Roger Parfitt hit the headlines recently after selling two whisky casks he bought for £4,700 for an impressive £225,000. The bank manager from Coventry purchased a cask of single malt Macallan for £3,200 and a cask of Tobemory for £1,500 in 1994. Despite not being a whisky expert, Parfitt had expected the casks to appreciate in value over the years and produce a healthy profit to add to his retirement fund.
The life-changing final sale price of the two casks came as a pleasant surprise to Parfitt who has 40 years of experience in the banking world. Parfitt plans to use his windfall to pay off his mortgage and retire three years earlier than he had planned. He’s also said he plans to purchase a cask for his two children which he’s nicknamed “the cask of mum and dad”, expecting to generate a healthy return to help fund their future.
While whisky casks can often be seen as a risky or complicated investment, this case is proof that you don’t have to be a whisky expert to make impressive returns from the cask market. While returns of 4,700% are pretty exceptional, the key principle to bear in mind is that whisky casks appreciate over time. Average annual returns are around 10%, with the BC20 cask index reporting an average of 13.09% over the last 5 years. Older whiskies from top distilleries like Macallan command especially high prices and enjoy a cult following amongst collectors and enthusiasts around the globe.
It’s important to also remember that whisky is an asset-backed investment, meaning that once you have purchased your cask you will always have access to that physical asset which you can either sell on or bottle whenever you wish to. This minimises your risk, especially when compared to more nebulous investments like stocks or even cryptocurrency which could crash at any moment in response to a single tweet from a powerful politician or business leader.
Another hidden benefit to whisky cask investment is that Parfitt’s £225,000 windfall will not be subject to any Capital Gains Tax. Since HMRC classes whisky as a “wasting asset” with a limited lifetime, CGT does not apply to any profits made on whisky casks.
In a recent interview Parfitt outlined one final advantage of whisky cask investment: “I remember thinking, if it doesn’t appreciate in value, the worst that could happen is that you would have to get it out of the warehouse, bottle it and drink it.” While we’ve always delivered strong returns for all our investors, there’s always the option to enjoy some or all of your cask if you should choose to!
For more information about investing in whisky, please contact us.