Owners of whole Whisky casks are naturally interested in their likely future value.  In this note we explain what determines the price of whole Whisky casks as they age, and how we now model these factors in our new (proprietary) whole Whisky cask Market Price.  

The future value of Whisky casks is determined by two main factors:

1- The uplift in value of the spirit as it ages; and 

2- The increase (or decrease) in the secondary market prices for fine Whisky.

1. Uplift in Value of Spirit with Age

Fine Whisky increases in value, as it ages, for two reasons: 

• It costs money to store casks, and the holder must be compensated for this expense; and 
• The vast majority of distilled Whisky is bottled very young, and hence supply of older spirit diminishes quickly. 

Distilled Scotch Whisky must only be matured for three years in cask before it can be bottled and sold.  It is estimated that 90% of distilled Scotch Whisky spirit is bottled in year three.  In the United States the cycle is even shorter, with Bourbon Whiskey only requiring maturation for two years in barrel before bottling.  So if you own a cask older than three years of age, you already have a relatively scarce asset.   This gets rapidly scarcer with every passing year subsequently.  

Both the above factors (cost of storage and decreasing supply of older spirit) result in an upwards sloping price trajectory for fine Whisky's value with age.  But exactly how 'upwards sloping' is this price trajectory?  Does price growth vary from distillery to distillery?  Is it constant over time, or is the best performance in certain 'sweet spots' of age?  The answers are crucial to the accurate modelling of the likely future value of Whisky casks.  

To answer the above questions, we performed an analysis of the bottle prices for twenty different distilleries at three different age statements: 

Note:   Where an exact bottle match for the year statement wasn't available, we interpolated between year points on either side.

We looked at the prices of single bottles on the secondary market at 12 Years, 25 Years and 40 Years.  From these prices, we calculated the compound annual growth rates (CAGRs) implied by the difference in prices between the age statements.  For example, a 12YO Macallan bottle costs around £64, but Macallan 25YO costs £876.  The difference between these two prices, over the 13 years which separate them, is a CAGR of +22.3%.  This is a pretty impressive increase, and one that underpins the rationale for whole cask collecting.  

But the effect wasn't found only for iconic distilleries like Macallan.  We found a remarkable consistency of CAGRs across different distilleries.  CAGR is basically the same for very high price distilleries like Macallan (16.8%) and Ardbeg (15.7%), as for much lower priced ones like Tullibardine (15.5%) and Bruichladdich (13.6%).  

The only exception (in our sample set) was the 'silent' distillery of Port Ellen.  But this distillery's much lower returns with aging are explained by the fact that 12 YO spirit is already ultra-rare.  A single bottle of Port Ellen 12YO costs £800 already.  This means that all the uplift in value has already occurred before year 12, which isn't the case for almost all other distilleries.  

There is very little variation, on average, between the time buckets 12-25 years and 25-40 years.  We had expected to find that as whiskies got much older, and more expensive, the CAGR would decline.  But the data doesn't show this.  The average rate of increase decreases a little after year 25, but its only falls (on average) from +15.9% to +13.9% CAGR.  This shows that even when Whisky gets much more valuable it can still increase in price at almost the same rate as when it was younger, as its increasing scarcity (lower supply) offsets the lower demand which comes with a higher price.        

The high and consistent CAGRs of single fine whisky bottle prices underpin and justify the case for whole Whisky collection.  They explain why whole whisky casks are such an excellent long-term store of value.  

2.  Changes in Market Prices for Fine Whisky

We have shown in section 1 that, all things being equal, the price of the fine whisky spirit should rise by about 15-16% a year - which is the CAGR of the single bottles as they age.  

However, in order to get a truly accurate market price for whole casks, we must also take into account fluctuations in fine Whisky prices on the secondary market.  To do this, we reference the Rare Whisky Apex 1000 Index.   

Source:  Rare Whisky 101

This index is updated monthly, and we can use it to track movements in the overall fine Whisky market.  Index prices come mainly from auction results and hence capture movements in price across most of the major Scottish distilleries.  We can use this data to adjust our whole Whisky cask market prices to reflect the state of the fine Whisky market more broadly.  

3.  Cru Whisky Cask Market Price

In September 2024, Cru introduced a ground-breaking new Market Price calculation for all Whisky casks within Cru custody.   At the end of each month, all Whisky casks will get a new Market Price, calculated as follows:

• +0.5% per month appreciation (annualised +6.0%) to reflect aging.
• Value adjusted based on the monthly change in the reference Whisky index.

You will note that the +6% per year we assume for aging uplift is significantly lower than the approx. 15-16% annual increase in the value of bottles in our sample set.   We decided to haircut the assumed increase for aging for two reasons:  i) we generally like to apply conservative valuation metrics where-ever possible and ii) to account for the fact that bottles are more liquid and easier to sell than a whole cask.   

The new Cask Market Price will be shown in clients' Portfolio sections from September 2024.