Like many people who like a dram or two to cap off an evening, Mr Erik Hon, 38, an executive director in an investment firm, used to buy Yamazaki 18 and Hibiki 12 from duty-free liquor stores in Narita airport in Tokyo for $200 to $250 a bottle.
That was a few years ago. Now, it is virtually impossible to get either of those whiskies at airports.
“I couldn’t even get any Yamazaki at the distillery when I visited last year,” he says.
While good whiskies are getting rarer to find, their prices have also been on the rise, thanks to a spike in demand in the past five years.
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The spirit, made with malted barley, water and yeast, needs to be aged in barrels for a minimum of three years by law.
The conventional thinking is that the longer the whisky is aged, the more flavourful it becomes and the higher the price it commands.
But people are drinking whisky faster than distillers can make it. The limited supplies have also caused panic buying and hoarding by investors, which lead to prices shooting up even faster.
The end game is this: Want to drink good whisky? You better have deep pockets.
For instance, Yamazaki Single Malt Sherry Cask 2013, which has a cult following, is expensive and hard to find.
In 2013, the label launched a limited-edition sherry cask whisky in Europe with only 18,000 bottles produced. Distributors here sold it at $590 a bottle, but estimate that it is now going for $5,000 or more, helped by the fact that it was crowned the World’s Best Whisky by the 2015 World Whisky Bible, a yearly guide compiled by British whisky expert Jim Murray.
Another perennially popular whisky, the Yamazaki 18, now retails in Singapore at prices ranging from $700 to more than $1,000 for a 700ml bottle at spirits retailers such as 1855 The Bottle Shop and online grocer Red Mart. It used to retail at $250 when it first entered the market.
Does this mean the casual drinker is completely priced out of the whisky market?
Thankfully, no, because new distilleries are also constantly popping up outside of the usual suspects of Scotland and Japan.
Mr Hon, for example, has started drinking Indian whisky such as Amrut and Taiwanese whisky Kavalan.
Both distillers have produced award-winning expressions.
Amrut Spectrum was named American whisky magazine Whisky Advocate’s World Whisky of the Year in 2016 and Kavalan Solist Vinho Barrique was named the Best Single Malt by trade magazine The-DrinksReport.com’s World Whiskies Awards in 2015.
AGE IS JUST A NUMBER?
Given the exponential rise in prices, one cannot blame whisky connoisseurs for getting misty-eyed about a simpler, more affordable time.
Speaking to The Sunday Times, Mr Emmanuel Dron, 44, founder of whisky bar The Auld Alliance at Hotel Rendezvous, reminisces that 15 years ago, it was possible to get a bottle of 1926 Macallan Fine And Rare Collection for about £10,000. But now, a bottle goes for about £100,000 ($177,000).
The prices of Japanese whiskies, such as bottles from the now defunct Karuizawa distillery, have also rocketed.The distillery in Miyota in Nagano prefecture started production in 1956 and shut its doors in 2011.
“I purchased Karuizawa 1968 for less than $500 a bottle in December 2012. Today, that bottle on auction is worth $10,000,” Mr Dron says.
He has been dealing with rare whiskies for 20 years. His bar stocks more than 1,500 bottles of whisky, including some of the rarest in the world. Many whisky connoisseurs fly in just to try a dram of these rare liquids.
He says “the craziness started about three years ago”, when people started seeing whisky as an investment. He likens the trend to what happened with wine in the mid- 1990s, when rare bottles were snapped up at exorbitant prices.
“Nobody can drink the liquor at that sort of price,” he says. “The sad thing is that most people who buy the whisky do so for investment and not necessarily to drink it.”
Given the Great Whisky Rush, if whisky manufacturers had a time machine, many of them would no doubt go back in time to distil more Scotch.
In the here and now, though, they have another way to cope, which is by issuing No Age Statement (NAS) expressions.
These are whisky blends made from a combination of single malts of different ages and barrels. The only stipulation is that the malts have to be at least three years old.
For example, the Scottish label Laphroaig has released Laphroaig Lore, a blend of six whiskies ranging from eight to 21 years old.
Other NAS examples include Glenfiddich’s Select Cask range and the recently released The Macallan Edition No. 2.
While they used to be slightly cheaper, prices of NAS expressions are now matching those of single malts, says La Maison Du Whisky general manager Mathieu Musnier. An NAS from London-based boutique blender Compass Box, for instance, now ranges from $100 to the “high hundreds”, he adds.
According to the Scottish Whisky Act, if an age statement is printed on a bottle, legally, it would have to be the age of the youngest whisky in the blend. But with an NAS, distilleries can forgo this by not displaying the age.
Not all purists are convinced that the NAS solution is necessary.
Mr Dron says distilleries have resorted to this probably because there is a stigma surrounding young whiskies.
“If you put a young age on a bottle, you can’t sell it for as high a price as you can an older, double digit age whisky,” he says.
However, he feels that there is no shame in putting a young age on a bottle, a practice that was common place with many Scottish distilleries in the 1970s.
For Mr Musnier, the taste profile of the whisky is what matters and not its age.
“There might be a perception that NAS whiskies are not as good as single malts, but that’s absolutely wrong. Nowadays, you find very high-quality NAS whiskies that’re very well made.”
He cites the Islay-based Kilchoman range of NAS whiskies, such as the Machir Bay, which he says retains “all the intensity of a single malt”.
What is for sure is that the global thirst for whisky shows no signs of letting up, driven largely by Asia, where the drink is a status symbol for the growing middle classes in China and South Asian countries.
Statistics from Scotland-based Scotch Whisky Association – a trade organisation that represents the Scotch whisky industry – show that as of September last year, Asia accounts for six of the top 20 Scotch whisky export markets by volume.
India (No. 3), Singapore (No. 8) and Japan (No. 11) are joined by Thailand (No. 15), Taiwan (No. 16) and South Korea (No. 17). France and the United States take the top two positions respectively.
In Singapore, the consumption of whisky has increased markedly. The country has one of the highest figures for consumption of Scotch whisky per capita, with 2014 statistics by the Scotch Whisky Association showing that Singaporeans consumed – meaning bought and/or drank – 12.76 bottles of whisky a person a year.
Additionally, almost 19 million bottles of Scotch were shipped to Singapore in the first half of last year, a 15 per cent increase from the same period the year before.
On the supply side, Japanese whisky manufacturers remain tight lipped about future whisky production. But the Scottish are happy to say they are gearing up to meet the growing demand.
Glenmorangie, which produces single malt Scotch, is planning way ahead. Its director of distilling and whisky creation, Dr Bill Lumsden, says: “I’m laying down enough stock that will, in 10 years, allow us to have 1.2 to 1.3 million 9-litre, 12-bottle cases.”
The distillery is based in the Scottish Highlands and was founded morethan 170 years ago.
Over at Balvenie, a 125-year-old family-owned single malt Scotch producer, its master blender David Stewart says: “The distillery is working pretty much flat out at the moment because we can see the forecasts that we need more and more.”
Meanwhile, Diageo, the world’s biggest spirits group, is also planning ahead. It owns the world’s best-selling Scotch whisky, Johnnie Walker, among its 30 operational and 20 silent distilleries. Some of the brands it carries include Caol Ila, Lagavulin and Talisker.
In 2012, it invested £1 billion in Scotch whisky production, with the money going mostly into expanding operational distilleries.
Ms Apurvi Sheth, Diageo’s managing director for emerging markets and joint ventures (South-east Asia), says: “We own 40 per cent of the world’s Scotch stock and we have nine million casks ageing in our warehouses in Scotland. I believe we have the right level of stock to meet our forecasted demand.”
She expects growth for both aged and non-aged statements.
“People are now going beyond age and being an NAS whisky does not make it inferior,” she adds.
“Younger consumers are also experimenting with whisky, making it a more vibrant category.”
BOOM AND BUST
Despite projections and preparations, whisky is a particularly cyclical business, prone to boom and bust.
The last crash was in 1983, after which many Scottish distilleries, including the famed Port Ellen and Brora, were mothballed(decommissioned for a period of time) or shut down.
With most whisky distilleries ramping up production, Mr Dron foresees a surplus of stock on the market in the future, as well as a greater call for transparency.
“Prices just cannot continue to rise. Within 10 years or sooner, there’s going to be a lot of whisky on the market and people will insist on having the age on bottles again,” he predicts.
Invest in a cask of whisky to age or sell
Move over, vintage wines and pu er tea. There is a new investment drink in town: whisky. Given these Scotch-strapped times, where slow ageing processes cannot keep up with drinkers, some savvy investors are buying rare whiskies from the market, keeping them like stocks and waiting for their values to appreciate.
And if the prices do not rise? One could always console oneself by opening the bottle and drinking it.
Like any kind of investment, it is possible to go it alone and spot the winning horses by oneself.
But because good, investment-grade whiskies are rare and access to them may be limited to exclusive partners, there are specialised investment “clubs” that have sprung up.
In Singapore, there are two such entities.
The first is a by-invite-only club called The Johnnie Walker House, operated by Diageo, a spirits company that owns 40per cent of the world’s Scotch stock.
The club gives its 200 or so clients access to the rarest blends and collectible Scotch whiskies under the Diageo banner, including blended and single malts from distilleries that have already closed.
These include limited quantities of highly sought after single malt such as Brora 38 Year Old and Port Ellen 37 Year Old at £1,450 (S$2,560) and £2,500 respectively.
Clients can also buy into Diageo’s Casks Of Distinction programme, where seven or eight specially selected “perfect” casks from various distilleries are released in a year.
Once a client buys a cask, which ranges from £200,000 to £3 million a pop, he owns the whisky and decides what to do with it– whether to age it further or bottle it for sale. All the profits then go to him.
The second club is called The B28 Whisky Fund, set up in 2013 by Mr Mike Soldner, 38, who also runs luxury whisky barB28 in Ann Siang Road.
Here, the client base of between 100 and 200 customers pool together money to acquire rare whiskies from auctions. The buy-in is $25,000 and the fund currently has about $1 million.
Its last major recent acquisition was a cask of Lagavulin from the Scottish distiller that was aged 15 years before being bottled last year.
As the distillery celebrated its 200th anniversary last year, it is also considered a 200th year anniversary release.
The cask eventually yielded about 268 bottles, with the first ones arriving in Singapore just before Chinese New Year.
The fund invests in scarce and reputable whiskies. Typically, any whisky with fewer than 10,000 bottles globally would be considered scarce, Mr Soldner says.
He is also open to acquiring “independent bottlings” instead of official releases from big distilleries.
Independent bottlings are in smaller batches of a few hundred bottles and are from less well-known brands.
Official releases from big distilleries are, he says, “typically vatted – a combination of different single malts – filtered and have water added” and run in the thousands of bottles.
In a way, independent bottlings are a riskier proposition without big labels backing them, but his view is that he would rather invest in something that “tastes amazing”.
And clients do drink the stuff they buy. With the exception of some extremely rare bottles, such as the 1926 Macallan – valued at about half a million dollars – he says “most collectors do dip into their collections”.
This article first appeared in The Straits Times.