The booze you’re buying could potentially do more for you than line your bar—it could line your wallet, too, at least if you’re familiar with the concept of spirits investing. In the past decade, the value of spirits has exploded—consider that according to the Distilled Spirits Council, the value for “super-premium” bourbon has grown from $63 million to $643 million at retail in the U.S. since 2003—and that’s particularly true for aged spirits, led by whiskey. As buyers caught on, early investors were rewarded with a chain reaction: bottles began disappearing, creating more scarcity, elevating prices further, and fueling thirst, for both drinkers and speculators alike.
While the field may be more crowded and competitive than it was at the start, it’s still not too late to get involved for yourself. Short of building your own craft distillery—though thousands have pursued just that investment opportunity, with figures from the American Craft Spirits Association showing over 2,000 active craft distilleries in the U.S.— there are several strategies you can pursue to dip your toes into the water (of life).
What to Buy
Investing in spirits isn’t as easy as simply walking into the store and buying any bottle you find. That said, there are easy rules to follow to help get started. According to Alexander Fraser, a whiskey collector and investor who runs a Whiskey Investing Facebook page and website, there are several factors to consider first and foremost, such as the rarity of a bottle, its collectability on its own, and whether it’s part of a larger collectible range or series of bottles.
While well-stocked spirits stores may have the occasional limited release or rarity, Fraser makes most of his acquisitions via auction houses. “I keep reinforcing the fact that you need patience as an investor in whiskey,” Fraser says, noting that purchases via online auctions include extra fees in the form of commissions, insurance, and shipping.
Beyond patience, you’ll also need an education on what’s valuable and why or when to make a purchase. “Do your research,” Fraser says. “I spent six months reading about whiskey and why certain bottles made for good investments, as well as following an auction site for a few months to see how the value of bottles varies over time.”
Target a few specific bottles and price points for your first foray—allocated annual releases such as the Buffalo Trace Antique Collection or limited outturns from big brands such as the Macallan are surefire tickets to profit when you can find them at standard retail pricing—and remember that while you may be able to flip a bottle for a quick profit, your payoff likely won’t be for years down the road. “Investing in whiskey is long-term, anything from three to 10 years should be your timeframe,” Fraser says. It’s not unusual for rarities, such as the both famous and infamous Van Winkle lineup, also from Buffalo Trace, to reach values exceeding 10-20x its original price sticker. While that’s a dramatic outcome, and you can’t always count on those types of returns, such possibilities are tantalizing in any market.
Fraser also suggests going straight to the distillery and buying directly from them. “Many have member’s societies and have special releases for members only,” he says. “New distilleries often sell whiskey while it’s still in the barrel, allowing you to be right there at the beginning of an inaugural launch.”
From Bottles to Buying Barrels
An increasing number of distilleries even let consumers buy full barrels. As Fraser noted, this may be a new distillery that’s selling its wares in advance in order to generate revenue while their whiskey is still coming of age. In the U.S., in addition to upstarts entering the scene though, the majority of the major bourbon distilleries offer barrel purchase programs, including the likes of Woodford Reserve, Buffalo Trace, Four Roses, and others.
Restaurants and bars are frequent purchasers of full barrels so they can offer their customers a unique selection. As an individual though, you could buy a barrel and partner with a retail store owner for its labeling and sales. It’s also common practice for whiskey clubs or small groups of whiskey-loving friends to go in on a barrel together, reducing your individual outlay.
Old Forester recently revamped its single barrel program by offering 100 proof and unfiltered cask strength options (a cask strength whiskey literally provides more bang for the buck as it hasn’t been diluted by the addition of water to a typical bottling strength between 40 and 50% ABV, and is often preferred by both connoisseurs and collectors alike. Consider a barrel that’s bottled at 65% ABV as opposed to 40% ABV holds over 1.5x as much actual alcohol inside.)
“Our single barrel program allows consumers to immerse themselves in a fairly bespoke process of selection that is educational and hands-on,” says Old Forester president Campbell Brown. “You can do it with smaller groups of friends and/or colleagues and there is a level of personalization that, for bourbon enthusiasts and lovers, has become increasingly important and desired.”
A full-size, 53-gallon barrel will yield between approximately 200-250 bottles, depending on age, ABV, and maturation conditions, with costs falling between about $5,000 and $10,000.
The joy of buying a barrel of whiskey for yourself is that nobody else has anything exactly like it. Each barrel is distinctively different in terms of flavor profiles, so you have the opportunity to pick out one you particularly like or think is of exceptional quality, providing a unique selling point if that’s the goal.
The logistics are more manageable for the purchaser than you might expect. The distillery will store your private barrel within its own warehouses and will bottle the liquid once it’s of age. As mentioned above, if selling your own label of whiskey at retail is the objective, you’ll need to partner with a store to handle shipment, taxes, sales, and so forth.
Such a hobby or one-time investment could grow into a massive enterprise if you’re dedicated to the task and up to the challenge. Private label brands are big business, particularly in the U.K. with Scotch whiskey as comparative to within the U.S. for bourbon or rye. Meanwhile, many craft brands here in the states are actually sourcing their whiskey from larger producers before blending and branding it themselves—essentially a large scale operation of what you’re considering here.
For your first pick, Brown has a few suggestions. “Don’t overthink it– I have no idea what clove or marzipan taste like, so I just focus on what flavor catches my attention, why it does and if I can answer that simply, I’ve found my barrel,” he says. “If you are in a group, give time to discuss the pro’s and con’s with everyone and be willing to lean into other people’s preferences. Also, have a plan going in on what to do if a group is split down the middle – I recommend you buy them both!”
Crowdfunding & Spirits Stocks
If all of the above is simply too hands-on and intensive for you, then there are still several viable options to consider. The first is to invest in Old Fashioneds the old fashioned way, the stock market. Brown-Forman (BF:B), parent company of Old Forester, has doubled from approximately $35 to $70 per share in the past five years, for instance. LVMH, which has spirits brands such as Hennessy and Glenmorangie, has nearly tripled, and other major players such as Diageo, Pernod Ricard, and Constellation Brands have seen lucrative returns as well.
Last but not least, when you don’t want to be hands-on but you don’t want to go the traditional route either, the just-right option for you may be to find a distillery crowdfunding campaign. Alcohol is one of the highlighted categories on Wefunder, for instance, where you’ll typically be able to find craft distilleries and brands among the available companies, offering returns ranging from revenue to stock or equity. Barrow’s Intense, a ginger liqueur, and Avua Cachaca, selling the Brazilian sugarcane spirit, each had successful six-figure campaigns, while Cleveland Whiskey raised a staggering $1.5 million. Other services such as WhiskeyInvestDirect and WineInvestment.com have also popped up over the last few years.
Vail’s 10th Mountain Distellery ran a Kickstarter back in 2014, raising nearly $27,000 to launch offering backers a barrel of whiskey custom engraved for $10,000.
Now the next time you visit a bar, you won’t be buying a drink, you’ll be researching your investment. If nothing else, that’s a win-win.