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3 Red Flags To Watch For With Scotch Whisky Cask Investment

The information provided in introductory brochures by many Scotch whisky cask investment firms seems to be innocuous, offering basic information about the industry and ways for potential investors to invest in a cask.

However, information that is opaque, outdated, or miscontextualises the cask investment market characterises many of these firms’ brochures and social media ads.

Here’s three claims about Scotch whisky cask investment that we’ve seen published by firms operating today that don’t provide the factual information prospective investors need and that very likely constitute fraud.

582% or 586% growth in 10 years

To prove the financial viability of Scotch whisky cask investment, some firms point to growth in the rare whisky market of 582% or 586% over the past 10 years.

That figure is drawn from the Knight Frank Rare Whisky Icon 100 Index, which only tracks the changing auction prices of 100 rare and desirable bottles of whisky. It is a measurement created by whisky consultants Rare Whisky 101.

The 582% and 586% figures are outdated and inaccurate. The most recent figure covering index changes over the past 10 years through February 2023 represents an overall index increase of 392%. While a considerable figure, it lacks context, failing to account for the radical shift in the secondary market for whisky bottles as single malts became globally recognised as a luxury asset.

A more apt comparison, the overall prices for those specific index bottles, grew by only 28% between February 2019 and 2023, and even slightly decreased between February 2022 and 2023.

Furthermore, the Rare Whisky Icon 100 Index does not account for casks, nor is an appropriate indicator of the market performance of Scotch whisky casks. The Knight Frank report’s editor, Andrew Shirley, made clear his distaste for how his work is sometimes used by firms promoting Scotch whisky cask investment in an article in Whisky Magazine: “Our index is tracking 100 bottles of rare and valuable whisky; it has absolutely nothing to do with cask whisky.”

Any firm publishing a report or social media ad using those 582% or 586% figures to promote Scotch whisky cask investment to prospective investors should be reported to the ASA.

Annual returns of 8%-20%

Many firms claim that investing in Scotch whisky casks can lead to annual returns of 8% to 20%. While it is certainly possible to profit from a cask of Scotch whisky, just like other alternative assets such as art or vintage cars, it’s important to note that there is no publicly-available hard, transparent data to support assertions of indisputable profits.

“Hard, transparent data” refers to accessible records of Scotch whisky cask sales taking place between private investors and how they were sold; whether through auctions, sold on to other buyers, bottled and then sold through retailers, or other methods.

Public auction purchases of bottles can be tracked, offering clear data regarding whisky bottles on the secondary market. But as noted above, it is a wholly different market from Scotch whisky cask investment.

Therefore, no concrete proof currently exists verifying that any of those annual returns are ‘guaranteed’ or that everyone who invests in a Scotch whisky cask will be enjoying them. Remember that when it comes to investment there is no such thing as ‘guaranteed’, especially when it comes to the volatile and unregulated Scotch whisky cask market.

A Scotch whisky cask doesn’t need a delivery order to be sold to a new owner

This is actually true, but requires further explanation. 

A Delivery Order (DO) as defined by the Scotch Whisky Association (SWA) is “a document setting out the details of the cask to be transferred, signed by purchaser and seller and then delivered to the warehousekeeper”. It serves as a kind of contract fulfilling the legal requirements covering the transfer of ownership of a cask of Scotch Whisky. 

DOs have not been legally required since 2006 — the SWA states “nowadays an invoice or owner’s certificate may suffice” — but still serve as the industry standard for cask ownership transfers in Scotland. Very few warehouses in Scotland, if any, operate without them. So anyone buying a new cask should have one in order to ensure that the cask exists and is indeed owned by the purchaser. 

But here’s the problem: obtaining a DO requires a warehouse to open a new account and at the time of writing very few warehouses are opening new accounts for individual investors buying small amounts of casks as it places significant strain on warehouse operations. 

Many firms or brokers providing Scotch whisky cask investment services, therefore, act as middlemen helping clients purchase casks under their warehouse accounts with the DO for the cask placed under that firm’s name. But that raises the risk that ‘purchased’ casks might not meet legal requirements regarding ownership transfers. 

Some cask investment firms or brokers will mention that a delivery order isn’t needed to safely buy and own a cask, and might quote the SWA guidance stating ‘Nowadays an invoice or owner’s certificate may suffice’. If they do mention the SWA in this way and neglect to mention the very important sentence that comes after that phrase, ‘Before completing the purchase you should check with the warehousekeeper what documents they require and ensure that the seller can deliver them to you’, that’s a red flag. 

Therefore, in situations where a purchaser cannot get a DO with a cask, the firm or broker facilitating the sale should provide the contact details of the warehouse holding the cask in order to follow the official SWA recommendations.

Without a delivery order or a clear documentation trail of the transfer that includes the warehouse keeping the cask, it is not certain that a purchaser legally owns the cask they bought. 


The information provided on Protect Your Cask is intended solely for educational and informational purposes and does not constitute legal, financial, or investment advice. We strongly encourage readers to conduct their own research and, where necessary, consult with professional advisors or legal counsel before making any investment decisions in the Scotch whisky cask market. The views and opinions expressed herein are not intended to serve as a guarantee or prediction of future events and should not be relied upon as such. Protect Your Cask disclaims any liability for decisions made based on the information provided on this website.