When Roger Parfitt sold two casks of Scotch whisky he bought almost 30 years ago, investors perked up.
It was the stroke of luck everyone hopes for - netting him £225,000 after an initial £4,700 investment - and meant the 59-year-old could pay off his mortgage and retire three years earlier than planned.
Investment in cask whisky is often seen as a good long term bet. It is the top performing category tracked by Knight Frank over the past 10 years, with the ‘rare whisky’ sub-index rising by 483 per cent.
But although stories of huge returns make the headlines, Louise Robinson, operations director at Whisky Investment Partners, the company which bought the two casks and then sold them on to be bottled, warns that investors shouldn’t automatically expect such fruitful yields.
“That was rare,” she admits. “We don’t like to give numbers - we normally say between eight and 12 per cent - but there are no guarantees. It’s not an investment in the traditional sense of the word. You’re buying a product that you own and hopefully it’ll be worth something when you do come to sell it.”
The Leeds-based whisky cask stockist, which set up in April 2020, employs 30 people and is fast approaching a turnover of more than £15m this year. It buys 400 to 600 casks of ‘new make spirit’ - which matures into whisky after three years and one day - each month from Scottish distilleries and sells them to the public to hold as an investment for up to 10 years.
The casks are stored in HMRC-approved bonded warehouses, usually at the distilleries where they are made.
The whisky recipe remains the same but how valuable a whisky becomes depends on the brand, the year it’s made and who is willing to buy it. “There wasn’t as much whisky produced last year because everything was shut down due to covid,” says Robinson. “You’d like to think that whisky that was produced last year is worth more because it’s rarer.”
Casks cost about £2,000 on average and typical customers tend to be over 40. “It’s people who want to make a return on their money that they’re not making in the banks,” says Robinson. “It’s something a little bit different.
“It’s a simple process. You don’t have to watch prices going up and down all day on a website as you might do with stocks and shares.”
She adds: “Customers tend to buy three or four casks on average. They are given a certificate of title and the cask is theirs to do with what they wish. We can put investors in touch with the people who bottle the whisky who will pay what they think it’s worth at the end of the investment.”
Whisky investment has proved popular during the pandemic. “We’ve been really busy since we set up,” says Robinson. “Our potential customers have been at home, had more money in the bank and have been looking for ways to make a return for the future.”
Casks have received a lot of recent attention as an investment vehicle but it’s feared that many whisky fans are being lured into investing thousands of pounds by firms offering artificially-high financial returns.
While Robinson believes the whisky market is getting stronger and stronger, she is also careful not to over-promise. “There could be a leak in the cask or you could get to the end of the investment and it’s not matured into the best whisky so it isn’t going to be worth as much as you thought,” she says. “But in that case, at least you’ve got something physical that you can bottle or have a raving party with.”
She adds: “The most common mistake people make is following big money promises. As the old saying goes, if you think it sounds too good to be true, it probably is. You’ve got to do your research on what you’re buying and make sure it’s legitimate.”
Robinson, who grew up in Leeds, began her career as a travel agent and went on to work in HR at Yorkshire Electricity.
She moved to Switzerland in 2002 to work for Alstom Power where she was responsible for planning the workforce for its power station construction projects.
She returned to Leeds in 2008 where she entered the financial services sector after having her two children.
“Until I moved to Swizerland I didn’t really know what I wanted to do,” she says. “But it was there I realised that operational processes and business development was my niche and when I moved back to Leeds I realised financial services was the sector I wanted to work in.”
Robinson was made redundant following an acquisition and began working with Alistair Moncrieff, now managing partner at Whisky Investment Partners, after meeting him through a family friend. Since then, the pair have set up and run a series of investment and financial services businesses together.
When Moncrieff decided to enter the whisky investment market, Robinson says his enthusiasm was infectious. “I’m not a whisky drinker but I like the idea of making something that’s quite old school into something new and fresh and easier for customers to access,” she says.
International expansion is on the cards for Whisky Investment Partners, starting with Europe.
Robinson recently moved to Barcelona with her two children, age 15 and 12, to open up a new office there. The firm also opened another office in London.
Looking ahead, she is also keen to grow the business digitally by developing an app where customers can generate digital certificates of title and store distillery admin.
“We’re wanting to grow the business and make the user experience better,” she says.
Although whisky tends to be a male-dominated industry, Robinson hopes to challenge the stereotype. “People sometimes see a female sat in the room and they think that you’re the assistant,” she says. “But hopefully the world is changing. It’s not something that I let get to me in any way. I know I’m good at what I do. I’m very driven and self-motivated. I’m a single mum and I’m driven by providing for my two children. I give everything I’ve got.”
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