Another Day, Another New Whisky Auction

by Oliver Klimek on December 13, 2013

Last year I took a closer look at whisky inflation, the phenomenon of some whisky prices growing faster than suggested by the the inflation rate. This year in particular has seen a different kind of whisky inflation: a steadily rising number of whisky auction companies.

There have always been whisky auctions, particularly by traditional auctioneers like Bonhams, Mulberry Bank or McTear’s, but also the German web-based whiskyauction.com site has been around fror several years. Then a few years ago Scotch Whisky Auctions opened their doors in Glasgow.

But now it seems there is no week without another new whisky auction website popping up. Now there also are Whisky Auctioneer, Whisky-Online Auctions, Just Whisky, Whisky Auctions Edinburgh, auctionwhisky.com, Whisky Bid, and maybe even more. I confess I have lost track.

I have to quote David Robertson again who in the initial press release of his Whisky Trading Company predicted a substantial growth for the whisky auction market:

“With a huge market already well-established in fine wine investment, whisky as an alternative investment market is dynamically growing both at home and abroad. Whisky auction houses in the UK alone saw 14,000 bottles sold in 2012, a huge jump from just 2,000 in 2008. By 2020, this number is estimated to grow by 114 percent to 30,000 bottles. Globally 2012 saw around 75,000 bottles auctioned valued at £11 million, and this is expected to double in volume to 150,000 bottles in 2020 with values trebling to £33 million, suggesting the trend towards premiumisation will continue.”

With all those new auction companies, is there still room on the bandwagon or is it already becoming crowded on there? More and more auction houses fighting about the cake means the pieces will become smaller, so it might well be possible that not all of them will survive for a long time.

So far the growing demand for collectable or “investment grade” whisky has been driving the prices on the auction market up to levels that some have already called insane. The £1600 paid for a bottle of 12 year old Speyburn is often cited as an example. But on the other hand, the projected increase in auction volume means that supply will rise as well which is likely to put pressure on the prices.

Maybe some of the bottles perceived as rare and almost impossible to get are not quite so rare after all. The quick flipping of newly released bottles aside (latest craze is Bowmore’s Devil’s Cask which you will find donzens of in aforementioned auctions), who is selling the older bottles now? I would not be surprised if it were many whisky collectors who bought them for their release prices and who are now tempted to rake in a substantial profit as long as demand is high. And there is quite a number of serious whisky collectors out there with the big shots like Giuseppe Begnoni or Sukhinder Singh just being the tip of the iceberg.

Good auction prices may lure more and more bottles from the collections that have been bought with smart money. But what if the people who buy now for high prices want to sell their bottles? Will the demand keep up with the projected growth in supply so that further price increases can be expected? It is not the first time I have expressed my doubts in the sustainability of the secondary whisky market. And I am becoming more and more convinced that the ice is getting thinner with every new auction.

What nags me in particular is the continued promotion of whisky as an investment for people who might not be interested in the liquid itself but rather regard it as an investment alternative to precious metals or pork belly futures. This has been done by whisky makers themselves like Dalmore and by whisky investment professionals like David Robertson or former Edrington employee Nicholas Pollachi who is responsible for the latest plug on CNBC where he promoted three Edrington or ex-Edrington whiskies promising price increases up to 1000% within five to ten years

 

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{ 1 comment… read it below or add one }

politicalidiot December 21, 2013 at 5:41 pm

I agree with you Oliver. When the discussion deviates from the whisky and focuses only on speculative investment it enters creepy territory. The CNBC spot I hadn’t seen. What a load of this that is. CNBC is a fraud. Promoting whisky as an investment is as egregious as promoting cabbage patch dolls as investment in times past.

That said, I think I need to sell my ’59 Macallan to some sucker and retire!!!

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