A Bull Market in Single Malts

Sought-after Scotch whiskies can fetch seven-figure prices
Courtesy Bonhams

Two years ago, when Aaron Chan heard that a liquor store in Athens might have a rare Hanyu Ichiro Malt Japanese whisky, he phoned the shop from Hong Kong. Unable to make himself understood, he e-mailed photos of the distillery’s distinctive playing-card labels to the shop. The owner replied with a picture of his bottle—the label was the Ace of Spades.

“That was my eureka moment,” says Chan, who paid about HK$6,000 ($774) for the whisky. “The Ace of Spades was very, very rare already.” Another bottle of Ace of Spades went for HK$85,750 at a Bonhams auction on Aug. 15 in Hong Kong—14 times what Chan paid and slightly more than the price of an entire case of 1982 Château Margaux wine from Bordeaux that Sotheby’s sold in New York in June.

Investors are bidding up prices of rare single-malt Scotches from distillers such as Macallan, Bowmore, and Dalmore, and Japan’s Karuizawa and Yamazaki. In January, Sotheby’s sold a 6-liter Lalique decanter of Macallan “M” single malt—one of only four made—for a record HK$4.9 million.

“I’m not really an advocate of buying whisky and flipping it,” says Heather Greene, director of whisky education at the Flatiron Room in Manhattan, a bar for spirit lovers that offers tasting classes to aspiring connoisseurs. “But I’m getting questions from people asking if they should buy a couple of cases and sell them for double.”

According to the Investment Grade Scotch index, published by consulting firm Whisky Highland in Tain, Scotland, prices for the top 100 single malts rose an average 440 percent from the start of 2008 through the end of July this year. That compares with a 2 percent drop in the Liv-ex 100 Benchmark Fine Wine Index and a 31 percent gain in the Standard & Poor’s 500-stock index.

Mahesh Patel, a real estate developer in Atlanta, has amassed more than 5,000 bottles over the past 25 years. His cache is insured for almost $6 million. “Everything I have is appreciating,” Patel says. “I am a believer of buying two of everything. One to open and enjoy, the other you put away if it’s rare.” One exception to his rule is a Dalmore Trinitas 64 Year Old, which he bought in 2010 for £100,000 ($166,455). Only three were ever made, and he’s not touching the one he owns.

Distillers are finding it hard to keep up with the increase in demand, given how long it takes for whisky to age. A standard bottle of Glenfiddich spends 12 years in the cask and investment grade Scotches many more. The 1962 Macallan seen in the James Bond movie Skyfall aged for half a century.

Rising demand for rare malts prompted Rickesh Kishnani, the chief executive officer of Platinum Wines in Hong Kong, to launch the world’s first whisky fund, in June, after raising $4 million. “There will be a gap in the market for 10 to 15 years between the supply of rare old single malts and growing demand, particularly in Asia,” he says.

Whisky’s popularity is spawning counterfeits, says Luigi Barzini, spirits specialist at merchant Berry Bros. & Rudd in London. “There are a lot of fakes across Asia and some in Italy,” he says. “It’s a big problem for all of us.” There also is a growing number of speculators who may be pushing prices too high too fast. “The needle is getting closer to the bubble,” says Mark Gillespie, who runs the website WhiskyCast.

That doesn’t bother Patel. “I don’t see this as a paper investment,” he says. “It has inherent value. At the end of the day, you can still open the bottle and enjoy it.”

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE