With the coronavirus pandemic sending stock markets into a tailspin, investors are increasingly searching for safer assets to park their cash until the volatility subsides.
One alternative investment seeing an uptick in demand is casks of Scotch whisky and Irish whiskey, where value is tied to the age of the product as opposed to the movement of markets.
The Whiskey & Wealth Club (WWC), which allows private investors and funds the opportunity to buy cask whisky in wholesale quantities, said on Thursday that in March alone it had seen £1.1mln invested into over 62 cask pallets, equivalent to around 370 casks or 74,000 litres, making it its second most successful month to date.
WWC co-founder William Fielding said the firm had also heard that distilleries across the board are planning “price increases of up to 20% in the coming months”, boosting the value of casks further.
Aside from casks, investors considering rare whisky’s as a place to put their money may also be getting into the market at the right time, with the Knight Frank Luxury Investment Index, which tracks the value of goods such as designer handbags, diamonds and classic cars, showing that the value of rare whisky increased 5% over 2019.
The index highlighted collector interest in what Rare Whisky 101’s Andy Simpson described as the “oldest, rarest examples iconic distilleries such as Dalmore, Springbank, Ardbeg, Lagavulin, Bowmore and Brora”, although he added that casks had also remained “in huge demand”.
Dividends under the cosh
Demand for asset-backed investment such as whisky has become more pronounced as even equities considered to be ‘havens’ in times of market volatility have had to cut back on some of their prime selling points, notably their dividends.
The UK’s banks have been hit particularly hard this week after Lloyds Banking Group PLC (LON:LLOY), Barclays PLC (LON:BARC), HSBC Holdings PLC (LON:HSBA), Royal Bank of Scotland Group PLC (LON:RBS) and Standard Chartered PLC (LON:STAN) all scrapped their dividends after a request from the Bank of England to preserve cash during the coronavirus crisis, hammering their share prices in the process.
However, the dividend cancellation trend is pervading across the entire market, with data from broker Peel Hunt indicating that companies in the FTSE 350 and AIM 100 have cancelled dividends over the last three to four weeks totalling around £11.8bn.