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

Rare Whisky Apex 1000 +6.7% for the full year 2020
Despite all the turbulence across the world and across traditional markets, the RW101 Apex 1,000, the benchmark index for rare whisky, grew by a steady 6.7%. This may not be the heady heights of bygone years, but, in the context of 2020, this performance gives further endorsement for rare whisky as a serious alternative investment category. It is worth noting also that the RW Top 100 index, which tracks the most prized collectible bottles of whisky in the world, increased by 15.6% in 2020. This indicates that the rarest bottles are becoming rarer, while demand continues to grow. As a result, prices at the top end are growing faster.

Record year for Sotheby’s
In December, Sotheby’s reported US$ 92 million in sales of fine wines and spirits in 2020. The number of lots increased by 50% compared to 2019. Spirits represented 20% of sales (versus 2% in 2015). Top performers were two lots of The Macallan, including a Macallan Red Collection, their latest release of some of the rarest liquid to come out of the distillery, which sold for US$977k.

RW Japanese 100 grew by 18.7% in 2020
Comprised of the most prized Hanyu, Yamazaki and Karuizawa whiskies, this index shows that the demand for collectible Japanese whiskies continues apace. Rarity and demand from China driving this phenomenon. To top it all, a Yamazaki 55 YO broke the world record for a bottle of Japanese whisky, in August, selling for c $US 795,000.

Distillery Specific Indices Highlights
The big brands continue to the way but not all brands, or even rare bottlings from the same brand, are performing as well as each other: Macallan +15.9% (18YO +21.7%, 25 YO +10%), Port Ellen +35.4%, Lagavulin +26.3%, Brora +21%, Bunnahabhain +21%, Springbank +14%, Glenfiddich +17%, Caol Ila +23%. However, Highland Park only +2% and Clynelish -1%. Cherry picking remains the order of the day, as rising tides are not lifting all boats.

Collector Specific Indices Highlights
Here are some highlights from some of the iconic collections in the whisky world that RW101 track as part of their collector specific indices:

• Glenfarclas Family Cask + 27.3%.
• Diageo Special Releases +34.1%.  Diageo has been releasing these special releases for many years but recently stopped including the iconic Brora and Port Ellen whiskies in the annual editions. As a result, demand for the earlier releases that do contain these distilleries is growing as they become now more collectible.
• Grain whisky on the radar: a new index, recently created by RW101. One to watch in future as this much maligned spirit, used mainly in blending, is enjoying a renaissance.

Industry Update

Strong headwinds for Scotch in 2020
The Corona pandemic hung over the whisky industry, like all businesses, in 2020. The Travel Retail channel along with the On Trade has been decimated, and profits have been hammered. Witness Diageo’s results announced in Sep: Net Sales – 9%, OP -14%. Consumers are shopping more and more online. US tariffs and Brexit also negatively impacted the Scotch whisky industry in 2020. With an end to the pandemic in sight, and renewed optimism for trade barriers to come down, not forgetting the Brexit deal, the hope and expectation is that recovery for the whisky industry will come in 2021.

Irish Whiskey renaissance continues apace
There are now 35 operating distilleries in Ireland with 24 under construction or in planning. This is a remarkable renaissance, when you consider that there were only 2 distillers in Ireland in 1988. Sales have soared from 200,000 cases in 1989, to over 11 million cases in 2020.
Jameson, which has more than 70% market share of the global Irish Whiskey market, is a top 10 brand in Impact Magazine’s Top 100 spirits brands. As with most categories of alcoholic drinks, people are trading up and this can be seen in Irish Whiskey, with premium Irish brands Redbreast (+14%) and Midleton (+15%) growing faster than the rest.

American Whiskey also hotting up
Moet Hennessy announced in Dec 2020 that it had acquired a minority stake in Whistlepig, a Vermont based rye whiskey brand, as part of a global distribution agreement.
According to Forbes magazine: “The American whiskey industry is growing by leaps and bounds. There are now more than 2,000 craft distillers in the US. New registrations of whiskey expressions are at a 50-year high. Consumer interest in American whiskeys, especially rare, ultra-aged, ultra-expensive expressions, is growing exponentially.”
The Top Trend for 2021: the growth of American Malt Whiskey. There are over 150 single malt producers in the States. We are following this part of the market very closely…

TSMF Activities in Q4 2020

Eur 3.5 million now deployed in whisky assets
We have been busy in Q4, deploying the funds entrusted in us by our investors in Q3. Highlights include:

• Yamazaki 50 YO 3^rd edition; one of the rarest bottles of Japanese whisky around, from the Rolls Royce of Japanese whisky. Only 150 bottles released.
• The Glenfarclas Family cask collection: one single cask bottle for every year from 1954 to 2003. An iconic collector’s item.
• Old Rip Van Winkle 25 YO 2018: one of several very old and rare American whiskeys we sourced in Q4.
• A cask of Bushmills 29 YO Irish whiskey. Some of the oldest liquid to be found on the island of Ireland.
• Mortlach 35 YO Connoisseurs Choice 1936 and Mortlach 36 YO 1936. Rated some of the finest liquid around by the experts at RW101.
• A selection of Dalmore Constellations, ranging from the 1969 to the 1991 vintages.
• Port Ellen 1978 2^nd release.
• The Macallan 1984 18 YO Sherry Oak.
• Bowmore Black 31 YO.

Our inventory split by country of origin is as follows; Scotch 60%, Irish 20%, Japanese 11%, American 10%.

We aim to launch our web shop by end Q1, starting with a slect number of countries, increasing with new markets opening up month by month. Stay tuned!

Slainte!
Ed Forrest
MD, The Single Malt Fund