Is Irish Whiskey a worthy Investment?

Feb 18, 2024 | News, Opinion, Whiskey News

When we began with Irish Whiskey Auctions just five short years ago, the whiskey landscape was a different place. There was no official secondary market in Ireland, with many trades and sales being done on social media or between those who knew each other through the few whiskey societies. Bottles were easily found in retail shops , even going as far as being able to walk into your local supermarket and buy the “latest” Midleton Very Rare off the shelf and get as many as you wished for. There were many situations where you could not only get this year’s release but possibly last year’s and maybe previous years. ( Ah the good oul days!).

Now, not only are you doing well in sourcing a single bottle -but you might come away disappointed, what changed?

Loads of things really…

We now have multiple avenues to buy, sell, and trade precious bottles of spirits, with three auction platforms in Ireland, and many groups and subgroups of social media whiskey fans and messaging services. People quickly saw that there were a few euros to be made and it was nearly part of the perfect storm of influences (much like the failing of Irish Whiskey in the early 1900’s) Covid, auction houses, extra funds and clever marketing by the brands , all conspired to create a market that many experienced FOMO.

People that never tasted whiskey before in their lives suddenly were telling all around them that they were making vast sums of money, securing bottles that others coveted so much , that they were paying over the odds to secure them. Now my opinion is that this was never a bad thing, the more people talking about Irish Whiskey the better. Of course, I would say that it was a great thing as we were one of the new beneficiaries of this modern-day gold rush! There were so many other great side effects of a rising Irish Whiskey Industry. However, now a moment of hesitation has set in with many people that I talk to, the truth of the matter is that there are still many people who are “coming” to whiskey looking for investment opportunities. Have they missed the boat? I don’t think so, In fact, I think they are still getting in at the beginning. As I said before we are only just beginning. Markets are burgeoning everywhere and many of the newer brands are looking around at less conventional markets for Irish Whiskey, less of the USA, Germany, and South Africa and more of the Nigeria, South Korea, and Brazil.

Challenges still exist for the newer entrants to the Irish Whiskey industry, cash flow being the biggest challenge for many. They are hemorrhaging money at a scary rate, most of them are double costing (they have to source whiskey from GND, West Cork, or some of the many aged ex-Cooley or Bushmills stock that are out there for ever-increasing prices). They also are laying down their own distillate .Many of the newer distilleries want to get their inaugural bottlings out in the market and attach a premium to the fact that it is their first-ever bottling. Some of the prices that are being asked for these releases are absolutely crazy. This can be so damaging to the fledgling brand, and I am concerned that some of them don’t see this. How can you build a fanbase when many people are turned away by the price that scares them off? I know I have said in the past that not every release is for everybody and that includes the price point, but I would suggest the base way to build a loyal and supportive fanbase, that might continue to buy your spirits for years to come, is to get as many people tasting it as possible. Very few customers in Ireland have the want or the means to open five and six hundred euro bottles on a gamble that the spirit will be good , or that they might just open it to taste it. If it is priced fairly they will take a chance and hopefully be impressed with what the brand has created, and become an unpaid ambassador , telling all their whiskey friends about this brand or spirit that they must support.

It is indeed a fine balancing act to pull off, on one hand, you want it to be an impressive thing. It is after all your firstborn, You want it to be an impressive presentation, you want it to be memorable, you want it to create a buzz, you want it to engage your potential customers. The other side of that double-edged sword is that it alienates potential customers before you even hit the shelves. The price point is probably the single biggest hurdle that you will have to navigate in getting your new release on the tables and bars of customers. You can have buy-in from the audience in what your ethos is, and what your plans are, but if you overprice your release all that hard work evaporates. Ultimately you want people to taste the liquid- and if they think it is too expensive then that will never happen.

The Here and Now Market or the Long term market.

The people that are likely to buy the inaugural release and never plan to taste it, are the investor buyers or speculators. They may purchase at any price but you still need a buy-in from them. They need to know that it is a good investment and that there is the possibility that they will make money selling it in the future. Their breakpoint price is usually higher than the drinker – but they have criteria that need to be filled too. The biggest one is what market are they purchasing for.

“The Piranha”

There are two very different markets, the Piranha and the Great White if you will- and two very different purchasing price points. Some of them buy to “flip” within the next six months and it will be the most in-demand bottles, the ones that most people can afford and the ones that usually cover both bases, the drinkers and the collectors. These prices are so volatile it is scary, this month a bottle can go for many multiples of its original price, and two months later it drops like a stone. There is no predictability to it, what is a hit and what isn’t is a strange thing. I don’t think I have a handle on it yet. If I did I would give up the auctions and become a drinks consultant because every brand would want to know what the secret recipe is. It is a very nuanced market, and the hype is everything. A ‘Here and Now’ buyer will help build the hype, he will tell all and sundry that it is a good buy and that they should not miss out. He is hoping to capitalise on FOMO.

“The Great White”

The Long-term market is a different beast. A smart long-term buyer avoids the initial scramble for bottles and waits silently in the background, not telling people that it is a good buy as he wants the price to settle down so he can sweep in and buy a bottle or two. He doesn’t care what the market does here and now just that the brand is a good long-term bet. He also most likely has a higher break point for the initial purchase. Buying to put the bottle away for their retirement or for future liquidation to pay for college or some other expense for their children. ( and boy are they expensive things, kids) Information is king here, looking at previous reference points for how similar bottles perform or what is likely to happen, is where they are at.

So is Irish Whiskey a worthy Investment?

If you can navigate the hype, and all the various short-term fluctuations in pricing then yes. Not every bottle is a golden nest egg, but if you stop, look around, talk to many people, both styles of buyers, study the market, and be patient then yes it is a great way to invest some of your hard-earned money. I like the flexibility it allows people. It is your asset. It is at home with you, you have direct control, and you are not depending on anyone else. Stocks, shares, and crypto are all out there.. they exist somewhere(hopefully) and you need to give notice to liquidate them and are depending on others to assist you. The Whiskey market is a great thing as it can be a hobby too, the thrill of the chase, the aesthetics of building a collection, the satisfaction of completing the series. It is sports cards for adults! It can offer some great returns on initial investment too. Many bottles that were bought for relatively humble money years ago are now selling for many multiples of that. A Midleton Very Rare 1988 was bought in 1988 for approximately €50 (£40 punt) now it is rare that a bottle sells for less than €20,000 , with it making over €30,000 in one auction. Now, I must add , that this is an exceptional bottle and was the beneficiary of a set of circumstances that made it one of the most sought after bottles but it is not beyond the realms of possibility that one of these modern-day releases will be the one that goes stratospheric in the decades to come.

So if you have some extra euro and are looking for an alternative to holding the money in a bank (where the returns are less than 0, inflation and 0% interest) then you could do a lot worse than doing a little bit of homework and get involved in Irish Whiskey bottles as an Investment. Pick up the phone and talk to us or others you know are whiskey fans, always do due diligence as you would with any investment. But if you are smart it can be a great wee nest egg.

Now Whiskey Cask Investment is a different thing and I will give my not-so-muted opinion on cask investment companies in one of my next rantings.

Until Then,