Buying and owning rare whisky and spirits

At a glance

• Who it is for: collectors of rare bottled whisky, cognac, armagnac, rum and other spirits, and those approached about cask ownership.
• The three things that matter most: authentication of rare bottles; for casks, verified title in a bonded warehouse; and understanding that values can fall and some schemes are fraudulent.

Understanding the market

• Segments: rare and old single malts; closed or "lost" distilleries; limited releases; independent bottlings; vintage cognac and armagnac; casks of maturing spirit.
• Value drivers: distillery reputation and closure; age and rarity; cask type; bottle number and series; condition (fill level, label, seal); provenance.
• Unlike wine, bottled spirits largely stop maturing once bottled.

Ways to own

• Bottles bought from retailers, auction houses (including online specialists) or distillery releases.
• Casks: owning a cask of maturing spirit held in a bonded warehouse; bottling, duty and resale add complexity.

Where and how to buy

• Established retailers and specialist auction houses.
• Casks: preferably direct from distilleries or established brokers; ask for a delivery order or equivalent warehouse confirmation in your name.

Due diligence and authenticity

• Counterfeits exist at the top of the market; seek specialist authentication for rare bottles (glass, labels, closures and sometimes scientific analysis).
• For casks: warehouse confirmation of ownership, cask number, spirit volume and strength (regauge), cask type and storage fees.
• Check the seller's regulatory status where relevant and be cautious of unsolicited offers.

Costs of acquisition and ownership

• Bottles: purchase price or buyer's premium; shipping; insurance; storage.
• Casks: purchase; annual storage and insurance; regauging; bottling, labelling and duty if bottled; selling costs.

Structure, tax and regulation — topics to raise with your advisers

• Duty-suspended (bonded) versus duty-paid status.
• Tax on disposals where you live.
• Licensing or regulatory issues if you plan to bottle and sell.

Insurance, storage and security

• Store bottles upright, away from light and temperature swings.
• Insure on agreed values; keep an inventory with photographs.

Care and maintenance

• Monitor fill levels and seals; avoid heat and light.
• For casks, periodic regauging and sampling.

Selling and exit

• Auction, private sale or retailer buy-back; casks may be sold to brokers or other collectors, or bottled.
• Liquidity for casks can be limited.

Red flags

• Cold calls offering cask "investments" with projected returns.
• No delivery order or warehouse confirmation in your name.
• Rare bottles offered far below market.

Questions to ask your advisers

1. How would a sale be taxed for me?
2. Are there licensing implications if I bottle and sell a cask?

Glossary

Delivery order

document instructing a bonded warehouse to transfer cask ownership

Regauge

re-measuring a cask's volume and strength

Angel's share

spirit lost to evaporation during maturation

Independent bottling

spirit bottled by a company other than the distillery

Specialists you may need