Buying Cask whisky should be the cheapest way you can get hold of many Whisky's whilst also giving you the opportunity for some creative control over the final product. E.g. How long the whisky is matured in cask, if it is finished or re-racked into another barrel type even down to what the final glass bottle looks like if you wish.
There has been a proliferation of Cask whisky investment in the last few years. Some people have done very well, making significant returns quickly. However there have been several recent cases of companies popping up and committing fraud. Do your research. How long has the company been around? If they are storing the cask for you, you need to very confident they will still be around in years to come when you cask is matured. Can you actually go and visit your cask? Do they have a way of exiting you from any opportunity?
Key Terms to remember with Cask Whisky
Whisky – is a distilled spirit made from fermented grain mash. Crucially it must have a minimum alcohol level of 40%. As whisky ages the ABV% drops over time. If your cask drops below 40% ABV it is no longer legally whisky, and therefore worth considerably less. It usually takes many years for this to happen. But don't forget about your casks..
Scotch – Whisky made in Scotland. The historical home of whisky. Primarily made from water and malted barley but some other grains can be used. Bourbon – Must be produced in the USA but not all American whisky is Bourbon. Mostly made in Kentucky, it must be at least 51% corn and ages in new oak barrels. Typically sweater in style than Scotch.
Cask Strength – means that the whisky has not been diluted with extra water after it has finished the maturation process. It will have a higher ABV typically 50-60%. Most bottled whisky in the supermarkets and major stores will all be diluted down to 40% ABV. Reducing flavour but maximising the volume you can sell.
Independent bottler – These are a vital and underappreciated part of the whisky industry. When a distillery sells of a cask to a 3rd party and it leaves the distillery's warehouse then when it comes to be bottled it will no longer be an official distillery bottled release. The whisky is the bottled privately by or an independent bottler and can carry their brand, as well as saying 'Distilled at [the name of the distillery].'
OLA – Original Litres of Alcohol. You are usually quoted OLA on a 'New Make' cask. If you are quoted the OLA on an older cask, it may never have been regauged, so you might want to requested to get updated volume of alcohol before purchasing.
RLA – Regauged Litres of Alcohol. This should always come with a date that the cask was regauged. The more recent the better. This means a new test has been done to measure the latest level of volume of alcohol.
Angels Share – This is the amount of whisky lost each year to evaporation, approximately 2% per year. This is why older casks have less liquid left in them. A number of factors can affect the rate of evaporation such as heat, humidity, if the cask is moved around a lot or if it is re-racked into a new barrel.
Single Malt v. Blended malt – Single Malt can come from only one type of grain and from one distillery. Single Malts are typically higher quality and higher priced. A blended malt – like The Famous Grouse – can source from a number of different distilleries and blend together.
Regions – There are five official Scottish Whisky regions; Islay, Speyside, Highlands, Lowlands and Campbletown. There are some traditional general differences in style with Islay more famous for its smoky peaty whisky and Speyside for fruit forward Spirits.
Peat – A naturally occurring organic soil found in bogs, that is traditionally burned in the whisky making process adding a smoky flavour. Peat is not found in every region in Scotland, and there are increasing environmental concerns around burning peat, as peat bogs are huge source of carbon capture.
Cask Sizes – Different cask sizes change the whisky to wood ratio, which affects the maturation speed of the liquid. The main ones and their approximate sizes are; Quarter Cask (125L), American Standard/Ex-Bourbon (200L), Hogshead (230-250L), Port Pipes (350L+), Butt (500L) and Puncheon (500-700L).
Cask types – In addition to sizes, wooden whisky casks are often sourced from other alcohol production that can affect the taste of the whisky in different ways as small amount of liquid were absorbed into the barrel. As Bourbon Whisky needs to use new wood every time there are a huge amount of Ex-Bourbon casks sold onto other whisky producers. The other most common type are ex Sherry casks. However you also see ex-Wine, ex-Port and even ex-Madeira casks.
Pricing – when you are quoted the price of a cask, this is usually Under Bond – before all Duty tax, VAT and bottling charges. If this is being compared to the price a bottled whisky at retail or auction, you should also factor in a 25% margin that any retailer might need to take.
*Whisky investment is not regulated, and Petersham Cellar is not a financial institution. As such, we cannot give financial advice or any guarantees about the potential increase in a whisky's value. However, using our extensive network of contacts in the wine and spirit industry, we can give you our informed opinion as to whether a whisky has the potential to accrue value.
As with all investments, the value can go down as well as up and Petersham Cellar cannot be held responsible for any market fluctuations.
All casks must, by law, remain in a bonded facility in Scotland. Only once a cask is bottled may the liquid move outside of Scotland (and at the point it leaves the Scottish bonded warehouse, taxes will be due).