This week I moderated a virtual panel discussion about whiskey investing for the Legends Investment Network. My panelists included Benjamin Tsai, president and managing partner of Wave Financial, and Raquel Raies, The Macallan brand ambassador. The Macallan is one of the most highly sought-after collectible Scotch whiskies in the world, but collecting is not the only way to invest in whisk(e)y.
Tsai runs a whiskey token fund (a type of cryptocurrency) called the Wave Kentucky Whiskey 2020 Digital Fund that is asset-backed by actual barrels of whiskey distilled at Wilderness Trail Distillery in Danville, Kentucky. The plan is to own the barrels until they reach maturity and then sell them on the open market, either back to Wilderness Trail or to start-up whiskey brands that need barrels to support their new products. There are some major differences between this type of investing and investing in collections of bottles, and there are still more opportunities to invest in the whiskey world.
There are a few different whiskey tokens that have come out during the cryptocurrency boom, including Whiskey Coin, which was to be backed by bottles of collectible whiskey but never launched, and CaskCoin, which is backed by barrels of Scotch whiskey. Asset-backed cryptocurrency funds may seem like a huge risk, but, contrary to popular belief, they are regulated – and taxed – just like a bond or equity. The explosive growth in popularity of both whiskey and cryptocurrency made this a natural next step, but there are still plenty of options if you aren’t into cryptocurrency.
Most of the newer distilleries offer the opportunity to invest. When I travel to tour distilleries across the United States, I often meet college roommates, best friends from the old neighbourhood, and family members who have invested in someone’s dream to help it become reality. Those investors have invested as much emotionally in the project as they do financially in actual assets.
If you don’t want to own part of a distillery, many of the big companies like Brown-Forman and Diageo are publicly traded, meaning you can purchase their stock in either your personal investment portfolio or your retirement account, so you can literally bank on whiskey’s popularity to fund your future.
There are still lots of folks out there who would rather have physical control over their investments, and this is one of the reasons why the whiskey boom has given rise to such a strong secondary collectors market. The other reason is the thrill of the hunt – there’s nothing better than finding a rare bottle ‘in the wild’ (at retail price) knowing it will fetch a greater price in a collector’s market.
There are a few considerations to make in this circumstance. First is legality. In the United States, the only real legal way for an individual who doesn’t hold a license to sell a bottle is through a license holder in states and territories where that is permissible, such as Kentucky and Washington, D.C. Facebook and other marketplaces have taken the crackdown on illicit sales very seriously, wiping out entire enthusiast communities because of a few bad apples who refused to follow the rules.
The second consideration for collectors is storage. Be sure to store your bottles upright in a cool room, like a wine cellar. Do not store your whiskey on its side as this will accelerate the degradation of the cork – unlike wine, whiskey’s high alcohol content can cause speed-drying of cork.
Lastly, look into insurance for your whiskey collection. If it is stored properly in a safe location (not near anything that might create a flame or a spark) there are riders and special policies that can protect your investment. However, those policies often will not protect against someone in your home opening and drinking the contents, so invest in a lock!
All this said, the best thing you can do when you buy a great bottle of whiskey is to drink and enjoy it with those you love – even if they want to mix it with Coke. After all, the best and longest-lasting investment is always going to be in relationships.
Tsai runs a whiskey token fund (a type of cryptocurrency) called the Wave Kentucky Whiskey 2020 Digital Fund that is asset-backed by actual barrels of whiskey distilled at Wilderness Trail Distillery in Danville, Kentucky. The plan is to own the barrels until they reach maturity and then sell them on the open market, either back to Wilderness Trail or to start-up whiskey brands that need barrels to support their new products. There are some major differences between this type of investing and investing in collections of bottles, and there are still more opportunities to invest in the whiskey world.
There are a few different whiskey tokens that have come out during the cryptocurrency boom, including Whiskey Coin, which was to be backed by bottles of collectible whiskey but never launched, and CaskCoin, which is backed by barrels of Scotch whiskey. Asset-backed cryptocurrency funds may seem like a huge risk, but, contrary to popular belief, they are regulated – and taxed – just like a bond or equity. The explosive growth in popularity of both whiskey and cryptocurrency made this a natural next step, but there are still plenty of options if you aren’t into cryptocurrency.
Most of the newer distilleries offer the opportunity to invest. When I travel to tour distilleries across the United States, I often meet college roommates, best friends from the old neighbourhood, and family members who have invested in someone’s dream to help it become reality. Those investors have invested as much emotionally in the project as they do financially in actual assets.
If you don’t want to own part of a distillery, many of the big companies like Brown-Forman and Diageo are publicly traded, meaning you can purchase their stock in either your personal investment portfolio or your retirement account, so you can literally bank on whiskey’s popularity to fund your future.
There are still lots of folks out there who would rather have physical control over their investments, and this is one of the reasons why the whiskey boom has given rise to such a strong secondary collectors market. The other reason is the thrill of the hunt – there’s nothing better than finding a rare bottle ‘in the wild’ (at retail price) knowing it will fetch a greater price in a collector’s market.
There are a few considerations to make in this circumstance. First is legality. In the United States, the only real legal way for an individual who doesn’t hold a license to sell a bottle is through a license holder in states and territories where that is permissible, such as Kentucky and Washington, D.C. Facebook and other marketplaces have taken the crackdown on illicit sales very seriously, wiping out entire enthusiast communities because of a few bad apples who refused to follow the rules.
The second consideration for collectors is storage. Be sure to store your bottles upright in a cool room, like a wine cellar. Do not store your whiskey on its side as this will accelerate the degradation of the cork – unlike wine, whiskey’s high alcohol content can cause speed-drying of cork.
Lastly, look into insurance for your whiskey collection. If it is stored properly in a safe location (not near anything that might create a flame or a spark) there are riders and special policies that can protect your investment. However, those policies often will not protect against someone in your home opening and drinking the contents, so invest in a lock!
All this said, the best thing you can do when you buy a great bottle of whiskey is to drink and enjoy it with those you love – even if they want to mix it with Coke. After all, the best and longest-lasting investment is always going to be in relationships.
