Firstly, we hope that our readers and their families continue to remain safe and well during these difficult, Covid-dominated, times.

The Rare Whisky Market

RW101 has just released its Q3 report, which “demonstrates rare-and-collectible Scotch Whisky’s resilience as an investment and it’s negative correlation to traditional markets”. They also commented that “Demand…. appears to be accelerating”.

• The APEX 1000 (covering 1,000 different bottles/whiskies sold at auction in the UK) has increased by 6.8% YTD Sep 2020.
• In September, the Apex 1000 increased by 1.6%.
• Brand / collection-wise, the top 3 gainers in Sep were Balvenie Tun 1401, Yamazaki and TheManager’s Dram.

Q3 saw another world record broken. This time for a bottle of Japanese whisky; in this case, a 55YO Yamazaki which commanded a price of c US$ 795,000, at an auction at Bonhams Hong Kong, on the 21st August. This was one of only 100 bottles, which were released by Suntory in June 2020, and sold to Japanese residents, by way of a lottery, at a price of US$27,500. Not a bad profit for the lucky winner who sold this bottle only two months later!At the end of September, the “world’s largest and most diverse whisky collection” was put up for sale by Whisky Auctioneer, which plans to sell “Pat’s collection” of more than nine thousand bottles over the course of the next eight months. We met “Pat” and saw this collection over a year ago, and it is magnificent. We wish him well with the sale.Q3 2020 has shown that demand for rare and collectible whisky continues to grow at a very steady pace, irrespective of the challenging times we are living in. With pressure on supply still very much a reality, the prospect for further price increases remains strong.

Industry Update

Diageo and Pernod Ricard announced their full year (to end June) results in August. Not surprisingly, both reflected significant divergences between their first and second halves, ie, pre and post Covid. Diageo reported -9% in net sales and -47% in operating profit. OP was affected by one off operating items, but organic operating profit was still -14%. Pernod Richard saw similar declines of -8% in net sales and -12% in operating profit. Amidst these challenging results there were some highlights that are worth a mention:- Irish (-1% PR), American (+3% Diageo) and Canadian (+8% Diageo) whiskies are bearing up well.

• Jameson made it into the top 10 of Impact magazine’s top 100 premium spirits brands list, for the first time.
• Premium Brands are getting stronger: Redbreast + 14%, Middleton +15%, Glenlivet +2%.
• The US market is the most resilient for both Groups.

TSMF Activities in Q3 2020

Trading remained suspended in Q3 due to the Covid lockdown and consequent logistics closures. We are now vamping up activities as we move into Q4, following the successful closure of the latest tranche of fund-raising on October 1 . We look forward to bringing you some exciting news in our next quarterly report.

Slainte!
Ed Forrest
MD, The Single Malt Fund