Although it’s far too soon to predict the full economic impact of Covid-19, the early indications over the past couple of months are revealing an uptick in the secondary whisky market. This characteristic pattern has previously been observed with the 2008 economic crisis. Back then dramatic falls in global equities prompted investors to look at alternative assets like rare whiskies which typically hold their value extremely well during turbulent times.
So exactly why is whisky so attractive during periods of economic uncertainty, and what is happening this time round? One key benefit of investing in alternative assets like whisky is that prices have very limited correlation to global markets rocked by the continuing shockwaves emanating from the Covid-19 pandemic.
Additionally, as a tangible asset the supply of a particular rare whisky in the market is constantly decreasing as bottles are consumed. And collectors are increasingly turning to their finest bottles to boost morale during these unprecedented and challenging times. Fewer bottles in the market will cause the value of those remaining to rise in the longer-term, assuming a consistent level of demand.
In terms of the here and now the picture is also looking rosy for whisky investors. The secondary whisky market has shown strong growth over the past couple of months. According to analysis by Whisky Advocate, hammer prices for online auctions like Just Whisky and Whisky Hammer are up by up to 48% from February to April 2020.
The highest increases have been achieved by Hibiki 17 year old, Ardbeg 17 year old and Macallan The Archival Series (Folio 2) bottles which all achieved 46-48% growth over the two-month period. In total the analysis showed a rise of 16% across thirty different bottles – not bad considering the stark performance of global markets across the same time period.
The reasons for this buoyancy are complex, but one potential factor is the closure of auction houses and the postponement of in-person sales. This reduction in supply can then be a key driver especially for rare, sought-after bottles. Another explanation is that there are simply more people prepared to dig deep into their pockets for that special bottle, and who now have the luxury of time to browse the online auctions for something to impress their friends or simply to enjoy after a long day in lockdown.
Only time will reveal the full impact of the Covid-19 pandemic, but for investors looking to protect their assets and diversify their portfolio the whisky market is one of the few areas still offering significant growth potential right now.