Malty Tasking

“ Whisky is a lot less volatile than wine, but it’s not indestructible. You can, for example, drop the bottle…” It’s a rueful reflection from David Robertson, Chief Investment Officer of the Platinum Whisky Investment Fund, speaking amid the debris of an 80-year-old single malt from the Speyside Mortlach distillery.

Robertson’s bid to place the venerable spirit on a table that proved to be stubbornly absent reduced the Fund’s whisky collection, at a stroke, from 7,682 bottles to a still respectable 7,681, with its total valuation said to be in the region of US$4.5 million. Strictly speaking, at the time of the accident though, the Speyside had yet to be formally inaugurated in to the Fund’s portfolio.

It still technically belonged to a collector with whom Robertson and his partner, Rickesh Kishnani, the Fund’s Chief Executive Officer, were negotiating. With an air of some relief, Kishnani says: “Luckily the seller was nice enough to cover that loss.”

Even without such trauma, whisky can be rendered – if not undrinkable – less agreeable to drink in a variety of ways, most of which do not involve shattered glass. Nonetheless, unlike wine – which spoils easily in less than optimum storage conditions – whisky needs only to be kept at a fairly stable and relatively cool temperature, while protected from direct sunlight, to remain in near peak condition.

Expanding on the spirit’s robust nature, Kishnani says: “With wine you have to worry about vintages, how it has been stored, and whether it is still drinking well. With whisky you don’t have to worry about any of those things.”

Another thing you don’t worry about is economic jitters on the Chinese mainland. Over recent years, much of the ridiculous inflation of the cost of fine wine has been directly attributable to the willingness of Chinese buyers to pay increasingly outlandish asking prices for premium vintages.

Of late, many such punters have exited the market. This has left some investors – many of whom were banking on the boom going on indefinitely – with significant amounts wine on their hands, much of it worth less than they actually paid for it.

The same thing could, of course, quite easily happen with whisky. There are, however, some very good reasons for assuming it won’t in the case of the bottles the Platinum Whisky Investment Fund tends to – unless, of course, Robertson goes and drops a few more of them.

Reassuringly, the international collectible whisky market isn’t dependent on Chinese money. There are plenty of serious – and seriously rich – collectors in Europe and North America, as well as in Asia. This has meant the decelerating mainland economy has had little impact on the value of the more collectible bottles of single malt.

Another factor in this retention of value is the sheer rarity of good aged spirits. Highlighting this, Kishnani says: “The most expensive bottle we have in the Fund is the 90-year-old Valerio Adami Edition of The Macallan from 1926.

“There were only ever 12 individually numbered bottles produced, with all 12 being sold. Of these, we know four or five have been consumed, meaning there are between six and eight bottles left in the world. While we don’t know where they all are, we know we have one – bottle Number Eight, to be precise.”

That particular bottle is currently valued at more than US$200,000. Even Edrington, owners of The Macallan distillery, doesn’t possess one.

Other highlights of the Fund’s portfolio, which Kishnani says is fast becoming one of the largest collections of single malt whisky in the world, include 50 year old whiskies from Springbank, Balvenie, Dalmore and Mortlach; a Laphroaig distilled from 1903 and a Highland Park distilled from 1902.

He says: “We also have a Glenfiddich 1937, a distillation from immediately prior to World War II that was bottled in 2001, which is truly incredible.  After all that time, there were only 61 bottles left in the cask, so we feel very lucky.”

He deems such specimens “trophy bottles,” but emphasises that most of the Fund’s whiskies are far more affordable. At present, bottles worth less than US$500 make up 70 percent of the Fund’s holdings. These were all bought within the last 18 months and most are now worth appreciably more than they cost.

The Fund was launched in June 2014 with a mission to buy and sell all its stock within a period of seven years. To date, it has raised a total of US$9 million from 37 private investors, with US$4.5 million having already been spent. The target is US$10 million and this should be more than achievable. After all, according to Kishnani, the collection increased in value by approximately 26 percent in its first 18 months.

Most subscribers to the Fund, which is said to be the first of its kind in the world, are from Asia. They range in age from their mid-20s to their mid-60s, with the majority – unsurprisingly – being whisky lovers. They all have the option to take some of the returns on their investment in liquid form, as well as in cash, but, according to Kishnani, there are also a couple of teetotalers who see the Fund purely as an investment opportunity and never touch a drop.

You don’t have to sign up for the Fund to invest in whisky, of course. For those who are thinking of buying a few bottles to sell in the future, rather than to drink, though, there is probably something useful to be learned from its investment strategy.

Robertson, a former Master Distiller at Macallan and a former Rare Whisky Director at Dalmore, has some 20 years experience in the industry. So far, he has focused on vintage bottles of great antiquity, iconic whiskies aged up to 64 years, and limited edition bottles from Japan, while also placing a strong emphasis on “silent stills” – distilleries which have closed, with their supply of spirit necessarily finite.

Japanese whiskies from such silent distilleries are commanding surprising prices at auctions across Asia. As a result, Robertson has invested in some prime examples, and has secured a number of rare  bottles of Karuizawa.

He says: “Karuizawa has become one of the fastest growing bottles at auction, both in this part of the world and in the UK. It’s a silent distillery, which is very unusual in Japan. It closed in 2000, but it’s probably still Japan’s most iconic distillery.

“Not so long ago, bottles were available for a few hundred pounds. Then they went up to more than three thousand. We bought early in the Fund’s life and at what we thought was a very attractive buy-in price – about a third of the current value. This effectively gave us a cornerstone for the growth that we’ve achieved in the last year and a half.”

He now believes, however, that Karuizawa has reached a plateau in terms of its appreciation and suggests that investors should look at other distilleries. He says: “I think Yamazaki has probably got a little left to run, while Nikka is probably a little bit undervalued right now.”

In terms of auction prices, Karuizawa is to Japanese whiskies what The Macallan is to Scotch. Robertson, however, thinks rare bottles of “the Rolls Royce of single malts” are now a little overpriced.

He says: “We just don’t see the value in it right now. Some of the brands that we see more value in are Brora, Port Ellen and Rosebank, all of which are distilleries that stopped production back in 1983. They are silent stills that are never going to reopen.

“This means the supply of whisky in the market from these places is only ever contracting, largely because people are drinking, or even dropping them.

One of the dangers of investing in rare whisky, though, is the growing number of fakes. Robertson, who personally authenticates every bottle the Fund invests in, says he has  declined quite a few imposters.

Highlighting the giveaway signs of such counterfeit spirits, he says: “Normally, with an old bottle, you would expect a little evaporation, so, if the fill level is high, that looks a bit odd. You should also check all the packaging. There was a classic example of a Macallan Gran Reserva fake that we were offered which had words spelled wrongly on the back label.

“You should also always inspect the seal, and check the colour. We know the typical colour of a bottle of Founders’ Cask Karuizawa, for example. So if it’s a bit too light or dark, that rings alarm bells.”