Top 10 most investible Scotch brands of 2016By Annie Hayes
As Scotch whisky’s value sales continue to soar, we round up the 10 distilleries that offered the best return on investment last year using RW101’s latest Investors’ Index.
Last week rare whisky index, valuation and brokerage firm Rare Whisky 101 (RW101) revealed that Scotch whisky volume and value sales at auction reached record levels in 2016.
More than 58,758 bottles totalling £14.2 million went under the hammer – prompting leading Scotch whisky index the Rare Whisky Apex 1000 Index to close 38% up for the year, outperforming wine, gold and the FTSE 100.
RW101’s Investors’ Index launched in 2014, and tracks changes in the value of Scotch whisky brands to give investors unique insight into the market.
In 2015, the Index demonstrated that interest in silent distilleries dwindled in comparison to the previous year, when they made up seven of the 10 most investible Scotch whisky brands.
This year, RW101 notes that Speyside distilleries Glen Grant, Balvenie, Glenfarclas and GlenDronach saw “significant increases” with “massive market appetite” for the latter.
Glenfarclas, meanwhile, has been “buoyed by vastly underpriced ancient vintages” and is “starting to catch up” with other distilleries.
Islay distilleries Bowmore, Ardbeg and Lagavulin made “excellent progress” in 2016, driven by interest in “old aged spirit, single casks and older vintages”.
According to research by Lloyds Private Banking, one in six UK investors holds alternative investments in their portfolios, with 3% investing in whisky. On average, £27,700 is spent on whisky as a single “passion” investment.
“Most investors are not passionate about equities and bonds beyond their return but a study by Lloyds Private Banking has revealed that one in six UK investors holds a ‘hobby’ investment in their portfolios,” said Markus Stadlmann, CIO, Lloyds Private Banking.
“Investors are willing to part with large sums of money to invest in what they love. On average, £13,500 is spent on a single investment, and with one in ten spending more than £50,000 on an individual item.”
Click through the following pages to see which whiskies RW101 found to be the most investible in 2016.
Up 7 places
William Grant & Sons-owned Speyside distillery The Balvenie has shifted up 7 places to re-enter the top 10 for the first time since 2014. The distillery has rolled out a number of high-end releases in recent years – including the first two chapters of its DCS Compendium, crafted in celebration of the industry’s longest-serving malt master, David Stewart MBE – which may have contributed to its “significant” value increases. The brand was founded in 1862 by William Grant himself, who converted 18th-century mansion Balvenie New House into a distillery. To this day it is one of just six distilleries in Scotland to boast its own malting floor.
Up 6 places
Islay distillery Ardbeg has made “excellent progress”, according to RW101 – confirming that there is no slowdown in demand for heavily peated Scotch whisky. The main drivers behind its growth in popularity are “old aged spirit, single casks and older vintages”.Owned by The Glenmorangie Company, the distillery has closed twice throughout its history – in 1981 and 1996. Last year, Ardbeg released a 21-year-old whisky to the Ardbeg Committee, a members’ club of 120,000 people formed to “prevent the distillery’s doors ever closing again”, using liquid distilled in the mid-90s.
Down 4 places
Interestingly, it is a string of independent bottlings – the release of £20,000 Mortlach 75 Years Old by Gordon & MacPhail, for example – which are “pushing prices”. Mortlach’s official distillery bottle value sales remain flat at auction –a trend also noted with Talisker and Glen Grant distilleries. The Diageo-owned brand benefited from a rush on secondary market stocks in 2015, but the momentum did not carry through. The Mortlach distillery lies in Speyside’s Dufftown, and was the first legal distillery to be built there.
Up 1 place
Rising one place to 7th position is Convalmore, a Victorian Speyside distillery with a wealth of history. Built in 1893 and decommissioned in 1985, the site changed hands a number of times during its turbulent lifetime, surviving a serious fire and failed “continuous distillation” experiments. After closing it was sold to United Distillers and now belongs to William Grant & Sons, which still uses the site for warehousing Glenfiddich and Balvenie whisky. Though its liquid was used for blending while it was active, three single malts have been released since its distillery doors closed, as well as a selection of independent bottlings.
Up 10 places
Soaring through the ranks is Islay’s oldest distillery, Bowmore, driven by old age statements, single casks and old vintages. Founded in 1779, its production methods have scarcely changed in two centuries. In 2015 a bottle of 1980 Bowmore single malt Scotch whisky donated by Queen Elizabeth II fetched a whopping US$50,000 at auction, while at the end of 2016, Bowmore launched the final 50 bottles of its 1961 50 Year Old whisky, at the same time launching a new 50-year-old collection.
5. Port Ellen
Throughout 2016, in RW101’s top 30 ranking, 49 distilleries dropped a place – 39 of which are silent. Out of the 13 silent distilleries in the top 30, just two have remained equal – one being Port Ellen. Established on Islay’s south coast in 1825 by AK Mackay and Co, and closing in 1983, Port Ellen has become one of the most sought-after whiskies in the world, with prices increasing steadily as supplies peter out. Diageo has released a bottle of Port Ellen in its Special Releases every year since 2001, and independent bottlings have been released by the likes of Douglas Laing & Co and Signatory.
Down 2 places
Mainly used for blends, Killyloch was distilled between the 1960s and 1980s at historic Lowland malt distillery, Glenflagler, which was closed and demolished by Inver House Distillers in 1985. The name is said to be the false spelling of nearby water source Lillyloch, and occurred after early barrels were marked with an incorrect stencil, or so the story goes. Bottlings are very rare – 36-year-old Killyloch 1967 (pictured above) was its only ‘official’ debut as a single malt.
Delivering the same success as 2015, hugely investible non-mover The Dalmore remained at the top end of RW101’s Investor’s List. The Whyte & Mackay-owned brand targets the luxury market, launching high-end travel retail boutique activations and rolling out (very) limited edition releases – most recently an “exceptionally rare” Domaine Henri Giraud Champagne-finished 50-year-old single malt to mark master distiller Richard Paterson’s 50th year in the industry. Now Whyte & Mackay’s largest Scotch facility, the Alness-based distillery produces whisky in stills of varying sizes to create a “stronger, more complex character”.
Up 4 places
The Macallan has had a “stellar” 12 months according to RW101, remaining the “most heavily traded” distillery with 22% of the total value share for all bottles sold at auction. The distillery’s vintage 18-year-old bottlings (from 1965 vintage to 1990 inclusive) increased in value by 142.1% – at the end of 2015 a vintage vertical of these bottles would have been priced just under £19,000 – that price has now risen to almost £46,000. The Macallan 40 year-old retailed for £5,000 and sold out in double quick time. The liquid is so in-demand that luxury wine and spirits retailer Le Clos broke the world record for largest ever travel retail transaction in 2016 by selling an assortment of high-end Macallan single malt Scotch releases for US$500,000.
Retaining 1st place as the world’s most investible Scotch whisky brand is Diageo’s Brora. Outperforming silent still sister Port Ellen, Brora has become somewhat of a “cult” single malt. Built in 1819, the distillery was known as Clynelish, until the opening of the Clynelish Distillery, when it was changed to Brora. Between 1969 and 1973, the distillery produced a heavily peated whisky to cover the Islay drought, afterwards a lightly peated Highland-style whisky until it was mothballed in 1983. In 2014 Diageo released 160 bottles of Brora 40 Year Old, pictured, for £6,995.