Table of Contents

• Whiskey & Wealth: Unlocking the Potential of Liqui …

• Why Invest in Whiskey? The Magic Beyond the Glass

• The Risks and Rewards of Whiskey Investing

Hey Dad, this one’s for you!

Let’s get right to the point: What should I buy Dad for Father’s Day?

Todd Camhe, whiskey fund expert recommends Bardstown or Rabbit Hole bourbon for your gift for Dad… I hope my family is reading this.

Alternative Investments 101

presented byNoyack Investing Club

Whiskey & Wealth: Unlocking the Potential of Liquid Gold

This week, our analysts are taking a deep dive into whisky, lock stock and "barrel" (pun intended) 

Have you ever wondered what it’s like to hold history in your hands—a tangible piece of time that not only tells a story but also grows in value? Welcome to the fascinating world of whisky investing, where every bottle and cask has a tale to tell and some profits to share. Today, we're diving deep into the golden barrels of whisky as an alternative investment.

Here are some interesting numbers about just how much we all LOVE whiskey:

Why Invest in Whiskey? The Magic Beyond the Glass

Imagine owning a bottle of Macallan 1926, which recently shattered records by selling for a staggering £1.5 million! Whiskey isn’t just a drink; it’s a journey through time, craftsmanship, and culture. From the rolling hills of the Scottish Highlands to the meticulous distilleries of Japan, whiskey offers a unique blend of history and potential for extraordinary returns. The reasons for investing are:

• Appreciating, Low Risk Asset

• Uncorrelated to Other Classes

• Consistently Growing Demand

• Difficult Market to Access

Did You Know? Rare whiskies have appreciated by over 400% in the past decade, outperforming traditional investments like stocks and bonds. Talk about a liquid asset!

Here’s are indices of the whiskey market investment price growth for the period 2012-2022:

• The Rare Whiskey Apex 1000 Index (tracking the performance of 1000 rare whiskey bottles) has shown a steady growth of over 416%.

• The Rare Whisky Icon 100 Index (tracking the performance of 100 collector’s bottles) has grown by 391%.

• The Rare Whisky Vintage 50 Index (tracking the performance of 50 of the oldest bottles) has grown by 301%.

• According to the Knight Frank wealth report, the Knight Frank index of rare Scottish single malts has increased by 586%.

Don’t even get me started on the appreciation of Japanese whiskey…

Types of Whiskey Investments: Choose Your Adventure

• Bottles: Imagine having a collection of rare, limited-edition bottles that appreciate in value over time. Each bottle is a masterpiece, waiting to tell its story. Fun hobby but is it a scalable investment?

• Casks: Investing in a whiskey cask is like buying a piece of the future. As the whisky matures, so does your investment, potentially leading to significant returns. Hard to pick up but easier to find as investment.

• Distilleries: Ever dreamed of owning a piece of a renowned distillery? Investing in shares allows you to be part of the whisky-making magic, benefiting from the overall growth of the brand. But this is not for the faint investing heart.

What IS Sourced Bourbon?

Sourced Bourbon, also known as wholesale bourbon, is aged and sold to help new brands launch and scale quickly. It also supports established brands in meeting unexpected demand or supply shortfalls.

Sourced Bourbon serves as a versatile industry ingredient, often mixed with proprietary blends and various aged juices to craft unique tastes and profiles.

Why Demand for Sourced Bourbon is Strong and Growing

1. Market Growth: The surge in bottled and craft market offerings has created a pressing need for distilleries to accelerate their time to market.

2. Demand Forecasting: Predicting brand demand is challenging in this fast-growing market, making the sourcing (or trading) of aged barrels crucial for meeting consumer needs.

3. Value Determination: The value of a barrel is ultimately determined by the number of bottles it can produce and the price per bottle. A robust consumer market, therefore, drives strong demand for barrels.

4. Blending Popularity: The practice of bourbon blending continues to grow, contributing to the sustained demand for sourced bourbon.

Whiskey Investment Trends to Watch in 2024

• Japanese Whiskies: With their meticulous craftsmanship and growing global demand, Japanese whiskies are set to soar. Their unique flavors and quality make them highly sought after by collectors.

• Sustainable Practices: Environmentally friendly production methods are gaining popularity, adding value to brands that prioritize sustainability. Consumers are increasingly looking for products that align with their values.

• Limited Editions: High demand for exclusive releases ensures these bottles remain hot commodities. Limited editions offer a unique opportunity for significant appreciation in value.

• Funds are Coming: As the whiskey investment market expands, dedicated funds like Oak Proof are emerging, offering investors a more accessible and diversified way to participate without extensive knowledge or the headaches of direct ownership. These funds pool capital and expertise to acquire high-value bottles or casks, potentially leading to attractive returns.

The Risks and Rewards of Whiskey Investing

Investing in whiskey can be exciting and potentially lucrative, but it's essential to understand the risks and rewards involved.

1. Market Volatility:

   • Whisky values can fluctuate based on consumer preferences, economic conditions, and market trends.

   • Stay informed about market developments and be prepared for potential ups and downs.

2. Proper Storage Conditions:

   • Improper storage (temperature fluctuations, light exposure, humidity) can deteriorate the quality and value of your whisky investment.

   • Store bottles or casks in a secure, temperature-controlled environment shielded from light and humidity.

   • Consider professional whisky storage facilities designed for optimal long-term aging conditions.

3. Fraud and Counterfeiting:

   • The growth of the rare whisky market has led to an increase in counterfeit bottles and casks.

   • Work with reputable dealers and auction houses with a proven track record of authentication and transparency.

   • Seek expert opinions or authentication services to verify the authenticity of bottles or casks before purchasing.

4. Potential for Significant Returns:

   • Many rare whiskies have appreciated in value by hundreds or even thousands of percent over the past decade.

   • For example, a bottle of The Macallan 1926 60-Year-Old sold for a record-breaking £1.5 million in 2019.

5. Long-term Perspective and Diversification:

   • Approach the market with a long-term perspective and a diversified strategy.

   • Invest in a range of different brands, styles, and ages of whisky to spread risk and capture potential upside across different market segments.

   • Educate yourself about the history, production processes, and market trends surrounding your chosen whiskies to inform your investment decisions.

Case Study: Oak Proof Whiskey Investment Fund

Let’s take a closer look at Oak Proof, a unique investment firm focused on the bourbon and whiskey wholesale market. Oak Proof invests in sourced whiskey barrels, offering a low-risk, appreciating asset that is uncorrelated with other investment classes and benefits from consistently growing demand. Unlike investing in distilleries or brands, Oak Proof's strategy involves acquiring and aging barrels of bourbon and other aged spirits to be sold into the sourced whiskey market.

The Importance of Sourced Bourbon

Sourced bourbon plays a crucial role in the whiskey industry, allowing new brands to enter the market quickly and established brands to meet unexpected demand. As the bottled and craft market offerings continue to grow, the need for distilleries to source aged barrels becomes increasingly important. Oak Proof capitalizes on this trend by investing in the "picks and shovels" of the bourbon gold rush, focusing on barrels rather than the end product, mitigating risks associated with traditional distillery investments while tapping into the strong demand for sourced whiskey.

Why Oak Proof's Strategy Stands Out

• Deeper Industry Relationships: Oak Proof has strong connections with distillers, bottlers, and other key players, ensuring access to quality inventory at attractive entry points.

• Agility and Flexibility: The firm’s strategy allows it to quickly take advantage of market opportunities and adjust to changing conditions.

• Strategic Risk Management: Diversification across mash bills, spirits, regions, and selling markets helps manage risk and enhance returns.

Final Sip

Investing in whiskey is more than just a financial decision; it's a journey through time, flavor, and history. With potential for high returns and the sheer joy of owning a piece of liquid art, whiskey offers an exciting alternative to traditional investments. Ready to join the ranks of savvy investors turning barrels into gold?

Stay tuned for our next edition, where we’ll explore the booming market of sustainable investments and how they’re reshaping the financial landscape.

📺 WHAT WE'RE WATCHING

How to Start the Ultimate Whisky Collection

Starting a whisky collection involves understanding and tasting various styles. It requires prioritizing aged and rare bottles, considering the vintage and bottler. Additionally, ensuring proper storage is crucial to maintaining the quality and integrity of both the whisky and its packaging. Watch the full video to delve deeper into these essential steps and elevate your whisky collection journey.

Watch the full video here

👂 WHAT WE’RE LISTENING TO

Check out our interview with Todd Camhe from Oak Proof Whiskey Fund

📖WHAT WE’REREADING

Liquid Gold? Here’s the Sobering Truth About Investing in Whisky

The Guardian reveals that while whisky investments can yield impressive returns, they come with significant risks such as market volatility, storage challenges, and potential fraud. The article emphasizes the necessity of thorough research and caution for anyone considering investing in this lucrative yet complex market. It’s a must-read for those looking to understand both the opportunities and pitfalls of whisky investment.

Read the full article here

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