Summary:
According to research, the specific risk-return profile of rare whisky, compared to other asset classes, qualifies rare whisky as a stand-alone asset class. Furthermore, the research shows that adding rare whisky to an international multi-asset portfolio leads to statistically significant performance improvements for various investment strategies*.
*Source: (L. Tegtmeier, Does Rare Whisky Add Value in Multi-Asset Portfolios?, 2022)
Supply and Demand Dynamics:
As global demand for premium and super-premium whisky continues to rise, the value of rare and vintage whiskies logically increases.
This is supported by research from L. Tagtmeier (2022)*, which shows that the low availability of rare whiskies, combined with strong demand, results in a continuous price increase. This dynamic makes whisky an attractive product with the potential for value appreciation, where supply and demand play a key role in price development.
*Source: (L. Tegtmeier, Does Rare Whisky Add Value in Multi-Asset Portfolios?, 2022)
Non-Correlated Asset Class:
Whisky as an investment offers a unique opportunity as a non-correlated asset class. High-quality whisky shows little to no correlation with traditional financial assets, making it a valuable diversification in a portfolio, especially during periods of market fluctuations. This means whisky’s value is not dependent on the performance of stocks, bonds, or other common investments.
This is confirmed by research from Cordiez (2020)*, which demonstrates that collectible whisky shows little to no correlation with common financial assets. As a result, whisky can add stability to a portfolio, even in times of volatility in traditional markets.
*Source: (T. Cordiez, That’s the Spirit: An Analysis of Investment in Collectible Whisky, 2020)
Diversification:
Adding rare whisky to an international multi-asset portfolio offers statistically significant diversification benefits*.
*Source: (L. Tegtmeier, Does Rare Whisky Add Value in Multi-Asset Portfolios?, 2022)
Hedge Against Inflation and Market Crashes:
Over the past decades, fine whisky has proven to be an excellent investment, outperforming mainstream assets such as stocks, bonds, and commodities. For example, the Scotland Index of Whiskystats increased by over 87% between Jan. 2014 and Jan. 2024*.
*Source: Whiskystats, Scotland Index, 2024
Reduced Volatility:
Whisky as an investment is characterized by reduced volatility, making it a stable and predictable investment option. High-quality whisky encourages long holding periods, resulting in a more consistent price trajectory and fewer fluctuations in value. This long-term perspective ensures more stable value growth compared to other investment products.
Research confirms this low volatility, with rare whisky performing exceptionally well in terms of risk management. An analysis shows that whisky has a high Sharpe ratio of 0.99 for smoothed returns and 0.76 for desmoothed returns, highlighting the strong combination of high expected returns and low volatility. Moreover, rare whisky, measured by semivolatility, value-at-risk, and maximum drawdown, has the lowest downside risk in the desmoothed returns (except for semivolatility). This makes whisky an attractive choice for investors seeking long-term stability and value*.
*Source: (L. Tegtmeier, Does Rare Whisky Add Value in Multi-Asset Portfolios?, 2022)
Rare commodity:
The finest bottles are not made overnight. It takes decades for them to mature, making them both expensive and scarce.
A Tangible Asset with Intrinsic Value:
Investing in whisky means direct ownership of the underlying asset, contrasting with participation in an investment fund. In the event of the bankruptcy of the management partner Scotch Whisky International B.V., you retain ownership of your whisky products.
Longevity:
Unlike wine, whisky does not mature or deteriorate in the bottle. If stored correctly, it has an indefinite shelf life.