighter and smoother taste. Campbeltown are well known for a drier and smokier flavour and Speyside is renowned for their peat and fruity textures whilst Islay whisky is peated with a smokier flavour.
Scotch whisky has truly global appeal and is currently exported to over 200 countries around the world. Over 99 million cases were exported globally in 2014, with the market growing steadily since. The market is worth a staggering £135 per second, and has been one of the most stable sources of revenue over centuries for the UK Revenue Commission. The whisky industry has been one of the steadiest performing UK commodities, allowing employment opportunities within agriculture as one of the it’s many benefits, nationally.
Is there still a market for Scotch Whiskey?
Scotch whisky has been taxed and sold for centuries with currently some 40 bottles exported per second, with an annual revenue totalling in excess of $5 billion.
There are over 100 working distilleries in Scotland producing world-renowned whisky over four selected regions. The Scotch whisky industry has some of the world’s most noticeable brands such as Johnny Walker with four bottles consumed every second.
Currently, the French consume more Scotch whisky than they do Cognac each year, making them the 2nd largest market, importing £445 million worth of whisky in 2014 alone.
How much Scotch whisky is being matured?
There are over 20 million barrels of whisky currently being matured throughout Scotland. That means more whisky is being stored and matured than there are people making up the country’s population. With around 5.3 million Scots, there are just under four barrels being stored for each person. That’s a lot of whisky.
With many international whisky brands competing to market and sell their product, huge whisky reserves are required to facilitate international demand. And with legislation dictating whisky has to be matured for three years and one day to be legally sold as whisky, there is huge demand for distilleries producing whisky, and storage facilities to safely store the whisky asset maturing in bond.
Whisky is Scotland’s number one export, making up 73% of their total export per annum. It accounts for 20% of the UK’s total food and drink exports, or one fifth of the UK’s entire food and drink export market.
There is undoubtedly huge demand for Scotch whiskey, and supply is running at full capacity to meet demand. Market experts predict further double-digit growth for decades to come, and see no reason why whisky won’t continue to grow as the most popular spirit globally consumed today. With an already formidable global following and an ever growing international population, it’s hard to argue why whisky would not continue to dominate the global spirits industry for future generations.
How much can Scotch whisky be worth?
It’s no secret bottles of Scotch whisky can be worth absolute fortunes. The most expensive bottle of Scotch ever to be sold fetched an eye watering $6.2 million.
Aged bottles of Scotch can easily fetch hundreds of pounds per bottle on the open-market on auction sites. Collectors from the Far East are prepared to spend hundreds of thousands of pounds per bottle for a collectable rare aged cask whisky. Russian collectors also have a taste for fine whisky, with the market experiencing huge growth as a result. Speculators purchase into cask whisky as a securitised asset-backed investment, capable of seeing huge returns when appropriately liquidating their stock.
The value of Scotch whisky on the open-market has hit a record-breaking high with more and more rare bottles becoming available at auction. Macallan hold the Guinness World Record for the most expensive whisky sold at auction with their 64 Year Old in ‘Lalique Cire Perdue’ selling for little under £300,000.00 back in 2012.
Is whisky investible?
Yes. Since distilleries have been distilling whisky, there has been a market for investing into whisky as a commodity.
Private individuals can purchase new make cask whisky to store under government bond, either to sell back to a whisky brand or take to bottle to sell on the open market.
Selling a whisky cask back to a whisky brand or a private individual usually yields a return of 10%+, whereas taking the cask to bottle can be even more lucrative, although one must factor in there are labelling, bottling and duty costs to consider.
Who invests into whisky?
Due to the historical success of whisky, private individuals have been investing into casks for decades, with many aged casks currently worth thousands of pounds per bottle on the open market.
A Swedish Fund manager, Sentat Asset Management AB, announced shares for what they claim is the first publicly traded Scotch investment fund. They plan to raise 25 million euro to invest in a portfolio of rare, collectable whisky.
It is certainly not the first fund to invest into whisky, nor the first publicly traded fund. However, it will be the first publicly traded fund to invest into physical bottles of whisky with an independent valuation of their portfolio showing it has appreciated at an annual rate of 17% from 2014 to 2017. The fund chairman and CEO Mr. Christian Svantesson stated that “instead of gold, we buy liquid gold.”
There is potentially huge upside to investing into whisky, with companies and private individuals placing it very high on the list as an alternative asset-backed security.
Can I tour a working distillery?
Yes. Distilleries are becoming a major tourist attraction with over 1.5 million international visitors recorded in 2014, a 10% increase from 2010. Distillery tours generated approximately £50 million in revenue, an increase from £27 million recorded in 2010.
Please be aware many are working distilleries with visits by confirmed appointment only.