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All You Need to Know About Investing in Whiskey


Fueled by rising demand in developing countries like China and India, whiskey has become an increasingly attractive investment option.


Companies like Fortune Brands Inc.'s (FBHS) Beam Global Spirits & Wine Inc. unit and Diageo PLC (DEO) have in recent years focused their production on lucrative small-batch bourbon made popular in recent years by shows like AMC's (AMCX) Mad Men.

Besides buying only limited releases, investors should generally stick to bottles from iconic distilleries like Macallan, Dalmore Glenfiddich, or even better, to those from distilleries that have ceased operation, like Islay's Port Ellen and Sutherland's Brora.

A bottle of Dalmore Single Malt

Andy Simpson, an independent whiskey valuer and consultant, has been a keen follower of whiskey sales for some years. His Whisky Highland Index tracks the performance of some 143 distilleries at whiskey auctions.

Based on his index, here are the top 10 distilleries from which you should get your bottles of single-malt scotch, based on the price of bottles sold and the percentage gain in value.

Distillery Whisky Highland Index
1. Macallan 95
2. Dalmore 94
3. Port Ellen 90
4. Balverie 88
5. Glenfiddich 88
6. Bowmore 87
7. Ardbeg 84
8. Glen Grant 81
9. Highland Park 81
10. Brora 81

What are some good-value-for-the-money whiskeys investors should look out for?

One good whiskey that will be released later this month is Macallan's fourth edition of its Easter Elchies Cask series, which "will retail at around £140 ($221) and should see good growth, as with most limited Macallan," Simpson said in an email.

However, the series will be a distillery exclusive, which means you will have to take a trip up to Scotland to get your hands on it.

Another good buy, Patel shares, is the Mackinlay Rare Old Highland Malt, which has a fascinating back story. In 1907, explorer Sir Ernest Shackleton headed down to the Antarctic, bringing along with him for company 25 cases of the drink. Three crates of this special whiskey were buried under the snow after Shackleton's expedition failed to reach the South Pole, thought to be lost forever.

However, in 2007, a team from New Zealand managed to uncover a single crate, and carefully shipped three bottles to Whyte & Mackay in Scotland, where Master Distiller and Blender Richard Paterson analyzed the alcohol and expertly recreated the exact taste of it. Whyte and Mackay then created a limited 50,000-bottle run of this whiskey, which retails at about $160.

"I guarantee that this whiskey will go up in price because most of it is being drunk, and the story behind it is so amazing. I'm already seeing on eBay (EBAY) that some people are selling it for about double the price," Patel elaborates.

Of course, such popular limited-edition whiskeys often sell out quickly upon release. If so, you can turn to the growing number of both traditional and online whiskey auctions, where discontinued bottles and rarities can be found. One new online auctioneer Simpson recommends is the Glasgow-based Scotch Whisky Auctions.

Ultimately, investing in whiskeys requires you to do a lot of homework, and it is probably better if you already have a fondness for this particular poison. Simpson cautions that while there are a lot of positives associated with whiskey investing, "the stark reality is that you can lose a lot of money if you don't know what you're doing." So, only invest what you can afford to lose, and in the rare case that you make a bad purchase, take comfort in the fact that you can very easily drown your sorrows at the very least.

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No positions in stocks mentioned.
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