Rare whisky ‘bubble’ bursts as sales tumble

The value of rare whiskies sold at auction has plunged this year, according to a new report that said a bubble in an asset class popular with wealthy investors may have “finally burst”.

Bottles of whisky sold globally for more than £1,000 declined 34 per cent by volume and 40 per cent in value in the year to October 1, according to Edinburgh-based investment bank Noble & Co. The figures mark an acceleration from last year’s decline of 7 per cent in value terms, despite increasing 10 per cent in volume.

Noble said a weakening global economy after a period of high inflation had stifled demand for high-end drinks.

Interest in rare single malts snowballed in the years of very low interest rates and central bank quantitative easing that followed the financial crisis, which encouraged investors to seek out returns in alternative asset classes.

But the period of high inflation and interest rates after the pandemic has eroded demand for expensive collectibles like rare Scotch, said Duncan McFadzean, head of food and drink at Noble & Co.

“The bubble in which fine and rare Scotch whisky has been traded for so long may have finally burst,” he added.

Jonny Fowle, global head of whisky and spirits at auction house Sotheby’s, said the era when almost any whisky release would go up in value was over.

But he said producers were “incorrectly” pricing more modern, post-2020 releases, whereas older bottles that were priced reasonably at release were still “doing well”, if somewhat below the heights of 2022.

The Macallan 50-year-old Lalique, for example, is still selling at 10 times its release value in 2005, at about £50,000 at auction. Bowmore’s first edition, released in 1993 at £100, is achieving about £15,000.

Rising auction prices since 2017 had encouraged producers to hike prices to recapture some of the value lost to the secondary market, he said.

“It’s understandable not to want to leave profit on the table,” he said. “But it’s a shortsighted endeavour — it’s pricing investors and drinkers out of the market,” he said.

The figures come at a tough moment for the broader Scotch whisky industry. Exports were down 18 per cent in value and 10 per cent by volume the first half of this year, compared with the previous-year period, according to the Scotch Whisky Association.

The market witnessed strong growth in the run-up to the pandemic and bounced back strongly from that dip in 2022.

“The industry thought it was going to be the ‘roaring 20s’ but the reality has been much, much tougher,” McFadzean said. “The industry ran straight into the wall of the cost of living — volumes have been falling and you’ve had profit warning after profit warning from majors.”

In recent years, the focus of demand has shifted from Asia to the US, where a strong economy drove demand for premium whisky.

McFadzean said the threat of US sanctions under Donald Trump could be balanced by a resurgence of buying in Asia, where Hong Kong has reduced tariffs, but economies have also been struggling there, including China.