Turbulence in the rare whisky market contributed to a 1% drop in the Knight Frank Luxury Investment Index (KFLII) in 2023.
It’s only the second time the index has recorded a year-end decline, said global consultancy Knight Frank in its newly published 2024 Wealth Report.
A sub-index tracking rare whisky bottles dropped by 9% over 12 months, underperforming sub-indices for other ‘passion’ assets, including wine, cars and handbags. A fine art sub-index was the best performer, rising 11%.
Experts said declines on some sub-indices reflected froth coming off the market. Knight Frank’s report also said wealthy investors focused more strongly on stock markets last year.
Its whisky index, compiled by Rare Whisky 101, was still the top performer on KFLII over 10 years, rising 280%.
Individual bottles still commanded stratospheric prices in 2023. A bottle of The Macallan 1926 fetched a record-breaking $2.7m (almost £2.2m), including buyer’s premium, at a Sotheby’s auction in November.
This is enough to buy 88 square metres of prime London property, said Knight Frank.
Whisky market expert Andy Simpson painted a mixed picture of price movements on the Knight Frank Luxury Whisky Index in the past 12 months.
‘While the worst performing 50 bottles lost 26% of their combined value, the remaining 50 bottles gained 5%, with the 20 best performers increasing by a respectable 20%,’ he said in Knight Frank’s report.
‘In my opinion, some bottles that lost significant value in 2023 will return through the next two years as they are simply so scarce and, right now at least, so undervalued,’ added Simpson, who is managing director of private client business Simpson Reserved.
Rare whisky prices still rising, says Bordeaux Index
Previous data has also suggested a softening in the whisky auction market, but some traders continue to report price growth for blue-chip bottles.
UK merchant Bordeaux Index said recently the rare whisky market was outperforming fine wine.
It reported fine wine prices down 12% on average in 2023 amid a quiet overall market. ‘We saw rare whisky, on the other hand, continue its upwards trajectory, albeit at a slightly slower pace, seeing prices on average higher by 13%.’
It said strong performers in Scotch included Springbank, Balvenie and Dalmore, as well as casks of Macallan. Japanese whisky had a quieter year, following lots of activity in 2021 and 2022.
Bordeaux Index predicted more price gains on rare whiskies in 2024, adding Macallan bottles underperformed last year and, as a result, ‘some (though not all) Macallan bottlings look good value to us’.
More wealthy collectors eye wine and whisky
Whilst there are never any guarantees when it comes to price rises, interest in both wine and whisky investment is still rising among the world’s super-wealthy, suggested Knight Frank’s report.
It surveyed more than 600 ‘private bankers, wealth advisers, intermediaries and family offices’, who collectively manage more than US$3 trillion of wealth for ultra-high-net-worth individuals (UHNWI).
When asked which passion investments were becoming more popular among clients, a global average of 35% and 26% of respondents said wine and whisky respectively. Only art and classic cars generated more enthusiasm.
‘Joy of ownership’ was cited as the main reason clients were interested in ‘investments of passion’.
Knight Frank defines UHNWIs as people who have a net worth of at least $30m.
‘At the end of 2023, there were 4.2% more UHNWIs than a year earlier, with nearly 70 very wealthy investors minted every day, taking the global total to just over 626,600,’ said Liam Bailey, Knight Frank’s global head of research and editor of The Wealth Report.
