Analysis of Bulk Trade Bids
How much whisky has been bought back from WID clients by the Scotch whisky trade?
To our clients, WhiskyInvestDirect is a platform for buying and investing in Scotch whisky as a commodity, and selling back to the market at a profit. We hope to make this process as efficient as possible for our clients, and so it can be easy to forget that the fundamental driving force that makes this possible is not trading on the platform, but when the whisky enters and leaves the platform itself.
Distilleries sell spirit to us at a young age. This helps them generate cashflow, and reduces the upfront capital cost of producing their own Scotch whisky. We release the whisky onto our platform, where it is traded and owned by our clients, typically for a number of years. Then, when that distillery or a different trade buyer needs that stock, they will offer to buy it back from our clients in the form of a Bulk Trade Bid (BTB).
We have had a large number of these BTBs in the past few years, and we now feel we are in a position to provide some analysis to help clients inform their investment strategies. To start with, we have very simply looked at the volume of stock sold by our clients grouped by age bracket, and compared it with the volume of stock in that age bracket currently on the platform.
Grain whisky sold by clients in BTBs:
Malt whisky sold by clients in BTBs:
With grain whisky, we see greater demand in the 3-5 year age group, that tails off. There has been limited trade interest in whiskies between 6-11 years old, and then the grain older than 12 years has seen heavy demand, although it should be noted that this is a small sample size.
This fits an intuitive understanding of the whisky industry – Scotch whisky must be at least 3 years old when it is bottled, and typically blends will be older than this even if they do not have an age statement. However, the bulk of the flavour profile in a blend will come from its malt components, and often the grain used will be younger than the malt to reduce costs without compromising the flavour of the final blend.
For blenders using age statements, 12 years old is the most common, and this is why we see a renewed interest in grain beyond 12 years old.
In the case of malts, the interest from the trade is more evenly spread across different age groups. The age of malts in a blend tends to be a leading factor in the cost of bottling, and since we see a range of blends for sale at a consistent spread of price points, we might expect the demand for different ages of malt to be similarly consistent. There is slightly more demand for younger malt, just as there is more demand by volume for low-priced blended Scotch whisky, but there is much more of a balance than with grain whisky.
We might also predict that there will be a spike in demand beyond 12 years old, due to the large number of whisky brands with that age statement. However, there is very little whisky older than 12yo on the WID platform, and therefore our data cannot confirm this.
Based on these observations, grain whisky may be a more suitable option for clients with a specific investment term in mind, since they can choose whiskies with the goal of selling during those age windows with higher demand.
Malt whisky will suit clients with more flexibility in their investment term, since interest from the trade may come at any point in the whisky’s lifetime. However, one great advantage of the WID platform is that, although Bulk Trade Bids provide an excellent opportunity to realise your investment at a healthy premium, you always have the option of selling on the Live Order Board at any time, 24/7, and so flexibility is built into the service we provide.
This page provides only general information. It does not consider your personal situation or needs. You are entitled to rely on the truth of the historic data above, but you cannot rely on any forward projections stated or implied. Previous price trends are no guarantee of future movements. Whisky, a physical commodity, is not an investment within the terms and scope of the Financial Services and Markets Act 2000. Your protection is limited to the resale value of the whisky you own, together with normal insurance covering specified risks including fire and theft. You will not be protected by the Financial Services Compensation Scheme, and you may not fully recover your initial investment. Investing in whisky may involve risks which you are currently unaware of. If you are not able to assess this information, seek expert investment advice.