If you are investing for the long term then short term market fluctuations will be relatively insignificant and more often than not the cost of delay will be more damaging. That is particularly true if you are making regular investments.
Why do I mention this? Well, the whisky market has softened over the past 12 months and comments have been made to me that now may not be the best time to invest. Of course, a softening of the market has resulted in more stock availability and a consequential “small” fall in prices so with better deals available, “now” may well be the best time to invest.
This brings me to my own golden rule of investment which is to take the emotion out of a decision and focus on the fundamentals.
As you will see from the “Why invest in Whisky?” section on this website, Scotch Whisky increases in value year and year as it derives a greater premium with age. The figures, provided by an independent analyst who consults for banks and private equity, may demonstrate current pricing but if you were to look at data from the last 50 years you would see the same picture emerging.
Another comment that is often made is “With all these new distilleries are we in danger of over-production?” Firstly, most new distilleries are relatively small affairs and so have not added greatly to the production capacity within the industry but, more importantly, the increasing market for Scotch globally has outpaced the increase in production. In 2013 the ratio of consumption to production was 75.7% while the estimate for 2023 was 80.7% (Source: Scotch Whisky Industry Review).
The world is a very different place than 30 years ago. Emerging markets of India, China, Malaysia, Latin America, Middle East etc have resulted in an enormous increase in middle class families many of whom have a desire to purchase western style luxury goods including Scotch Whisky.
India has now taken over as the biggest export market by volume despite extremely penal tariffs on Scotch Whisky. The widely anticipated free trade agreement with India would have a huge impact on Scotch Whisky and even the conservatively minded Scotch Whisky Association has stated that such an agreement would increase Scotch Whisky exports to India by £1 billion.
In China, the biggest spirits market globally at $160 billion, Scotch Whisky has grown significantly but still accounts for less than 0.3% of spirit sales in China. According to a report published in Forbes Scotch Whisky is still the globally preferred whisky and with compound annual growth of 6.34% expected over the next 5 years the opportunities for Scotch are enormous!
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