The Bursting of the Whisky Bubble: Rare Bottles Lose Auction Value

  • Global Economic Weaknesses and Faulty Pricing Dampening Demand for Luxury Collectibles.
  • The value of rare whisky at auctions has dropped significantly this year.

Eulerpool News·

According to a recent report by Noble & Co., an Edinburgh-based investment bank, the value of rare whisky sold at auctions has suffered a significant decline this year. The report indicates that a bubble in this asset class, popular among wealthy investors, may have 'finally burst.' The sales of whisky bottles sold worldwide for over 1,000 pounds fell by 34 percent in volume and 40 percent in value by October 1st. These figures show an intensification of the decline compared to the previous year, when the value decreased by 7 percent despite a 10 percent increase in volume. The weakness of the global economy following a high inflation period has dampened the demand for high-quality beverages. During the years of low interest rates and quantitative easing by central banks following the financial crisis, interest in rare single malts increased significantly, prompting investors to seek returns in alternative asset classes. However, the phase of high inflation and interest rates post-pandemic has reduced the demand for expensive collectibles such as rare Scotch, explains Duncan McFadzean, head of Food and Drink at Noble & Co. Jonny Fowle, global head of whisky and spirits at Sotheby's auction house, confirmed that the era when nearly every whisky release increased in value is over. He noted that producers have been pricing modern releases 'incorrectly' since 2020, while older bottles that were initially moderately priced continue to perform well, albeit not at 2022 levels. An example of this is the 50-year-old Macallan Lalique, which still fetches ten times its initial release value from 2005, around 50,000 pounds at auctions. The first edition of Bowmore, launched in 1993 with a price of 100 pounds, is now traded at about 15,000 pounds. Auction prices that had risen since 2017 encouraged manufacturers to raise their prices to reclaim some of the value lost to the secondary market. However, this approach offers only short-term benefits and excludes both investors and connoisseurs. The current figures represent a challenging moment for the broader Scotch whisky industry. Exports fell by 18 percent in value and 10 percent in volume in the first half of the year compared to the same period last year, according to the Scotch Whisky Association. After rapid growth leading up to the pandemic and a strong recovery in 2022, the market currently shows weaker trends. In recent years, demand shifted from Asia to the US, where a strong economy ensured a market for premium whisky. McFadzean sees a threat from potential US sanctions, which could, however, be offset by a resurgence of purchases in Asia. Nonetheless, economies there, including China, are also struggling.
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