Bite-sized learning on everything and anything relating to wood, casks and the maturation of spirits by Dr. Martin Purvis.
Time to wade into the debate around whisky cask sales/investment….
I was recently sent some details of new make casks that are available for purchase. I had a number of thoughts when considering this…..
1. They aren’t cheap!
2. I don’t really want 200 bottles of the same whisky – variety is the spice of life for me and there are so many great bottles to investigate!
3. the exit costs for bottling a cask of this for yourselves are high. (UK Duty alone is currently £28.74 Per litre of absolute alcohol – so for 130 litres = £3,736)
4. Liquidity for this investment is pretty limited – unless the brand goes supernova and the trademark owners are short of stock.
5. It is misleading to advertise the stellar growth of one cask that was purchased a long time ago (such as The Macallan).
6. A high end mature branded cask – if available today would set you back 6 to 7 figures and the use of the name would be closely controlled.
7. I totally get why new distillers want to sell casks as a way of generating early cash flow.
So to shed some light on this i thought i would share some calculations.
A bourbon barrel is probably £100 delivered (i like round numbers).
Malted barley cost at £500 per tonne will yield ~410 litres of absolute alcohol – so ~£1.20 per litre of alcohol.
Lets assume that the grain cost is 2/3rds of the cost of make plus some other overheads = £2 per litre of alcohol produced. (all distillery costs vary depending on many factors).
A bourbon barrel will hold 200 bulk litres. Assuming a fill strength of 65% abv, a barrel will hold 130 Litres of alcohol.
So the variable costs for making a full barrel of new make are £260+£100 = £360
Add in some fixed costs etc and you still should have change from £500. Distiller then sells for some profit….(pick a multiple) and also if the cask is maturing there will be warehouse rent, insurance costs plus some inevitable loss.
If you have plenty of money and friends to drink your own bottling then its certainly worth a punt – but if you are after a get rich quick scheme then cask purchase probably isn’t a great option for you.
All that glistens isn’t gold or high value whisky!
Qualifications: BSc/PHD Geology, MSc Brew/Distilling, MBA Luxury Brand Marketing and Family Business
Background: Martin has worked for nearly 20 years across the spirit drinks industry in a variety of roles from Technical Support, Compliance, Food Safety, HMRC, Blending, Procurement of raw materials, Barrel Procurement, Maturation improvement, grain storage and merchanting, used and new barrel sales, customer relationship management, new business development.