In the recently released Knight Frank annual wealth report, a noticeable standout was how rare whiskey tracked among asset classes in their Luxury Investment Index (KFLII). It is emerging as a strong returning investment, taking the lead in growth over the last 12 months in asset value of 40% and a 10-year change of almost 600%. In comparison, wine the longer established luxury investment, showed a 12-month return of only 9% and just shy of 150% over 10 years.
A substantial amount of growth is coming from China and Asian markets. So much so that new direct flight paths have been introduced between Beijing and Scotland, the home of rare whiskey. Whisky expert and author Charles Maclean are finding celebrity and a strong following in China with a chain of concept, whisky-themed bars being developed in his name.
In a separate report by L.E.K consulting, it states that premiumisation is propelling overall growth in the wider spirits industry, this plays well for distillers in Scotland as a protected designation of origin. Although both at the top end and mass consumer end of the market we have seen a surge.
In our highly social and image conscious world of today, millennials are moving away from traditional higher-calorie, low-alcohol beers towards those with fewer calories and superior, crafted ingredients. And blended malt Scotch whisky is leading the pack as the fastest-growing category, with global consumption increasing an impressive 25% in 2015-16.
So how will we see this play out in the wider consumer market?
The Jing Daily reported recently that China is offering a window to the future, in that the future luxury market will look like today’s modern Chinese market; therefore to win in China is a good gauge for a winning future.
China is definitely leading the charge in the case of whiskey too, especially the premium end of the market, with the evolution of whiskey tourism, inventory themed whiskey bars, growing individual investment portfolios in rare whiskey and so on. As the premium end grows the more significant the filter down effect will be, coupled with the overall gravity towards spirit-drinking globally.
So why China and what brands need to do to maintain relevancy?
Unlike the rest of the world at 45%, within China, around 80% of luxury goods are bought by consumers under the age of 40. This audience is far more digital, highly educated and has greater access to high disposable incomes. They want brands that lead and seek out the authentic and original. Brands have to ensure a seamless and integrated digital journey, a luxury end to end experience which capitalises on consumer-centric behaviours.
A word of caution with rare whiskeys. While the trickledown effect is real, the top and bottom end of the markets are entirely different. Like fine art, they are a sound investment bet, so long as you don’t drink them! Like the scene from Brewsters Millions, where the ultra-rare postage stamp lost all its value the moment it was stuck to an envelope; so, to with rare whiskey, the value of the product is in its anticipation and bragging rights.