Rare whiskey 'bubble' bursts as sales plummet

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

Bottles of whiskey sold globally for more than £1,000 fell 34 per cent in volume and 40 per cent in value in the year to October 1, according to investment bank Noble & Co, based in Edinburgh. The figures mark an acceleration compared to last year. decline by 7 percent in value, despite an increase of 10 percent in volume.

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

Interest in rare single malts snowballed during the years of ultra-low interest rates and central bank quantitative easing following the financial crisis, which encouraged investors to seek returns in alternative asset classes.

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

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

Jonny Fowle, global head of whiskey and spirits at auction house Sotheby's, said the days when the value of almost all whiskey releases increased were over.

But he said producers were “wrongly” pricing more modern post-2020 releases, while older bottles that were reasonably priced at the time of release were “still doing well”, although a little short of 2022 highs.

The Lalique Macallan 50 Year Old, for example, still sells for 10 times its release value in 2005, at around £50,000 at auction. The first edition of Bowmore, released in 1993 at a price of £100, fetched around £15,000.

Rising auction prices since 2017 have encouraged producers to raise prices to recoup some of the value lost in the secondary market, he said.

“It’s understandable not to want to leave profit on the table,” he said. “But it’s a short-sighted business: it excludes investors and drinkers from the market,” he said.

These figures come at a difficult time for the entire Scotch whiskey industry. Exports fell 18 percent in value and 10 percent in volume in the first half of this year, compared to the year-earlier period, according to the Scotch Whiskey Association.

The market saw strong growth heading into the pandemic and rebounded strongly from this decline in 2022.

“The industry thought we would experience the Roaring Twenties, but the reality is much harsher,” McFadzean said. “The industry hit the cost of living wall head on: volumes fell and you got profit warning after profit warning from the majors.”

In recent years, demand has shifted from Asia to the United States, where a strong economy has boosted demand for premium whiskey.

McFadzean said the threat of U.S. sanctions under Donald Trump could be offset by a resurgence of shopping in Asia, where Hong Kong has reduced tariffs but economies are also struggling, notably in China.