Whisky Cask Ownership


Cask ownership is possibly the dream purchase for most whisky fans – the idea of having their own, personal spirit maturing for either their later enjoyment or as an investment sounds incredibly appealing. I take a look at the different offerings currently available.

Being introduced to Cask Ownership

I first heard about Cask Ownership schemes at a Bruichladdich tour last October where tour culminated in the warehouse and we saw all the different barrels ageing in the darkness. Our guide pointed to a barrel that had been purchased through their cask ownership scheme;  inscribed with a message ‘I hope this finally brings you around to whisky’ possibly left a son or daughter of the owner. Unfortunately since then with their purchase by Remy Cointreau, Bruichladdich no longer offer the ownership option. But it’s always been at the back of my mind since hearing about such offerings.

The idea of owning your own cask of whisky is something most whisky fans find appealing. The potential financial gains help sweeten the deal, but most of us would really like the idea of being part of the process – especially if it is with a distillery with share a fondness for. Also, and it’s incredibly vain, but the line ‘oh yes, I’ve a personal cask maturing for my retirement’ do seem to sound quite enjoyable as they slip of the tongue.

And that’s actually where I am today. I’m 33 in a week, so around half way to retirement and cask ownership is something I’m interested in. I have contributed to my pension since I was in my early 20s, but apart from that, I’m not one for investment. I know a little of how stocks work, but I’m more tempted to investing in something that I have a real interest in, if you’ll pardon the pun. Plus, there’s two ways this goes – I either make a little money through a strewed investment, or I’m set for retirement with around 300 bottles of my own 30 year old whisky to enjoy. At one a month, that keeps me going for 25 years!

So what’s involved?

The general process is that you begin by buying the biggest measure you’ll ever buy in your life – of new make spirit. That’s put in a cask of some description, from barrels, hogsheads, butts etc. You pay for this, usually with some insurance for a set amount of time; most likely around 5-10 years initially. This initial payment isn’t too expensive, as no tax is paid yet and you’re dealing directly with the distillery. By not too expensive, you’re looking at several thousand pounds, but you are dealing with a lot of alcohol.

The next stage arrives many years down the road when you feel the whisky is ready to be bottled. Then you get Customs Excise involved. This year, 2014, duty on alcohol is £28.22 a litre of pure alcohol – so you’ll be paying that for whatever percent of booze you own in your little barrel. Plus you’ve got to pay VAT on the duty, combined with the price you first paid in step one.  Also, while the Government also wants their cut, remember the angels have been enjoying your spirit, so there’s not as much as when you started. Finally, once that’s all sorted, you’ve got to pay someone to put it in bottles (and labels if you’re feeling posh). But then, there you have it, your own bottling or your own whisky, ready to sell (maybe) or consume (very much so). So let’s see what’s out there!

Established Distilleries:

 

Glengoyne:

glengoyne-logoGoogling Cask Ownership brings you straight to Glengoyne’s ‘A dram good offer’ page. Of all my research this was definitely the most extensive information of the offer, though it did take a little searching to find the t’s and c’s, plus the pdf of the offer.

Glengoyne’s scheme is aimed at individuals, groups or clubs that wish to create their own unique Glengoyne cask by being part of the process from start to finish. Just looking at their selection process, you have a choice of nine different casks including first fill bourbon, 2nd fill sherry european oak hogshead, fresh fill American Oak sherry butts to name a few options. Plus other options of Pedro Ximenez, Palo Cortado, Amontillado and Manzanilla casks are named, or they’ll help you find what you’re looking for. This is truly the ultimate exploration and ownership for a whisky fan.

glengoyne selection

Other benefits of this offer are cask sampling. Each year samples are drawn on your casks birthday ready for you to visit. Failing your visit, they’ll send you 200ml a year for £25.

Here are some more benefits to the scheme (complete listing on the links above)

  • A certificate
  • A special bottling
  • A Jacket
  • Free VIP visits to Glengoyne
  • 15% discount at the shop

Glengoyne’s offering is very impressive and well put together, including how much the scheme will cost down to the individual bottle (starting at £18.43 once everything is paid).

glengoyne costs

So there’s a handsome profit to be made? Well unfortunately not – as highlighted in the terms and conditions “This should not be considered as an investment opportunity. The finished, bottled goods are not for re-sale”.

So, this is not for someone looking as a boost to their retirement fund. But if you want a lot of your favourite whisky, produced your way, and want to enjoy it as it ages – this is the perfect investment of time.

Good for:

  • Fans of Glengoyne
  • Anyone who’s ever dreamed of creating their own whisky – start to finish.
  • Looking for a good selection of casks
  • Someone who wants a lot of whisky to drink or give away.
  • Clubs who want to make their own bottling for their members

Not good for:

  • Investment opportunities

 

The Isle of Arran Distillery

Arran-Distillers-Corporate-Logo-300x272Next on our travel we move due west to the Isle of Arran to view their offering. Again, a very extensive description of the process, and appears more aimed at investment, although to quote their site

The Cask Offer is an opportunity to lay down your own stock of the Arran Single Malt, to witness its development from new make spirit to full maturity and ultimately have access to a personal supply of our award-winning whisky. Please note we do not encourage the purchase of our casks for financial investment as the market price for bulk whisky is subject to fluctuation.

Unlike Glengoyne, this is just about the whisky, there is no mentions of jackets, discounts or samplings. All you get for your money is a receipted invoice, stock certificate and display certificate detailing the cask number.

arran whisky seceltion

Their cask ownership starts at a very reasonable £1500 for a 200-litre barrel, or £2000 for a ex-sherry Hogshead. This includes filling, plus storage and insurance for 10 years – no price is given for each year thereafter. At the bottom of the document they offer some examples of overall prices:

arran whisky price

So a very extensive offering from Arran, which personally I’m quite interesting in. By the looks of things, you can sell the bottles on once filled and labelled, although you cannot use some of their registered names, but you should be able to work around this. They will also request approval for the label. Overall, the initial investment is quite reasonable with an offering from an fairly well established distillery – and you can sell it!

Good for:

  • Investment – established distillery low initial investment
  • Someone looking for a cask selection

Not Good for:

  • Being heavily involved in the process
  • Much to ‘show’ for your purchase (until your whisky arrives)
  • Unknown price per year after 10 years.

 

Supporting Young, or New Distilleries

Over the past few years in the UK we’ve been blessed to have several new distilleries open, many outside of Scotland. As we all know, whisky is a long time investment, so to assist with their initial expenses, many of these distilleries are offering cask ownership schemes. Of course, the obviously problem with investing in these distilleries is the ‘unknown’ – what will the product be like, how well will it be received? Equally, how good is the distillery are producing whisky; depending on the experience of the distiller, the first few years could be hit and miss. Compared to the established distilleries above, there is more risk involved in the investment, so it would be worth finding out more about their plans for the future.

 

Cotswold Distillery

logo
Still in the building process, Cotswold Distillery one of the latest English Whisky offerings. As you would expect, they are using the association with the rural area to promote their brand; using locally grown barley, maltings and of course, Cotswold water. More can be found here.

Their cask ownership offer is £2,995 for a 225-litre hogshead, using their recipe and selected casks – so no choice of selection. The offer includes filling the cask yourself and 5 years of ageing (£25 a year thereafter). Duty, tax and bottling are paid later and there are no estimates given -although some of the figures above would offer ideas of who much this will be. If you choose to have the product bottled in 2017, you can attend the event, or receive a video, photos and a certificate if you cannot make the day. You also get to visit the cask ever year and sample it to see how it’s doing.

Well done for Cotswold Distillery for pointing out the investment risk:

This is a great chance to get in on the ground floor of something big and join us in our Cotswolds Distillery journey. While we cannot promise that our casks will appreciate in value, over recent years whisky has been an excellent investment – and at a reduced per-bottle price (50% cheaper, even inclusive of all taxes and bottling charges) this is a great deal!

Good for:

  • Supporting a new distillery
  • Good price for annual storage (especially if this is permanent).

Not Good for:

  • Selection of casks
  • Initial price is nearly double that of established distilleries
  • Age – personally I think 5 years may be a little young for the initially offer (but who knows, it could be great). I’d opt for another few years on top of that.

(For full disclosure, although I haven’t bought a full cask, I have already reserved a bottle for 2017).

 

Lakes Distillery

lakes-logo-300x225Of all the investment opportunities, the Lakes Distillery has the highest initial investment and the most exclusivity at £12,000 by investing in their Connoisseurs’ cask. Open to only 60 people, you get the opportunity to invest in a distillery in it’s infancy and say ‘you were there’ if/when it takes off. Estimated to contain 100 bottles, these must be around +50 litres of malt spirit initially, so not as large as the above offerings. You do get the opportunity to fill your own cask from the first ever run of malt spirit. All taxes, bottling and delivery is included in the price, plus

  • A yearly Connoisseurs’ Dinner, for you and a guest, when you can personally taste the maturing malt from your very own cask. This will also include overnight accommodation at the nearby 4-star Trout Hotel
  • A gift of a beautiful, commemorative limited edition print, taken from a specially commissioned painting of The Lakes Distillery
  • Invitations to exclusive events at the distillery

They anticipate that the £12k investment will be worth £20K after 10 years, based on the bottles selling for £200 a bottle, although, personally as someone looking to invest, this seems quite over-estimated. Potentially, if they sell for £25 a bottle, an average price for a 10 year, there’s potential to turn £12K unto £2500 over a decade – although they should go for more due to the exclusivity.

Good for:

  • Exclusivity in a new English distillery
  • Looking to pay everything initially – taxes will be higher in 10 years, so best to get it over with now?
  • Potential for profit if initial bottlings are £120 or more at 10 years

Not Good for:

  • Higher risk investment – although they could obviously be worth more than £200 a bottle once released.
  • People looking to create their own unique expression
  • 100% payment now, rather than taxes, duty at time of releasing from bonded warehouse

 

London Distillery

London-DistilleryLondon Distillery offer their 109 cask, a 20-litre ex-bourbon casks for £495, with 50% of the profits going to the Movember charity. As with Glengoyne, you are not allowed to sell the final product, but at only 20-litres, it’s more likely this will be for personal consumption as you will only get around 30 bottles out this. Also included is

  • a free of charge VIP distillery tour and further tours at preferential rates.
  • A certificate of ownership will be sent to you once the cask is filled.
  • The Cask price includes the cost of taking two 50ml samples of Spirit each year…One sample will be retained on site and the other will be sent to you for your own analysis.
  • Further 200ml samples are available at £25.00 each, including Duty and UK postage.

More info here

Good for:

  • Supporting a distillery and charity
  • Small investment
  • A gift

Not Good for:

  • Investment for resale
  • Selecting your own casks
  • Long term maturation – (a maximum of 5 years storage/maturation is stipulated)

 

Other Options? How about a barrel of Jack Daniels?

So this may not be the most exciting offer for someone looking for investment of money and time. But if the appeal is simply owning a barrel, quite literally a barrel delivered to your door – then this is the option for you!

Jack Daniel’s sell a whole barrel of the Single Select TN whisky for somewhere in the region of $10,000 or £6250. Although this price is for the US, the offer is available to Australia, Austria, Belgium, Canada, Cyprus, France, Germany, Greece, Ireland, Italy, Japan, Mexico, New Zealand, Poland, South Africa, Spain, Switzerland, UK or US. I’m waiting to find back how much the UK would work out for as an example.

You get around 240 bottles of whiskey from your barrel, which is selected either by you (if you can make it to Tennessee) or the Master Distiller. The contents is then bottled, dated and sent with the barrel for you to enjoy. All of this takes around 8 weeks!

Good for:

  • Fans of JD
  • Everything already done for you
  • Those that are impatient
  • It would make a great gift

Not good for:

  • Those who want to be involved in the process
  • No option to mature the whiskey longer (I imagine you can’t put in back in the barrel!)
  • Resale, if possible, wouldn’t probably gain much profit.

 Comparison of Schemes

Below is a spreadsheet export showing a comparison between options. I cannot emphasise enough that this is from my own personal research and contains many estimates highlighted in italics. This includes estimates from cask strength of each distillery, evaporation, price of bottling etc. It has been created using the same formulas to compare the schemes, using the information provided by each distillery and known prices such as VAT/Duty. Due to the normalisation of the data, the prices are different from that suggested by the distillery and are in no way 100% accurate. Finally, this is the price for 2014, this will have changed in 5-10 years time.

cask strength comparison

One thought on “Whisky Cask Ownership

  1. Really interesting post and I am keen to find out if you did take the plunge in investing in a cask?

    I am currently going through the same process and struggling to decide on what I want to go with.

  2. e

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