Whisky investment: Turning a passion play into liquid gold

Born and raised in Copenhagen, Gil Schwarz has always had a nose for the finer things in life. Today, considered one of the premiere power brokers, dealers and collectors in the wine and whisky business, he founded The Wine Institute of Las Vegas in early 1999 to serve as the foremost wine education business based in Las Vegas. 

He has spent the past three decades refining his knowledge and tasting skills, specialising in Bordeaux, Burgundy and the fine and rare whisky market in general, initially through partnering in the leadership of one of the most active chapters of the Commanderie de Bordeaux in the world, but later expanding and working directly with some of the biggest players in the industry. 

Travelling to the major wine and whisky regions of the world several times a year, he has in-depth knowledge and hands-on experience with their making, tasting, and selling. 

Having built up a global network of suppliers and with connections across the major European properties, whisky has now become “the main stage of the business” for Gil. Here, he reveals why what he refers to as ‘liquid gold’ is a compelling asset class to invest in…

Do you need to be a whisky afficionado to invest in this asset class?    
I think most of the people that buy whisky have a great passion for enjoyment and investment. Whisky is an easy commodity to get into. It can sit around, it doesn't need temperature and humidity control all the time and, unlike wine, once opened it can last for quite a long time. As an investable asset, it’s compelling because good bottles really appreciate in value and the returns on investment can be great.

What could those potential returns on investment look like?   
There's a lot of whisky being consumed all around the world from market-leading, mass-produced brands. The right investment advisor would guide you to put together a very significant portfolio from bottles, through to barrels, warehouses and distilleries. Once you've got enough volume of barrels, for example, you could start considering creating a brand yourself. It’s a big step, but it would become a potentially large investment with potential for a very nice return on investment. 

You want to have enough skin in the game to make this a worthwhile endeavour. 

What are the risks?   
We’re talking about physical assets here, whether that’s bottles, barrels or a distillery. It's not a computer line item on a spreadsheet, at all times you have possession of that asset and it has a constant minimum value. There are no times where these assets are worth nothing, which is not what you can say for a whole bunch of other resources.

Basically, the risk is very low, but it is a diminishing asset. For example, if you drink some of it. However, I like to say when the stock market crashes and everybody cries that they lost all their paper, we can at least drink our investment!

How can potential investors be mindful of provenance? How do they know what they’re buying is genuine?   
Investors who want to get into this asset class need to have professional advisors or work with an experienced portfolio manager, someone who really knows what they're doing.

They will be best suited to source and buy bottles with immaculate provenance and, typically, not get into too much of the old and rare stuff, where there's a larger propensity for some shenanigans. 

A simple way to ensure good provenance is to buy original bottles in original packaging from wholesale or retail sources that are directly connected to a distillery. 

Basically, somebody who knows what they're doing will ensure that nothing is invested into without a very sound provenance 100% all the way. That's the key to almost any investment, isn't it? That due diligence is done in collaboration with professionals that really have a good handle on the market.

What would you advise to families who would like to start investing in this area but don’t know where to start?   
I would say to look at it from a macro perspective. You want to have enough skin in the game to make this a worthwhile endeavour. For fun and games, you can always buy a few bottles at auction, put them away and sit on them for a few years, depending on your appetite. 

For me, an entry level for serious investment would be somewhere in the region of $1 million dollars. That level of investment makes the return more significant and it makes it more possible for you to enjoy yourself too. A level of investment around $10 million is great, because then you really have a chance to build a very meaningful portfolio and you get to drink great whisky at the same time. You can enjoy the fruits of the investment and get some significant returns. 

Gil Schwarz is a founding partner of The Distinctive Spirits Co. and Whisky Vegas. You can follow him on Instagram at @whiskyvegas.