There is a interesting CNN article that came out today which echoed a lot of the industry trends in the world of Scotch that we covered in the previous class.
Back in the 1980s, many distilleries closed and worldwide production capacity was reduced. The resurgence in demand over the last decade has therefore created a constraint on available supply, especially the supply for older, age-labeled products. Historically, distilleries typical produce a set quantify each year with no way to predict the demand down the line when the whiskey matures.
Therefore, there is no way to remedy the current shortage of older vintages, and analysts foresee a shortage in the older age-labeled products to last at least 10-15 more years.
To keep up with market demand, distilleries have began adding production capacity, but are constrained by the minimal aging requirements for scotch. As discussed in class, many brands are releasing non-age labeled products to meet the growing consumer demand.
Given the underlying market tailwinds, whiskey appears to be a very interesting asset class to invest in. Riskesh Kishneni has actually raised a $10 million fund thus far to invest in a portfolio of 7,500 bottles of rare whiskies. Accredited investors can get a piece of the action with a minimum $250,000 investment. The first whiskey investment fund actually takes inventory of bottles purchased. In the future, as the overall size of the niche segment expands, it would be interesting to see if a more developed derivatives market will emerge for this asset class.
Source:
http://money.cnn.com/2016/03/04/luxury/global-single-malt-scotch-whisky-drought/index.html
No comments:
Post a Comment