Cask to Cash: Maximising Returns on Whisky Investment
Whisky cask investing is a long-term strategy and requires careful consideration of your financial goals. It’s advised you find a transparent partner as the market can often seem opaque.
Thomas White, Chief Operating Officer of Tomoka Fine and Rare, London’s oldest whisky investment company, told City PM that any potential investor should consult an expert to understand if this market fits their criteria, noting a required five to ten-year investment mindset.
A crucial element, according to White, is working with a company that has a “proven track record” as the market can sometimes lack transparency.
Tomoka Fine and Rare aims to provide a “360 service,” including client onboarding, support, market updates, and most critically, a robust exit strategy.
White praises his team’s sourcing abilities, saying they “focus very, very hard on sourcing the right whisky and at the right price.”
Their analysts evaluate “the quality of the liquid to the quality of the wood that it’s going to be filled in”.
By utilising economies of scale, Tomoka can offer clients the best possible price for each batch.
Authenticity is also guaranteed by working only with “heavily vetted and trusted stocks” and suppliers.
Once a cask arrives at an HMRC bonded warehouse, the investor receives a legally binding Delivery Order which “guarantees authenticity and provenance,” Mr White confirmed.
Clients can even visit their casks in their respective warehouses.
The valuation
The team estimates the value starting with the brand itself, with iconic distilleries like Macallan, Springbank, and Dalmore naturally commanding a higher price.
The age of the whisky is also significant, as is the wood type: while most use ex-Bourbon barrels, a sherry or foreign red wine cask can have a “huge impact on the liquid in terms of colour, taste, and of course, value.”
Finally, White pointed to supply and demand, noting a “huge global demand for Scotch whisky” and highlighting the recent free trade agreement with India, the biggest consumer of whisky.
India is seeing its previous 150 per cent import tariff slashed to 75 per cent, then falling to 40 per cent over ten years.
“It’s just opened its doors to all with the biggest market on the planet,” White said.
Investors must also remain diligent to avoid scams by checking a company’s proven track record and transparency. To protect clients against losses, Tomoka offers a premium insurance policy that covers the asset not at the purchase price, but at the current market value.
When it is time to sell, White says an investment is only as good as its exit strategy.
Tomoka focuses on providing that liquidity by developing relationships with “hundreds of independent bottlers.” Alternatively, another of Tomoka’s investors may be willing to buy the cask, allowing the client to realise a return.
Get in touch with Tomoka Fine and Rare to learn more about whisky cask investing.