How to Invest in Whiskey

Whisky Advocate, a magazine that covers the industry, keeps a value-based index of 100 rare, collectible whiskies through the world’s commercial auction houses, a tally the magazine has kept since 2010. For the past four quarters, the index’s growth rate has ranged from 5.9% to 6.8%, says Jonny McCormick, a long-time whisky writer for the publication.

Unlike Scotch and Japanese whisky, American whiskey has only recently established itself as a collector’s item. As such, it’s not uncommon for the price of a rare bottle of bourbon or rye to surge by a factor of 10 in just a few years. (To name one example: Pappy van Winkle 23 years old has increased in value by 972.5% since 2010) .

Picking the right bottle is easier said then done, however. For anyone looking to get started, here are a few of McCormick’s basic tips.

Visit your local whiskey store.

Producers of Scotch and Japanese whisky generally price their products to align with global demand. Because most American whiskies are far younger (not to mention less expensive and established), distilleries that jack up the price too quickly risk dampening momentum, says McCormick. Many, including famed producer Van Winkle, are intent on achieving long-term, sustained growth as opposed to short-term gains. (Translation: prices often don’t align with demand.)

While some stores jack up retail prices, others don’t—which means it’s possible to buy a bottle for far less than it commands on the secondary market. Stores often hold lotteries or limit sales to long-time customers to discourage scalping. Regardless, for new buyers looking to score a bargain, making friends with your local whiskey dealer isn’t a bad place to start. (Although forewarned: flipping isn’t looked at too kindly.)

Seek out rare and unusual blends.

Whiskey blends that are available year-round aren’t going to see huge jumps in value. Steep price increases are reserved for limited-edition batches. In general, it’s a good strategy to focus on unusual offerings from bigger, well-respected distilleries, says McCormick. Unlike wine, the spirit’s price depends less on its vintage (age does matter, but remember: a whiskey’s aging process stops once it’s bottled), and more on its rarity along with the reputation of the distillery that produced it.

The real and difficult art lies in spotting the next big trend before it’s, well, the next big trend. That said, here are the factors to consider when predicting whether a batch’s value will rise significantly in future: age, reputation of the the distillery (as well as its cult-status among whisky fans), packaging, hype, and review scores. “When all of these things go green in your mind, this is a potential collectible for the future,” says McCormick.

Take a closer look at what’s happening in Ireland.

McCormick’s personal bet is that Irish whisky, which continues to shuffle along under-the-radar, outshined by its Scottish, Japanese, and now American, counterparts. Thanks to a resurgence in Irish distilleries, such as Teeling Whisky in Dublin, however, McCormick predicts its breakout moment is coming. If he’s right, this would be a good time to get in on the ground floor: “The Irish market is going to be really big over the next decade.”