This week saw the release of a long-overdue exposé of whisky cask investment schemes, which told the stories of a handful of victims who have lost tens of thousands of pounds each. The true scale of the situation is hard to tell at this stage, but shining a light on previous examples of fraud is likely to lead to hundreds if not thousands of individuals questioning what they've invested in, if they've paid a fair price or - even worse - do the casks even exist.
The documentary itself felt rather dragged out, with the ominous background music and 'straight to camera' victim statements feeling a bit clichéd and over-dramatic. However, the Disclosure team did well at highlighting how vulnerable the sector is to abuse, with the excellent Martin Armstrong of Whisky Broker calling for a centralised database for cask ownership details, in a similar way to the DVLA's system. Dram Mor's Kenny Macdonald added his own experienced thoughts, pointing out that when there's money to be made, the criminals are never too far behind.
Several case studies were examined, with the main offenders being your usual line-up of slimy schmoozers who wouldn't look out of place at a dodgy second-hand car dealership. The documentary concludes with the reporter confronting two such individuals, who continually refer to each other by various aliases by mistake in a rather comical - verging on tragic - fashion.
Our takeway from the programme is the critical importance of the Delivery Order (DO), which guarantees ownership of a cask. No DO, no cask. This has been exploited by fraudsters, with the same cask often being sold again and again to several investors. Another recurring theme is casks being sold for 4x or 5x their real value, with the owners now being forced either sell at a loss, or to wait decades in the hope that they might see a return on their investment.
Our advice to any potential whisky cask investors is to ask as many different experts as possible for their thoughts before committing to a purchase. Beyond the obvious risks of the cask not existing or not being as described, there are many technical factors which can influence a cask's value: first-fill vs fourth-fill, barrel vs hogshead, named distillery or not, plus many others. From a purist/drinker's perspective also, is the whisky itself of a decent quality? The expensive single cask expressions we see winning awards or selling for a fortune at auction have been hand-picked as being of exceptional quality. It is fair to say that 95% of casks are not of a sufficient quality to be bottled as they are - almost all need to be blended/vatted with other casks.
Overall, the Disclosure documentary is worth a watch, even for those with just a fleeting interest in whisky. It is worth mentioning that there are many respected, experienced and trustworthy whisky cask brokers out there, with the likes of Mark Littler and Felipe Schrieberg offering advice and information on the whole process.
Our personal view that cask purchases should be reserved for those with a genuine passion for the spirit, who are excited to see their own whisky mature over the years, and look forward to the opportunity of gifting bottles to friends or sharing a dram with loved ones. Any profit made should be taken as a pleasant surprise, rather than it being the raison d'être.
