Scotch Whisky Investments: investing in whisky

Scottish single malt whisky is a luxury product that captures the imagination. Most people have encountered it at some point: during a dinner, on a business trip or simply at home. Yet this 'water of life' took an unexpected turn about fifteen years ago: it became a Dutch investment opportunity, produced in Sassenheim. Anno […]

Scottish single malt whiskey is a luxury product that you don't talk about. Everyone has been introduced to it at some point: during a dinner, on a business trip or just at home. But it is the same 'water of life' that took a more than surprising turn about fifteen years ago: it became a Dutch investment object, 'made in Sassenheim'. In 2021, exclusive bottles and barrels of Scottish single malt can compete with other, often more common investments such as shares or real estate. “Anyone who does not consider exclusive whiskeys as an investment object is thinking too classically.”

Text: Jacob-Jan Esmeijer
Online editing: Mical Joseph
Image: John van Helvert

Facts don't lie. And it is historical data that underlines the value development of Scottish single malt. But how can it be that water, a distillation process, a barrel and time add so much to the value of whisky? For an answer we have to go back two decades in time. Michel Kappen, CEO of Scotch Whiskey Investments, then personally experienced that the prices of bottles of single malt whiskey increased enormously. An extensive study of five hundred different whiskeys between 1936 and 2008 led to a bizarre discovery: Kappen concluded an annual increase in value of 6,6 percent. According to Kappen, the principle is very simple. “The longer a whiskey matures, the more its value increases. On the one hand, quality increases because the flavor develops when whiskey is in the barrel for longer. And the older this whisky, the tastier and scarcer it becomes. We experience this especially with 25 and 30 year old whiskeys, the prices of which are skyrocketing. A bottle of 30 years old costs several hundred euros, those of 40 years and older easily thousands of euros per bottle. So time is money when it comes to Scottish distillate. After all, a 40-year-old whiskey will have to mature in barrels for 40 years before it can call itself 40 years old.”

Invest from a few thousand euros

Investing in whiskey could therefore be a consideration for those who want to spread their investable assets. Unlike investments in art, vintage cars and real estate, an investment in whiskey has no maintenance costs. In addition, bottles can also be traded faster. Investing in whiskey at Scotch Whiskey Investments is possible from a few thousand euros; Anyone can create an account on the World Whiskey Index free of charge and then buy and sell bottles independently on this trading platform. Finally, in 2014, Scotch Whiskey Investments received a license from the Netherlands Authority for the Financial Markets (AFM) that allows whiskey to be offered as an investment object. “I can imagine that this is a more than reassuring thought for potential investors who are considering single malt whiskey as a serious option,” Kappen concludes.

Completely unburdening

For those who do not want to have to worry about selling their whiskey portfolio, the Asset Management product should be considered. Many of Michel Kappen's clients have struggled with the prospect of eventual World Whiskey Index sales and urged him to find a suitable solution. Scotch Whiskey Investments has responded to this with its Asset Management product. And that Asset Management is an unmitigated success, as is evident from the more than two hundred customers who invest at least 100.000 euros per person in whiskey. “These are not all 'new' customers. Half of this group once started with an amount of between 50.000 and 100.000 euros and have now 'switched', whereby the original portfolio can be contributed. Investors do not have to immediately invest 100.000 euros to start with Asset Management. With an amount of 50.000 euros you can experience this for a year. If you like it, you complete the second part. If it is not what you imagined, the deposit will be refunded with a net fee of 4,6 percent. There is hardly anything more transparent.”

Boss above boss

Investing in whiskey is also possible at Scotch Whiskey Investments. For those who want to think (even) bigger within Asset Management, the Scotch Whiskey Investors Club could be the next step. With an investment of 250.000 euros or more you automatically become a member. The group where everyone invests between 250.000 and five million euros in whiskey now consists of more than one hundred and twenty investors. Membership includes Golden Opportunities, where members can supplement their portfolio with 'whiskey gems' – great opportunities that Scotch Whiskey Investments has managed to get their hands on. For example, a Golden Opportunity earlier this year concerned a 58-year-old The Macallan from 1950 with a market value of between 8.250 and 9.400 euros. “Our Investors Club members were able to purchase this limited edition for only 6.500 euros per bottle. We expect these Golden Opportunities to develop with a return of 15 percent per year within a period of five years. In itself it is not surprising that of the 240 available bottles, none were available after three months.”

'Stop working earlier'

'Investor from the very beginning' Henk van Dongen was introduced to Michel Kappen and Scotch Whiskey Investments in 2004. Van Dongen and Kappen discussed a lot over the years about the viability of 'investing in whisky'. Van Dongen: “We came to the conclusion that buying certain bottles from distilleries that were already closed would be a good start. Nothing would ever be made of that again. The rarer, the better the price development. And that has proven to be the case.” Van Dongen believed in the concept and thus became the 46th investor in Sassenheim, a true early bird. For the sake of completeness: the counter has now passed 25.000 wallets. What once started with an amount of 5.000 euros for Van Dongen has now been expanded through bottles sold and returns achieved - with a barrel of Clynelish to top it all off. “I made an extremely high return on this barrel, a few hundred percent even.” Henk van Dongen currently has a whiskey portfolio consisting of bottles and a barrel. The way the value is developing now, Van Dongen dares to claim that this will allow him to retire two years earlier. “It is therefore a nice retirement provision. And the value of my barrel is not yet optimal: in the coming years it could look even better. The switch to Asset Management is the next phase in which I make a five-year commitment. By then I'll be sixty and I'll have a choice about what I do with the barrel. With the money that will be released, I can consider either working less or stopping work altogether.”