Whatever its other virtues, whiskey does not spring to mind as an alternative investment. Recent auction prices, however, suggest that rethinking the term “liquid assets” may be in order.
Buyers who purchased the top 250 collectible bottles of whiskey for approximately $66,929 at auctions in 2008 could sell them today for $149,395, a 121% gain, according to the Whisky Highland Index, an online whiskey valuation library. Not too shabby when compared with the S&P 500's nearly flat performance over the same time period.
Single-malt Scotch whiskies tend to do the best at auction. Discontinued lines, collectible bottles and small, limited batches from the biggest Scotch brands, such as Glenfiddich, Macallan and Balvenie, are typical star performers.
While booze's return on investment looks as tantalizing as a dram of 18-year-old Laphroaig, turning whiskey into an alternative asset class is still pretty hard for most financial experts to swallow.
“Unless you've exhausted all other diversification possibilities, you should probably just enjoy whiskey,” said Nadia Papagiannis, alternatives analyst at Morningstar Inc.
Ironically, one of the problems of whiskey as an investment is that it's not particularly liquid.
“Reselling such items is problematic at best for anyone who's not involved in that marketplace full time,” said Bob Pugh, president of Insight Wealth Management Inc. “Even if the purchases enjoy a high value of appreciation, a great deal of those gains will be lost through transaction costs.”
And losses can happen, too. The 10 worst-performing bottles of whiskey lost 73% of their value since 2008, according to the index. For investors in losers, however, there is one consolation: You can enjoy the depreciated asset.
