When it comes to whisky as an investment my beliefs align with the time tested strategy of Warren Buffett, investor extraordinaire: “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” In whisky-speak this means only ‘investing’ in a bottle you’d be happy to open and drink yourself, on the off-chance your clever savings plan goes awry.
But I readily admit that I learned this lesson the hard way, despite taking an interest in finance at an early age, and attending an investment seminar at the tender age of twelve.
My first attempt at establishing an investment portfolio came soon afterwards: it was $250 worth of penny stocks — of my choosing — gifted for Christmas (in what seemed a natural fit for a budding financial prodigy!) It soon became apparent that this would be the gift that kept on taking, as I rushed home from school, scanned the financial pages of our local newspaper, and confirmed — on a daily basis — that my fledgling portfolio had shrunk further still.
I don’t recall how many agonizing weeks (months?) it took for my investment to completely evaporate, but suffice to say that my deflated young ego lost its appetite for the stock market, and it hasn’t been found since.
So once bitten, twice shy: my second attempt at developing a green thumb happened in 2003 when I purchased a case of Loch Dhu 10 Year Old (in what seemed a natural fit for a budding whisky enthusiast!) Loch Dhu was the marketing alias used to bottle whisky from the Mannochmore distillery in Speyside, born of a corporate brief looking to ween a younger demographic of drinkers off vodka and onto whisky, for all the wrong reasons:
Whilst Loch Dhu is an authentic single malt whisky, its velvety black colour, exceptionally smooth taste and sophisticated contemporary image will encourage more versatile usage (mixers). We have one very clear objective, to attract new and younger adult consumers to malt whisky. Loch Dhu is new in style, character, taste and image.
Loch Dhu quickly garnered a reputation as a wretched thing, and its gag-inducing, burnt sweetness was unanimously deemed an affront to the palate of genuine whisky lovers. That its colour was born of a secretive and questionable production process involving heavy char, maceration, caramel colourant (not to mention ‘treatment’ using an unspecified ‘natural product’), left an equally bitter taste in the mouths of proper connoisseurs.
But the riffraff loved this Franken-whisky! Much to their dismay it was quietly discontinued after two years in 1998, which was just enough time for it to inexplicably achieve cult status. And like any cult its zealots were steadfast and unrelenting in their claim that Loch Dhu was the Best Whisky Ever:
I spent my life disliking whisky until I sampled a taste of this beautiful treacle.
The single most exquisite alcoholic beverage I have ever tasted in my 53 years of life.
Truly heaven-sent! Real whiskey for real men!
And for the non-believers:
This will make me seem like a Philistine but I like it poured on a good vanilla ice cream.
Whatever. But clearly there was a demand so I happily paid $29 apiece when I spotted a dusty case in Vermont. A year later in Scotland just one bottle fetched me a princely £100 credit at Royal Mile Whiskies where I was told that Loch Dhu was a near daily request. It was a fivefold return on my investment in just one year, and my twelve-year-old financial prodigy was vindicated as I contemplated the exponential growth that the remainder of my portfolio would garner in the years to come!
Fast forward twenty years and Loch Dhu still reliably fetches £100 at auction, give or take a tenner, as my investment continues to clutter our shelves, gather dust and generally annoy at every turn. Occasionally I’ll give one away as a curio, while others have made their way back to Scotland, as I slowly manage to whittle away at my embarrassing attempt at whisky investing. I’ve genuinely lost track of how many bottles are left, but I’ll be relieved when the last one is gone and my position is finally closed.
By contrast we funded the launch of Distilled magazine by liquidating a clutch of bottles that netted $50,000 at auction. The irony is that it had absolutely nothing to do with savvy business acumen, and zero prescience was involved. Instead, each and every bottle was a whisky that we loved, knew well and were yearning to drink again ourselves. It also bears noting that most of these whiskies were from Japan, Charles and I having developed a taste for the likes of Hanyu, Karuizawa and Yamazaki long before it became fashionable.
And as long term investors already know, this lines up perfectly with the cornerstone of Warren Buffett’s philosophy: “Most people get interested in stockswhisky when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”