Owning the dream

Owning the dream

We’re all fans of whisky here, but what happens when one bottle is not enough? What motivates people to buy whole casks of whisky, why do distilleries sell them in the first place, and why do they sometimes regret it?

Whisky Learning | 31 Jan 2020 | Issue 165 | By Mark Jennings

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I know I’m not alone in dreaming of my own cask. The solemnity of the stone warehouse, the odour, the mould and stillness, and a piece, a modicum, a scintilla tucked away in the far corner with my name stamped on the lid. This clear spirit turning golden, intensifying. Mine, but maturing away from me, as I perhaps mature away from it and like a childhood friendship at distance, suddenly years later reunited, with all the ceremony of the intervening years disappearing as we sup, and toast and celebrate our lives together.

When I tell people that I put down a cask of whisky for my daughter Enya (born in January last year) the reply is often to the effect of “how lovely, she’ll really appreciate that in years to come.” They have made the same mistake I hope she doesn’t. This isn’t her cask, it just has her name on. It’s my cask. All mine. That might seem selfish and perhaps it is, but it’s been my dream to own a cask for a long, long time, as I suspect it has been for many of you, dear readers.

Why do distilleries sell casks?

Cask ownership programmes are often started by new distilleries as a means to generate a little cashflow and to create a buzz in the lonely years before an official bottling is released.

For Eoin Holmes, founder of the tiny Lough Mask Distillery in Ireland, it was simple: “Survival! Our largest still is only 1,000 litres. In order to make our whiskey and get through the three-year aging law we’ve had to sell a limited number of casks to aficionados.”

However, cashflow isn’t the core reason for Daniel Szor, founder of England’s Cotswolds Distillery. He says, “It was a way to create a ‘tribe’ of people who would be tied to our journey for the long term. I understood first-hand how important this can be, having been talked into buying a cask of Bruichladdich by Jim McEwan in 2002. From that day on Bruichladdich became my ‘home team’ and I followed their every move with great interest. And eventually that interest led me to start my own distillery!”

Jennifer Nickerson, founder of Ireland’s Tipperary Boutique Distillery, echoes this, “A major part of what we are building here is based on our connection to the land and country, and we want people to have the opportunity to be a part of that.”

Most of these programmes have a limited lifespan – once the distillery is bottling their own liquid they wind down the programme in favour of using their casks for their own bottlings – but some choose to keep them going.

Why we buy

Like any investment there are risks for the buyer, but also challenges for the distillery. Lately some cask owners have seen handsome profits as the spell of whisky ownership has grown in the years since they purchased their cask, while others getting into this for pure profit now may find a different outcome, with so many casks available; we just don’t know.

Buying a cask of whisky is not for the faint-hearted. Firstly, it’s proper money: anything from £2,500 from an unknown distillery to £22,000 for something more recognisable. Any way you cut it, this is a purchase most of us don’t make on a whim, or probably shouldn’t.

I asked existing cask owners why they bought in the first place. “Because I could have my cake and eat it – investment or for drinking,” said Dingle Distillery cask owner (or Founding Father, as they are known) Kevin Abrook. He bought a sherry cask some years ago.

Thomas Mote, distillery manager at Texas’s Balcones, views the main reason people buy as uniqueness. “One of the main drivers is for a customer to be able to purchase something that no one else can have. When they select a barrel the bottles are only available to that one person, and that prestige is hard to imitate.”

Kevin McParland, cask programme membership manager at Powerscourt Distillery in Ireland, thinks it’s also about the people involved, not just the wood or spirit. “The fact that our spirit is being produced by a world-renowned master distiller is certainly important.”

Barrel co-owner Edward Bates understood the more sentimental reasons when he chose a cask from Isle of Harris Distillery. “It was a family project towards the end of my father’s life. We liked the project and it seemed very good value. The initial purchase was split between five family members.” He also notes, “Harris’ sense of community has greatly added to the experience, so now when I go to the distillery I’m made to feel like I’m one of the family.”

This sense of being on a journey with the whisky and sharing this with others lit the torch for Sam Simmons, who bought a cask from from Isle of Arran Distillery. “For every whisky lover, there can be no greater thrill than owning your own cask of whisky and for us, owning a cask of one of Scotland’s youngest distilleries was really exciting as we were all new on our whisky journeys too.”

What about the money to be made? I was interested if he bought the cask as an investment. “It really had and has nothing to do with why we bought this cask. I advise folks who want to ‘invest’ in whisky bottles never to buy anything they wouldn’t drink themselves, and similarly I would not recommend financial reasons being the main driver for buying casks. Whisky should be about the people and the experience, every time.”
So, many different reasons but all will feel familiar to our readers, I suspect.

Things to consider when deciding to buy a cask

So you still want to buy a ton of whisky? You’ve chosen the distillery you want… then it starts to get real.

For some distilleries it’s simply a matter of choosing an existing, pre-filled cask, such as at Balcones where Thomas Mote gives this gentle caution: “Don’t always pick the darkest whisky as your favorite because you think it’s the oldest. Try to focus on what qualities are in the glass and what you like personally.” For most distilleries, though, cask ownership is really about owning something you’ve had a hand in choosing before it’s even hit the barrel. In fact, choosing the type of barrel is often the first act.

Most distilleries I spoke to offer a simple choice of single malt spirit in ex-Bourbon barrels of a fixed size, but that’s rare, with many offering a blinding array of options from cask type (such as Bourbon barrels, sherry hogsheads, American or European oak sherry butts, red, white or dessert wine casks, port, Madeira and even mizunara oak casks). One distillery was even offering a choice on the type of malted barley (plain, roasted, crystal or chocolate malted), while some distilleries even offer a choice of grain beyond barley, such as rye or Irish Pure Pot Still with malted and unmalted barley. Options, options, options! Thankfully this ‘consultancy’ is part of the fun of cask purchase, with the distillery team on hand to help you make the right choice.

For Lucy Geraghty, clubs membership manager at the new Holyrood Distillery in Edinburgh, that consultancy is a core part of the offering. “We wanted to offer a programme which is different to others and allows cask owners to truly focus on flavour, tailor their whisky to their personal tastes and create something very bespoke. As part of our programme, cask buyers meet with our distilling team for a flavour consultation in which they collaboratively explore the flavour they are looking for.”

Liquid + wood, what else is there?

Now you’ve chosen the liquid and the wood, don’t forget to ask about the length of the programme. Typically in Scotland and Ireland this is 10 years, and the costs for managing the cask for that time are part of the initial investment, but once the time is up you can bottle the whisky or keep it in the wood, for a fee. In hotter climes, such as at Milk & Honey Distillery in Israel, it’s a much shorter programme.

Head distiller Tomer Goren advises, “After three years we decide, together with the cask owner, if it is the right time to bottle it or better giving it some more time to develop and mature. The maturation process in the hot and humid climate of Tel Aviv is quicker, but each cask develops differently and every cask owner can decide if he’s happy with the spirit or prefers to give it more time to develop. Generally I think five to six years will be the maximum maturation time that we’ll recommend our cask owners to keep their casks.” Just make sure you price this into your budget.

Finally, what do you do with it in the end? The main choice, do you bottle it or do you sell it? For Kevin Abrook with his cask of Dingle whisky, he plans to do both at the 10-year mark.

Hans Martin Hansgaard, co-founder of Denmark’s Stauning Whisky, sums it up well: that at the end, “you get a very special bottle – you choose the cask, the spirit, the length of maturation, the ABV and you can have your own label.”

That leads me on to a very important point: just how much whisky can you drink? If you choose to bottle the lot you are either very generous to friends, own a hotel or have a very understanding partner, because that’s hundreds of bottles of whisky. While we’re on the subject there are a bunch of other decisions to be made here if you do bottle: the strength you want the whisky to be bottled at, the label and how much you weep at the share the angels take. Then there are the costs: duty, VAT and potentially capital gains. Do the maths up front so you are not just making this decision with your heart, especially if the cask will be ready in your retirement years.

Lastly, one thing we don’t really want to think about but should is market saturation. Martin McAuley was mindful of this when he purchased a cask from Echlinville Distillery in Ireland. “There is a dearth of these cask offerings with new distilleries coming online, so there may be a saturation of the market very soon and one wonders if the market is coming to be prepared for it. Hopefully India and China will be more open in a few years and make everything more profitable.” Wise words.

Do distilleries regret selling casks?

It’s easy to think that with all this great cashflow for a new distillery there is little downside, but this is an interesting ‘devil’s wager’. The more casks a new distillery sells at the start, when they are typically not producing a lot, the less they have to form the heart of their own release in three or more years when it truly becomes whisky and this can be a commercial headache. “We seem to be missing about 150 casks,” says Cotswolds’ Daniel Szor with a smile, “meaning sometimes we wish those 150 casks we sold still belonged to us.”

For this reason many distilleries offer a buy-back scheme, as they are desperate for the aged whisky that they were happy to sell in the early days but now have a big market for, so that’s one route. Others sell their casks to the likes of Whisky Exchange or other specialist drinks buyers.
There is the admin to consider during the programme.

Kevin McParland from Powerscourt Distillery is very positive about their programme, but does admit: “It’s the little things that trip you up. It’s the ‘small’ things and touches which so often seem to be great ideas at the time of concept that can sometimes become a lot more work in practice – it all adds to the fun!” That’s what it should be about to me – the fun of it.
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