Middle East whisky investors toast strong returns

Unsplash/Dylan de Jonge

• Value surged 322% in 10 years
• Cask sold for £16m in 2022
• Scotch exports to Mena worth £326m

Investors in rare whisky could be forgiven for raising a glass to the success of their investment over the past 10 years. Just maybe not using the expensive stuff.

The latest Knight Frank Luxury Investments report revealed the value of rare whisky has soared by 322 percent in that time.

That is a higher return than classic cars, art, watches and wine – what the consultancy describes as “luxury collectibles”.

Such growth has whetted the appetite of whisky aficionados across the Middle East.

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“From a UAE perspective and the Middle East in general, there is a lot of interest in whisky as an investment,” Thomas van Gameren, marketing manager at Netherlands-based Scotch Whisky Investments, tells AGBI.

The company was set up in 2005. It manages nearly $300 million of Scotch single malt whisky investments for its clients and is now eyeing up a permanent base in the UAE.

“Our plans entail [being] physically based in our top markets and somewhere in the UAE is up for discussion, that is clear,” van Gameren says.

Record-breaking prices

Proof of the thirst for this alternative asset class comes in a 2019 auction at Sotheby’s. A bottle of Macallan 1926 60-year-old Scotch Whisky set a then world record after fetching £1.5 million ($1.9 million).

A 1975 cask of Ardbeg Islay single malt Scotch sold to a collector in Asia in 2022 for £16 million. That is more than twice what the distillery’s owner Glenmorangie Co paid for the entire business in 1997 and the equivalent of around $36,000 per bottle.

Bottles of Black Bowmore Aston Martin DB5 are another example of a good return on investment according to Mike Smith, who is in charge of banking, finance, pensions and business money at Business Expert in the UK.

A savvy investor back in 1993 could have bought a bottle for under £100 – it would now be worth £50,000, Smith says.

One local whisky investor is Naim Maadad, founder of Gates Hospitality in Dubai and a board member of UAE Restaurant Group. He has a cellar of “liquid assets” that is close to 20 years old.

“Investors are buying up big based on market fluctuations and the currency turmoil, political uncertainty and crude prices,” Maadad says. 

Investing in whisky casks is equally popular. Although sizes vary, there is an average of 440 bottles in a typical one.

Entering the Gulf market

Whisky Cask Club in Singapore operates the first whisky cask fund, which is fully registered by the Monetary Authority of Singapore. It is another overseas entity looking to break into the Gulf market.

The multi-family office Blair Road Capital manages the fund and calls for a minimum investment sum of $50,000.

The company predominantly serves clients in South-East Asia and Australia, but CEO Alexander Knight reveals there is strong interest in the Gulf.

“There’s a lot of cash swilling around the place,” he said. “The demand is there and I want to dip my toe in the Middle East.”

That includes having an operation up and running in the region by the end of the year.

In simple terms, the longer a whisky matures in a bottle or barrel, the more expensive it becomes. Brand and rarity are also core to value appreciation.

In April the Singapore fund sold a cask of 30-year-old Macallan whisky to an investor from Qatar for £512,000.

Exports of Scotch whisky to the Middle East and North Africa (Mena) were worth £326 million in 2022, an increase of 74 percent against 2021, according to figures from the Scotch Whisky Association. 

Look to the long term

“I’ve always said Scotch whisky is a medium-to-long-term investment," Andy Simpson, a founder of UK-based Rare Whisky 101 consultancy, says.

"While short-term gains are possible, people should look at a five-to-20-year term.”

An example is the price fluctuations in bottles of higher-value rare whisky – £5,000 and above. They have declined in value by 4 percent year on year says the Knight Frank report.

Simpson revealed that the market leader, Macallan, has lost almost 12 percent of its value over the past 12 months, while Clynelish is up 3.9 percent and Balvenie up 22 percent.

Keren Bobker, a Dubai-based independent financial adviser and senior partner at Holborn Assets, was less enthusiastic. She believes that unless you have a deep understanding of the sector, it should only be a small "side" investment.

“By all means invest a small percentage if this is an area of interest but it is really not one to stake your retirement fund on,” she says.