Have you the bottle to invest in one?

If you buy a rare Scotch malt you will never lose money on it, says Barbara Oaff. And you could stand to make a lot

We have all heard of investing in fine wine, but what about investing in bottled whisky? Collecting Scottish single malts can be profitable. And more people seem to be discovering its potential, as well as its pleasures.

We have all heard of investing in fine wine, but what about investing in bottled whisky? Collecting Scottish single malts can be profitable. And more people seem to be discovering its potential, as well as its pleasures.

We are getting a real increase in interest, says Martin Green, a whisky consultant for the specialist auctioneer McTear's, of Glasgow. At each successive auction we are seeing new, younger faces.

Distilleries want to capitalise on this emerging growth. Their marketing has intensified and become more sophisticated. To wit: "Open a bottle of Laphroaig and you re opening the heart of our community."

Irish monks are credited with being the first community to produce spirits to drink, rather than as a solvent. The knowledge soon crossed to Scotland, where distilleries were set up by farmers. But the English latched on to whisky as a source of tax revenue after the 1707 Act of Union.

The main growth of whisky as an international drink was a 20th-century phenomenon as living standards rose and more people travelled. That fuelled the notion that whisky, with the long time factor in its production, had potential as an investment. Short of buying your own distillery or investing in distillery shares, there are two main ways of investing directly in whisky: identifying limited-edition bottles that will rise in price after the supply dries up, or buying casks of whisky that will be in demand years from now.

Casks of bulk whisky appreciate as they age and, as an investment, carry a number of tax advantages. Casks are most commonly filled with 240 litres of spirit worth £2,500 when they eventually reach the shops, pre-duty. But this is a professional market that needs professional advice, because it is all too easy to pay too much. That has turned the attention of most private investors to the tactic of investing in bottles, which the industry has responded to by developing the limited-edition market.

There are more limited-edition bottles, aimed specifically at collectors and collectors-to-be. The Macallan has outdone most of the competition by launching the largest and most valuable range of vintage whiskies ever. It is estimated to be worth £14.5m. And if you are tempted to buy one of its bottles at £375, what sort of returns could you expect?

That is difficult to say, David Cox, director of the collection, admits. "At the very least, most of our vintages hold their value; others go up, some by as much as 10, 12, possibly even 16 per cent over 10 years. But what the future will bring, no one can predict." There have been some spectacular price rises. The most impressive was at a Christie s auction. In 1991, a 1926 Macallan sold for £6,150. Last year it fetched a world record of £20,150. So what makes one bottle worth so much and another so little? The short answer is its quality and its rarity. The now legendary 1926 Macallan, for example, was 60 years old when it was bottled; it is reputed to have an exceptionally superior taste and it is extremely hard to get hold of; only a handful remain.

Douglas McIvor, the buyer for specialist whisky purveyor Berry Bros & Rudd, offers these tips for wannabe whisky collectors. Buy whisky that has already been bottled. If you are interested in buying the golden liquid while it is still in a cask, make sure you do so from a reputable distillery. In the mid-1990s, a few disreputable individuals sold casks; it turned out to be a scam.

Look for limited edition bottles. These can be anything from 2,000 to 200 to 20. Stick to the serious labels. Names include Bowmore, Bruichladdich, Glenfiddich, Springbank, Talisker, The Balvenie, and The Macallan. Even better, go with a distillery that has had its glory days and is now closed and not expected to reopen. This is a virtual guarantee that any stock you buy is finite. Try Brora, Dallas Dhu and Glen Flagler, among others. As a bonus, seek out bottles in their original box, ideally in perfect condition. Finally, be wary of old fakes. Get a professional expert to thoroughly check anything bottled before the First World War before you part with cash.

Some whisky experts actually recommend not collecting the stuff at all. "I think that's sacrilegious," Dr Nicolas Morgan, marketing director of malts at the premium drinks giant Diageo, says.

"Great whisky takes a lot of effort to make. It should be enjoyed as it was intended to be. It should not be locked away in a dark cupboard and brought out to the light of day only at auction in the hope of making money on it."

The final word on this debate goes to Charles MacLean, whisky consultant to the international auctioneers Bonhams. "There is a good chance you will get back what you paid for a bottle of whisky, if not more, sometimes a lot more," he says. "And, even if the market were to crash completely, which I do not expect it to, you will always have something special, very special, to drink, admire and appreciate."

'It's so pure and it's all good stuff'

Sukhinder Singh has been collecting whisky since he was a boy. Now, at 35, he is among the UK's most well-known collectors. Perhaps not surprisingly, he is also among the UK's most-respected dealers, running the Whisky Exchange in west London.

As Mr Singh grew up, his parents owned and ran an award-winning wine and spirits business. "You could say it's in my blood," he says.

Mr Singh got started with miniatures. "I became passionate about them." Up until recently, he had the world s largest collection, totalling 4,500. Many of those have been sold. "My new ambition is to match each remaining miniature with a full-sized bottle," he says.

Mr Singh will not be drawn on how much his present collection, displayed in a new, custom-built showroom, is worth. But he does admit his favourite piece is one of the famous 1926 Macallans, valued at more than £20,000.

"I am interested in the financial value of whisky, but what really appeals to me is the nature of the product itself," he says. "It is so traditional and pure. There are no chemicals, no additives and no short cuts. It's all good stuff."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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