How to invest in whisky

Casks are the safest investment in whisky. Buy brand new casks. In three years it becomes whisky, and somewhere between three and five years you'll get your first, best return on that cask. Aged casks will be more expensive. However since whisky matures in the cask, unlike the bottle, the price will increase exponentially the longer you keep it. Ideally buy some new casks, and some old casks. If you have limited resources buy new casks, because they're cheaper and you can buy more. Either sell after five years or keep for at least twelve. A good place to invest in casks is The Whisky Market. This business specifically helps clients hold, trade and bottle whisky by the cask.

Buying bottles always involves a certain amount of risk. With a large investment, it's very hard to find the quantity of bottles that will rise in value. Say you had £20k. You've now got to find bottles that aren't already ridiculously expensive, spread bet over a lot, and hope enough come good to make some big money. That's very difficult. If you want low risk and reasonable returns, buy casks. You won't lose money on casks at the moment. The world is drinking more whisky. If you buy a cask, the whisky industry will have a use for it. All cask have value, and that value is going up. People are making 11% each year on casks, up to 23% if they bought the casks a few years ago. The only drawback is time: as mentioned, the optimum time to sell is normally five years. But you'll make 11% per year on that.

If you want a cask that might rise in a value a little quicker, look for whiskies that have recently come on the market and aren't known by the wider public. For example, the whiskies from Bacardi – Craigellachie, Aultmore, Glen Deveron, Aberfeldy, Royal Brackla – haven't been around very long. These labels are new, they're being marketed heavily, you'll see them in all the travel retail stores. They're becoming very popular as single malts, but as casks the price hasn't yet massively gone up. So if you buy any of those as casks, they're bound to be worth more in the future because people will know the name. If you'd prefer the quicker return of bottle investment, read on for some tips...

In recent years the Japanese whisky Karuizawa has been magic. The distillery closed in 2000. A lot of the stock came to the UK. The first batch on the market sold for £120, the last for £325. If you had bought one of the last Karuizawa bottles and walked out of the door, it would have immediately been worth £1,500. Due to the finite number of the bottles, and its high-strength, Karuizawa attained cult status. A bottle at auction today would cost minimum £2,000. If the distillery closes, the remaining bottles can rocket in value. However often distilleries close because their whisky isn't very good, so watch for external factors like an over-saturated market or unexpected bad luck.

The biggest rival to Karuizawa in terms of spike in value is another Japanese label, Hanyu. Again the distillery closed, a lot of stock ended up in Britain. Hanyu did a series called 'The Card Series', a release of every single card in a deck. The last release was 'The Joker'. Sold at £225 in October 2014, by the end of the year 'Joker' bottles were fetching £900. The labels were mostly multicoloured, but Hanyu released a very small amount of monochrome label bottles, which now fetch about £7,000. Very limited-edition labels can be worth a small fortune.

You need to be quick to benefit from the spike in value often comes to a bottle that just won an award. We're talking minutes. Ideally attend the award ceremony armed with a laptop, and buy the winners in bulk as soon as they are announced. The two big competitions are the International Wine & Spirits Competition and the World Whisky Awards. Both are held in London. The San Francisco World Spirits Competition is also highly respected. It isn't a bad idea to spread your bets by snapping up a selection of the nominees. Even the non-winning bottles are still quality whisky, and will likely rise in value. The winning bottles should land you a big windfall.

Auction houses are great places to find rare labels. Try Whisky Auctioneer, whisky.auction, Scotch Whisky Auctions, and Bonhams in Edinburgh for a start. Mostly the whiskies will sell for around market value, although you might snag a few good deals in August as everyone's on holiday. However you won't have to pay retail, which is a major bonus. Then just sit on your purchase and hopefully it will rise in value. 

Always make sure the box and label are in good condition. Don't buy non-age statement whisky for an investment, that's a big no-no. So for example 'Talisker Dark Storm' or 'Talisker Sky', anything without an age-statement on the bottle. The quality may be superb but the re-sell value is generally low. Only ever buy if it's very limited run. Don't buy stuff that's mass-marketed – the value will rise but it will take a very long time. In the 1990s, Talisker released a very nice bottle with a map on the label, Talisker 10 year-old. You could buy those bottles for about £30, now they're worth around £90 at auction – but it's taken two decades. 

If you're going to keep whisky for a reasonable amount of time, a wine cellar is the ideal storage. No wine cellar? No worries. Whisky is much less delicate than wine. Make sure the space is not so hot that the whisky will evaporate over the years through the cork, and make sure it's dark. Light will affect the whisky. So dark room, not too hot, not to damp. A cupboard under the stairs should be fine, provided the temperature doesn't rise above 25 degrees. Of course if you've bought casks the supplier will normally arrange storage – many people turn a profit on cask whisky without ever seeing their product. Specialist businesses such as The Whisky Market can hold and trade your casks for you over a period of many years.