New from the guys that bought you BullionVault. It's Whisky Invest Direct

[HighlandTiger]

Well this is quite exciting, and I need our regular whisky experts to take a good look at this, as I'm only a novice at the whisky, (in spite of living within 100 m of two distilleries for around 20 odd years)

 

Bullion Vault have started a new venture. Investing in Whisky. Now this is right up my street, but I'd be interested to hear peoples thoughts on this.

 

www.whiskyinvestdirect.com

[mr-dead]

had this email through earlier too, havent had the time to do any research yet though.

[ifing]

You are misguided my friend. RUM is the answer, RUM. Skip the whiskey and go buy yourself a bottle Ron Esclavo XO

[HighlandTiger]

You are misguided my friend. RUM is the answer, RUM. Skip the whiskey and go buy yourself a bottle Ron Esclavo XO

 

As an ex- sailor, I can assure you I have had my fill of Rum over the years. On my very first voyage as a young cadet, the Old man, (captain), took me and the other two new cadets into his cabin as a welcome. He gave us rum to drink, and would not let us stop drinking or leave until we were carried out. Lets just say we weren't required to do much work the first few days onboard. But on the bright side. In all my time at sea, I was never sea sick

[ifing]

As an ex- sailor, I can assure you I have had my fill of Rum over the years. On my very first voyage as a young cadet, the Old man, (captain), took me and the other two new cadets into his cabin as a welcome. He gave us rum to drink, and would not let us stop drinking or leave until we were carried out. Lets just say we weren't required to do much work the first few days onboard. But on the bright side. In all my time at sea, I was never sea sick

 

Thats sounds like a wise captain

[Pipers]

I'm sure theres that man on youtube who sits next to the fire drinking whisky reviewing the it he as good as anyone.  

 

Square sided bottles for export you will make a fortune!!!!!!    

 

It all tastes the same

[simon13]

Have to say I was very sceptical given all the cask sale scams that have happened over the years.   A typical hogshead at 250 litre (industry standard) filled at the (industry standard) 63.5%abv will equal about 160 LPA.

 

In todays market, a cask of a lower tier single malt distillery (which is what is mostly on whiskyinvest) bough by an individual from a broker would cost about £7 per LPA.  Marketplace prices seem to be about £2.77 per LPA which seems pretty good... so about £283.2 for a Hogshead.  Almost seems too good to be true.

 

On closer inspection, its not as good as it looks.  Often a casks price will include insured storage in bond for 10 years.  whiskyinvest will charge £0.15 per La per month... which is £2880 for 10 years in bond for a hegshead.  More than buying an overpriced Arran "cask offer" which includes a hogshead and 10 years storage at £2500.  Not so good.  If a distillery is running out of warehousing space, they rent from a private bonded warehouse or another distillery. Normally about a £1 per month per cask but can be as high as £9 depending on who you deal with and who you are.  whiskyinvest is £24 a month for a cask.  That's where they make their money.

 

"WhiskyInvestDirect's revenues come from a mixture of four sources:-

• Commission
• Custody fees
• Interest receipts
• The difference between buying and selling prices of whisky, known as the "trading turn""

Well you are ripped off on the "custody fees" and whiskyinvest has three other ways to make money out of you.  I'd probably stop there.

 

 

If anyone really wants a cask, you can buy (quite expensively but a lot better than whiskyinvest) direct from some distilleries.  You can deal with a smaller cask broker for a big saving.  Buy the barrel, hold for 10+ years.  Whisky auction companies will gladly sell your cask for you or your broker could organise a private sale, at any age.  if you want it shifted it may take over 2 months before you have money in your pocket.

 

Seems like they are taking advantage of the whisky hype and hooking you with low prices per LPA and ripping you off on all the fees.

 

I have one cask which I made myself (legally) at Strathearn Distillery.  Did the whole process myself based on my research on 1960's whisky styles.

[simon13]

Looking at whiskyinvests marketplace, the increased price from a 2014 Q4 LPA to a 2012 Q4 LPA doesn't even cover the cost of the £0.15 per month storage and insurance fees for 2 years.  lol.

 

The only way you will make money is if there are plenty of bigger idiots about when you figure out the scam.

[simon13]

I wonder how they account for 1% to 3% evaporation per year.  At 3% a Hoggy will lose 41 of its original 158 LPA in 10 years.  Do they only sell 117 LPA of a barrel?

[HighlandTiger]

Looking at whiskyinvests marketplace, the increased price from a 2014 Q4 LPA to a 2012 Q4 LPA doesn't even cover the cost of the £0.15 per month storage and insurance fees for 2 years.  lol.

 

The only way you will make money is if there are plenty of bigger idiots about when you figure out the scam.

 

@simon13

 

I wouldn't have thought Bullion vault would be supporting a scam....lol

 

But it's not 15p per month. It's 15p per YEAR. 

 

Storage (with insurance included) for as long as you hold.

You pay £0.15 per Litre of Pure Alcohol (LPA) per year, billed monthly and subject to a monthly minimum of £3.

 

It actually works out about 10%+ profit per 12 month period, but whether these prices hold long term is another matter. 

[HighlandTiger]

I wonder how they account for 1% to 3% evaporation per year.  At 3% a Hoggy will lose 41 of its original 158 LPA in 10 years.  Do they only sell 117 LPA of a barrel?

 

As most of the barrels were originally bought by WID and then sold by "crowdfunding" through the market, I assume they will be making allowances for this, by holding back a number of barrels to cover the evaporation.  

[HighlandTiger]

@simon13

 

Now that you now that the storage is 15p per year not month, I'd be interested to hear whether this makes a difference to this investment type in your mind. Knowing the whisky industry as you do. (you were one of the people I was hoping would comment on this topic) 

[simon13]

Whoops on the reading. Thats very reasonable then. £24 per barrel per year. In order to minimise the fees you would have to hold at least 240 LPA, which is a lot of whisky.

After (mis)reading about the storage and insurance, i didn't look too closely at the other fees. I do have a few questions regarding the exit plan for the liquid. When a spirit drops below 40% abv it is no longer whisky (unless vatted with stronger liquid). Who decides when it is ready for bottling when a cask has up to hundreds of owners? Then duty has to be paid, bottling costs and a buyer has to be found or there is a buyer for the barrel itself who will use it for blending or bottling as a single. Or will these barrels be perpetually traded until death? What if you wanted to wait 30 years with an annual evaporation rate of 2.5%? Will there be more claims on a LPA than there will be real LPA.

[HelpingHands]

If you dont hold it you dont own it.

If you do hold it you dont own it for long.

[HighlandTiger]

exit plan. one of the methods is that WID have plans to sell their own brand whisky. and two the original makers of the whisky will buy it back at Fair market value. I think the whole idea is for distilleries to circumvent the huge cash flow issues when you have up to ten years between making a product and actually selling a product.

[HighlandTiger]

I'm going to fire off a few questions to them in an email tonight. if anyone wants a specific question answered let me know and I'll add it to the email

[simon13]

Certainly evaporation and bottling details would be appreciated.

It does look pretty decent but I have applied for planning permission and licensing for a small distillery. If all goes to plan i'll be producing in March 2016 and i'll need my spare monies for barrels and barley.

[HighlandTiger]

What about evaporation?

Barrel whisky evaporates at just under 2% per annum, which is known as the Angels' share. Evaporation is part of the maturation process.

Wholesale whisky is traded as Litres of Pure Alcohol (LPA) on an Original Fillings Basis (OFB ). In combination they refer to the amount of spirit which went into the barrel at the outset (filling).

When you come to sell your whisky it doesn't matter how much has evaporated. You sell LPA on the OFB. It is up to the buyer to make an approximate calculation of how much actual spirit will be in the barrel by anticipating the total quantity shared out between 'the angels'.

So it looks like the evaporation will be calculated in the price offered by the final buyer

[HighlandTiger]

Certainly evaporation and bottling details would be appreciated.

It does look pretty decent but I have applied for planning permission and licensing for a small distillery. If all goes to plan i'll be producing in March 2016 and i'll need my spare monies for barrels and barley.

Put me down for a case your first bottles. [emoji1]

[simon13]

So the investment is in original LPA, which will decrease over time?

I'll be running column and pot stills. Initially i'll be making gin and spirit for single malt whisky. But can make any type of spirit.

Always wondered how a silver still would work as a catalyst.

[HighlandTiger]

As long as the decrease in volume is covered by the increase in value as it matures it shouldn't be an issue. Any body can purchase barrels for physical delivery, so I'm assuming they have some distilleries on board as wholesale buyers.No doubt with a different fee structure to the general public

[HighlandTiger]

What happens when the whisky has matured?

We all share the objective of getting mature spirit profitably bottled and shipped to the consumer. That is the job of the brand builders and trade customers, and we keep them informed regarding the availability of maturing stock on WhiskyInvestDirect.

Before WhiskyInvestDirect, brand owners who had sold all their 10 year old production had restricted opportunities for buying more whisky. This is what we change.

In the future, the more marketable your particular holdings, the more attention you will get from trade buyers who need mature blending stock for their successful brands.

Sometimes the trade will simply post bids for a particular stock line on our order board. They can ask us to notify owners, to draw attention to the bid, which means you will not have to keep a close day-to-day watch on bidding.

They can also make Bulk Trade Bids. These offer a way for trade buyers to acquire a lot of whisky from multiple owners under the same commercial terms. We always notify our customers when there is a Bulk Trade Bid and of course bidders have to make their bid attractive in order to encourage holders to sell. Often these bids will offer you a premium from the prevailing price.

Once you sell, the buyers will withdraw the whisky from the warehouse for blending and/or bottling. Then the whisky is usually shipped to consumer markets rapidly. They take care of the associated formalities and charges.

As a user you do have a bottling right, which you can certainly use if you think your whisky would profit you better in your own bottles. But don't forget there are issues with warehouse licensing, shipping and tax. WhiskyInvestDirect is not suitable for small scale bottling runs because the minimum fees are set for industrial quantities, and are significant.

[simon13]

Smart thing is to sell them to investors. They are already involved and will be tempted to have a bottle of stock they have owned.

[HighlandTiger]

Reading the last bit. I'm thinking I could have a barrel shipped to you when you get set up and you can do the bottling for me

[simon13]

Might want to clarify taking ownership and any fees beyond the normal transportation, bottle and bottling costs, duty etc.

I'll have my warehouse and warehousekeeper and duty stamp licenses soon enough... And a small bottling hall