Macallan 18 Values Soften and Diageo Silent-Still Heavyweights Dip Amid a Mixed Start to the Year.
The first two months of 2017 have been something of a mixed bag for whisky values. There was always a certain air of inevitability around a re-trace of Macallan 18 year olds following 2016’s rapid gains. The vintage 18’s older Anniversary Malt siblings, however, continue to climb.
Following 2016’s emerging trend, the market seemingly continues to de-value the scarcity of silent stills – Values for both the Port Ellen Index and the Brora Index have fallen in February with significant volatility continuing, if not increasing across both indices. On a year to date basis, the Brora index is the worst performing of the key indices.
February was also the first month to see a year-on-year decline in the number of bottles hitting auction in the UK. February 2016 saw 5,360 bottles of Scotch sold at auction in the UK where February 2017 saw 4,980. Worthy of note is Scotch Whisky Auctions held their first 0% sellers commission auction back in Feb 2016, so there was a correspondingly huge increase in volumes from the Glasgow auctioneers.
Whereas year on year volumes declined by -7.09% it was a very different story for overall values. Again, comparing February 2016 to February 2017, the £ value hitting the open market increased by 31.06% from £1,131,512 to £1,482,991. This is to be fully expected noting the quantum shift in prices through 2016.
The key Rare Whisky 101 indices ranked in order of performance for February and also year to date are –
The broadest measure of the market, the Apex1000 Index, highlights continued positivity with the holistic picture showing good upside… >2% gains have been experienced in both January and February. The Rare Malts Selection Index looks to be experiencing accelerating growth. The Rare Malts had a great 2016 with early 2017 results suggesting this cult collectible series has further to climb.
The Vintage 50 Index also highlights the growth in interest for significantly aged, vastly rare Scotch with it’s second highest monthly increase in over three years. This months result was only bettered by a 5.82% increase in September 2016.
Despite a softening of Macallan 18 values, the ‘M’ distillery still leads the pack with the vintage Anniversary Malts advancing. Looking at the indices side by side shows they’re almost on par again with the Macallan 18 index standing at 553.82 and the Macallan 25 index at 538.55.
Port Ellen and Brora show exceptional peaks and troughs across both indices. This suggests both are being governed by the collectors market. We typically see a spike as a collector is missing one or two releases from a full ‘set’, thereafter the market returns to normality. Despite the inherent spiky nature of these indices, the general trend does still remain positive.
To some degree it will also be important to see what Diageo do with pricing for the 2017 release of Port Ellen and Brora (if, indeed there is one). On the secondary market, the trend seems to be the more retail prices are inflated, the more volatility creeps into the market. 2016’s Port Ellen Special Release saw relative retail price stability; so we find ourselves asking if the retail ask price is increased this year, how far will/can it go before the normal dynamics of the market simply snap and consumers walk away?
Elsewhere in the market, it’s fantastic to see London-based Whisky.Auction manage to bust a substantial haul of fake whisky. For those interested and/or invested in the secondary market for rare whisky this issue will become ever more prolific with prices at all-time highs. If there’s one person producing fakes in the UK, there’s a terrible certainty more will be doing the same.
In summary, for the early part of the year, from a collecting perspective, It’s fascinating to see silent stills moving out of the limelight in favour of producing distilleries. Will this trend continue or has the market simply paused for breath, thus providing a good time to acquire any remaining bottles from silent stills? Rarity certainly suggests buying up remaining bottles from silent stills, but, in some cases is liquid quality letting the team down? … A polarising start to the year.
Whisky Values Maintain Buoyancy as Port Ellen Leads the Pack in November.
Demand for rare whisky increases as November’s results show prices hardening amid an almost insatiable market.
Volumes were relatively stable at 5,352 compared to October’s 5,528 and average prices for Scotch look to be edging further north towards the end of the year. More on averages in the 2016 Investment Review released early 2017.
Other than the specific negative indices which track the worst performing bottles, every single key index finished the month in positive territory. As more confirmation certain brands/bottles continue to fall, the Negative100 index slid further into the red, losing 1.43%; its greatest single month dip since Mays -7.46% loss.
The basic principles of the current dynamic market remain broadly the same as they did five years ago with the most desirable bottles increasing and polarisation suppressing values for undesirables.
Bottle(s) of the Month
When gems from Springbank infrequently appear on the open market there’s usually a decent amount of activity. Over the past year or so, demand for some of these magnificent older examples has dialed up to eleven.
Born in 1963, this Cadenheads 31-year-old has only appeared on the market three times. Scant surprise then, when Whisky-Online Auctions unearthed one, it rapidly disappeared into the stratosphere from a pricing perspective.
From £320 in 2010 to its current price of £2,150 represents a 572% increase in value.
Rather more frequently seen on the open market, the blue label Macallan 30-year-old managed a new record of £3,500.
With a 2008 record low of £260, this bottle is one of the all-time best performers at auction yielding a 1,246% increase in value.
The Month in Summary
The key Rare Whisky 101 indices ranked in order of performance for November are –
Port Ellen (OB) prices continue along their unpredictable peak/trough sawblade-esque trajectory. Down 15.85% in October then bouncing back in November to increase 16.46%. A 2016 year to date result of +38.19% shows the general trend is still very much up.
As the third greatest gainer in November, Karuizawa appears back on the radar. Novembers increase takes Karuizawa out of the red for 2016 and gives a marginal year to date positive performance of 6.01%.
And then there was Macallan!
The current surge in values is so out of line with anything we’ve ever seen before. We still maintain this market is unsustainable. That said, every month we seem to keep witnessing further increases, especially to the vintage 18-year-old bottlings.
To illustrate how unique the current market is, if we forecast forward the average per-bottle price increases for both 18 and 25-year-old Macallan’s, we see the 18-year old’s becoming worth the same as the 25 year olds in just over one year, with an average per-bottle price of just under £4,000.
Now, while the current increases look almost incredible, an average of £4,000 per bottle would be madness… but with the current trajectories, that’s how out of line the current market really is.
With one more month before the curtain is closed on 2016, it looks like this year will be a record breaker. While there’s still time to see a year-end dip similar to that of 2014, we would see it as unlikely any dip could/would be significantly material… more a pause for breath. The current market just looks too bullish at the moment with demand for rare whisky remaining nothing short of exceptional.
October saw the second highest month on record from a supply perspective with 5,528 bottles of Single Malt Scotch hitting the secondary market in the UK, slightly behind August’s all-time high of 5,707. It’s incredible to think the number of bottles sold in one single month is now regularly exceeding 2010’s full year supply of 5,431.
From a pure investment perspective, October looks to have finally flushed through any Brexit forex related gains. The broadest measuring index, the Apex1000, increased by 2.20% in October, cooling from September’s 5.30% and August’s heady 6.18%.
While there’s clearly been the expected positive correlation between Sterling’s drop and certain bottles increasing, the broad market has remained underpinned by the same tried and tested principles. The ‘right’ bottles are increasing and the ‘wrong’ bottles are still languishing in the doldrums. The impact of the crash in GBP has by no means positively affected all prices; the value of some bottles has continued to fall.
Bottle(s) of the Month
October’s highlights have to include Scotch Whisky Auctions Rare Malts Selection Brora 1972 22 year old which, in-spite of massive increases already, pushed up from its previous £5,400 record to a massive £6,400. The profile of that little gem is below.
Whisky-Online Auctions took a bottle of the Largiemeanoch Bowmore 1967 from its previous best of £8,200 to £10,300. Demand for these amazing old rarities seemingly knows no bounds as the valuation history below shows.
The Month in Summary
October proved to be a particularly sharp, double edged sword as Macallan continued to surge but both Brora and Port Ellen dipped dramatically. Both indices saw large peaks over earlier months which have now been erased.
The monthly % changes of the indices are ranked below together with the respective 2016 year to date results-
It’s the first time we’ve ever seen an index/collection double in value over the course of less than one year. The vintage Macallan 18 year olds have outstripped everything before them. Even the rapid ascent of Karuizawa prices in early / mid 2015 can’t hold a light to Macallan. As a word of caution, and as can be seen from the charts, these bottles have been through a protracted re-trace before. Whether we see any sort of cooling in rare Macallan prices is anyone’s guess; but we’re absolutely not expecting these gains to continue. They simply cannot.
While not included in the ranking above, the Negative1000 index crept slightly further into the red, cementing the risks involved in selecting the wrong bottles.
Port Ellen and Brora are also showing why Scotch should be viewed as a medium to long term investment. With peaks and troughs galore, as ever, timing is everything.
Sometimes packaging delights us; sometimes it turns us off; sometimes it sadly becomes more of a focus than the liquid it’s intended to position, enhance and display… Rarely does it confuse. But that’s where Gordon and MacPhail’s Mortlach 75 year old packaging has left me – utterly confused.
I’m not saying it’s bad per se, just a little left of field, a bit odd and probably not that sensible if the truth be told.
The recent Whisky Auctioneer whisky sale saw a bottle of the oldest Scotch in the world sell for the not insignificant sum of £17,800. Included in the sale was the leather travel/presentation bag. I have nothing against leather travel bags, I’ve owned one for many years and it’s been a welcome companion on many a trip… But would I stuff nearly twenty grands worth of Scotch and crystal decanter inside it and haul it over my shoulder? The concept seems about as sensible as popping into Lady Gaga’s meat dress and wandering round the Maasai Mara shouting “here Lion, Lion… here boy”. Maybe the inside of the bag has significant steel and Kevlar reinforcement? At least it’s different! Odd… granted, but different.
Anyway, moving from packaging to prices as is more the focus here; there were some huge new records achieved at last week’s Whisky Auctioneer sale.
Macallan – A market divided.
As auction values for more modern releases and many Macallan ‘drinkers’ splutter and falter like an asthmatic steam train ascending Everest, many are becoming available at auction for significantly less that you’d pay at retail (Rare Cask for £135 at auction). On the flip side of this crumbling coin is the golden face of the ‘old’ bottles. The older vintage 18 and 25 year old’s are absolutely flying. Values are increasing at an unprecedented rate. The 18’s have already increased by 24.69% this year and the 25 year old’s have increased by 19.35%. April’s Rare Whisky 101 month-end charts were off the scale and that growth looks to be accelerating. As with the vast Karuizawa gains seen through early 2015, we’re wondering if the market is becoming overheated. Certainly, the pace of these increases cannot be maintained. Three of the 18 year olds sold at this auction achieved fresh new records – the 1970 hit £1,050, a bottle of 1974 sold for £975 and the 1978 made £825. All were selling for around a third of those prices as recently as 2013.
Islay continues to ride high.
Yet again, older rarer bottles from Islay made big money. I remember being sat in the auction room at Bonhams (Edinburgh) in 2010 and chatting in hushed tones to a friend as the auction moved along. Almost exactly when I’d finished talking, the hammer fell on a bottle I couldn’t believe I missed. £120 took a bottle of 1972 27 year old Bowmore… A snip… and I missed it because I was chewing the fat over Lyne arm angles, secondary fermentation or some other utterly geeky stuff. Like my old school reports – pay more attention! Especially noting that bottle sold for £858 at last week’s Whisky Auctioneer sale.
White Horse bottled Lagavulin seems to be in ever increasing demand. £230 took a bottle to nearly double its recent trading range… Maybe there’s panic in them there hills? Might 16 turn to eight then turns to NAS?! I suspect not to be fair, but who knows. A bottle of Murray McDavid bottled 1979 Lagavulin also shone through as a clear winner managing £1,000 for the first time. Until the end of 2013 this bottle had never sold for more than £200 at auction.
Bruichladdich saw a bottle of its 40 year old make the most expensive bottle of ‘Laddie at auction in the UK. A respect-worthy £1750 took it past a previous best of £1550.
From a silent stills perspective. The big movement was seen from independent bottlers. A brace of 1972 vintage Brora’s from Douglas Laing went expectedly berserk. The Old and Rare 29 year old managed £2,350, massively ahead of its previous UK sale price of £500 (that was expensive in 2010!) and the 30 year old bottled for The Whisky Shop hit £1,426, not a record but a superb price noting it was lacking its card tube.
Port Ellen had a noticeable lack of bottles at auction but a Connoisseurs Choice 1982/2007 stood out when it fetched £410.
All told, last week’s Whisky Auctioneer sale was as buoyant as they come. We’re just keeping a close eye on the rapidly heating vintage Macallan market. For those with a few stashed away, values are clearly increasing; however, I’m not so sure I’d be entering the market in a hurry right now. As always, time will tell.
It is with great sadness that we move into May’s round of whisky auctions. Scotch Whisky Auctions opened the new month’s bidding with nothing less than devastating news that Loch Dhu, Black Whisky, appears to have increased in value and moved to a new higher trading level.
Sadness aside, sellers around the world are rejoicing at being able to find an alternative means of disposal for these dangerous bottles. SEWPA’s (Scottish Environment Whisky Protection Agency) recent ruling unilaterally banned Loch Dhu from being poured down the drain after it was found to be highly toxic to aquatic organisms… in fact any organisms. Until now, desperate whisky collectors had hidden the bottles away, afraid the very blackness of Loch Dhu’s foul soul would invade the rest of their collection. With bottles selling for £100 – £120 (up from previous trading range £65 – £80) collectors can now offload the pressure of ownership to those more interested in weapons of mass dhu-structiveness.
More sensibly, away from the black sludge, rare whisky prices advanced again, taking many bottles to new record highs.
Not the most obvious collector’s choice, Strathmill, saw a bottle of Douglas Laing’s Old Malt Cask 1962, 42 year old sell for £460. Its previous record was £360 in 2015 with a low point of £120 in 2010.
Having been lucky enough to be able to visit Islay last week to celebrate Lagavulin’s 200th birthday, it seems only fitting to mention the new record prices paid for a 2011 Jazz Festival bottling. £600 was the winning bid, just exceeding a slightly lower priced bottle at £560. Impressive results for a bottle which originally retailed for £80.
Fellow, Islay distilleries Ardbeg and Bowmore also saw record results.
Ardbeg’s fourth release of the 1974 vintage Provenance breached the £2,000 mark for the first time when one sold for £2,100. Alongside the Provenance, a bottle of the mighty Ardbeg 1965 took £6,600, a comfortable new record.
A bottle of the 1968 37 year old from Bowmore also sailed through £2,000 for the first time. £2,600 took the bottle on this occasion which is 465% ahead of its record low £460 in 2009.
Representation from silent stills was relatively thin on the ground but for those making it to auction, values looked buoyant. Port Ellen’s first release took £1,900, not an outright record but well ahead of recent sales. A bottle of 1982/2000 Connoisseurs Choice from Brora managed to add £20 onto its previous £310 record and a 2004 Diageo Special Release Linlithgow (St. Magdalene) 30 year old soared to £760.
With a packed auction schedule in May, supply, again, looks high. At the moment, a certain element of positive momentum looks to be in control of the broader market… The first four months of the year have seen impressive results. If the rest of the year can keep pace, 2016 could well be a record breaker.
2016 has already seen significant increases in price for certain bottles of Scotch. As we move towards the end of Q1, that up-trend shows no immediate signs of let-up.
Further buoyancy at Scotch Whisky Auctions recent sale served to cement the positive market sentiment.
Age, vintage and rarity continue to be driving forces behind the best performers.
Ardbeg’s ever increasingly scarce single casks remained under extreme pressure. One of 453 bottles released from cask 1378, a 1975 vintage released in 2006, fetched £1,150. Just £360 took this bottle in 2009. Younger single casks also shone with a bottle of the 2000 vintage from cask 368 taking a massive £700. With a previous record of £410 in 2015, this looks like a one off spike but is impressive none the less.
Adding at least some balance to proceedings, heading down in value was a bottle of Auriverdes ‘bloggers-bullion’ gold bottle. At £1,000 it’s now worth just less than 50% of its first recorded sale of £2,100. Losses aside, £1,000’s still not a drop in the ocean for a free press release bottle.
At 40 years old, the 1966 distilled Jura was limited to just 98 bottles and is rarely seen at auction. At this kind of age and with exceptional rarity it’s no surprise to see the bottle hit a new record. In 2008 a bottle sold for £700. In today’s market the value of this scarce bottle has increased by 257% to £2,500.
While many of the more familiar releases languished or slipped in value, top end Glenmorangie’s performed well. Throughout 2010 and 2011 Glenmorangie values crashed. We’ve spoken about this frequently as values literally halved over a period of just three short months. While prices have remained depressed for certain limited editions, the older aged/vintage releases have recovered and in some cases excelled.
A bottle of 1981 Sauternes finish fetched a frighteningly low £120 in the depths of the ‘Morangie-massacre – Putting those fallow times well and truly behind it now, one sold for a record £720, a bottle of the duty free exclusive 1975/2002 ascended to £430 (Mid-crash this was sat at £122) and topping this heady trio was a bottle of Malaga finish 30 year old which managed £820 (again, just £120 took this bottle mid-crash). Hindsight is 20:20, we all know that; BUT… but, if you’d bought these three bottles in 2011, right at the peak of ‘Morangie-misery, they would have cost £362. In today’s market they would be worth £1,970, a 444% increase.
Old vintages also continue to shine. With an all-time low of £150, a G&M bottled 1957 vintage Tamdhu sold for a record £640. The previous record for this bottle was a mere £260 in 2014.
With a notable absence of any sort of volume for older vintages, it was scant surprise to see a new record for a 1970/1988 Macallan 18 year old: £920 sealed the bidding, well ahead of its previous best £750. Showing a recovery and renewed demand for rarities, the first release Easter Elchies Cask Selection closed out at £1,100, not an outright record but good progress, especially considering its 2008 release price of £105.
Silent stills were, again, visible by their absence. Dipping numbers on the open market are pushing prices ever higher.
I remember being beaten at auction in 2011 for a bottle of Brora Silent Stills 1983 18 year old. The enemy (the other bidder) took the price up to £310… there were only two of us bidding by that point… I thought he’d leave at just over £300 so I pushed on to £320. The enemy’s hand went straight back in the air and I remember thinking this is going to go silly. So I let the enemy have it for £330. Maybe I should have taken it a little further as one sold for a mighty £920.
Of the few silent stills present, other record performances were seen for –
Glenugie 32 OB achieved £470, sneaking past a previous best of £450.
Glenury Royal 40 year old managed £780, comfortably past a previous best £600 in 2014 and a low of £340 in 2013.
Killyloch’s 1967 OB hit £2,000 for the very first time. £1850 was its previous best. With £400 as its all-time low in 2012, that’s some major upside.
Port Ellen 9th made £1050, just squeezing ahead of its £1000 previous record.
Rosebank’s OB 25 year old Added £20 onto it’s previous best of £620, tipping the scales at £640.
In general, I don’t remember seeing such a buoyant start to the year as we’ve seen in 2016. There will be some spikes in-and-among the numbers and some bottles will naturally cool back down… That said, we do still see a continued hardening of prices for the oldest, rarest examples of the best whiskies. Get ‘em while you can?!
5,467 bottles (full sized bottles, single lots of single malt) were sold at auction in the UK, that’s the highest volume of bottles seen on the open market in one month. Monthly volumes have never quite managed to break through the 5,000 bottle barrier… as an indication of how vast last month was, February 2015 saw 2,690 bottles sold. To a large degree, this supply-glut was down to Scotch Whisky Auctions zero seller’s commission offer which gave a boost to the figures. Include memorabilia, blends, bundled lots, grains, mini’s and everything else sold through whisky auctioneers in the UK and, in total, there were 9,587 separate lots to bid on!
Bottle of the Month…
…Goes to McTears Auctioneers in Glasgow for bringing to market the only bottle ever produced of a 60 year old Dalmore for Drew Sinclair’s 60th birthday. A 1939 60 year old and just one bottle in existence… it doesn’t get much more desirable than that. Interesting to see a top end Dalmore in a little more sedate packaging too. At £7,500 it’s not the most expensive Dalmore ever, and while it’s a rather odd thing to say at this price point, it actually looks like good value for whoever bought it.
The Month in Focus
Scotch is an interesting investment proposition. It’s beautifully simple in its supply/demand driven environment.
Supply goes up – Demand stays the same or falls = Values soften.
Supply goes down – Demand stays the same or increases = Values harden.
Following January’s rather buoyant start to the year, in light of February’s massive increase in supply, we were bracing for an almost unilateral dip in values.
With the exception of one major index (Port Ellen) we witnessed some of the single largest ‘in-month’ increases we’ve ever seen.
The broadest measure of how Scotch is performing on the open market is the Apex1000 index.
December 2015 saw the index step back ‘in-month’ at the year-end by -0.02%; we know a massive supply month can directly impact value growth, and it’s not the first time we’ve seen this. While -0.02% is no crash, it’s still not the right direction for values.
Contrary to expectations, the Apex1000 increased by a significant 1.73% in February. It would seem that while supply is increasing it’s being continually outpaced by demand. Looking at a year on year comparison, February 2015 saw the Apex1000 increase by 1.53%… but with fewer than half the number of bottles on the market.
Conversely, the Negative1000 index, which tracks the 1,000 worst performing bottles, continued to fall, losing 0.68% in the month to rest at a record low 53.81 (the index started at 100 in 2008).
Ranked in order of performance, February’s indices look like this –
Historically, rather more sedate than other indices, the Rare Malts Selection Index took the reins with a 6.27% increase. Impressive, but we’re not convinced these gains will be cemented. Late 2015’s December-dip saw 2.34% wiped off a full collection of Rare Malts, so we could be seeing a natural correction.
Below is an extract from our 2014 full year investment report talking about Macallan’s 25 year old Anniversary Malts and the earlier release 18 year olds. Respectively, these indices moved up by 3.77% and 3.57% throughout the whole of 2014.
Current sentiment would appear far more positive for these stunning older bottles as they took to incredible gains last month. Increases throughout February alone out-stripped performances for the whole of 2014.
Karuizawa values stabilised during February as the index increased by a fractional 0.40%. Have we reached an equilibrium for Karuizawa values? We’re not so sure…
Then there was poor old Port Ellen!
A far cry away from the Port Ellen Index’s Feb 2015 all-time high closing position of 456.77 points; twelve months later and we see almost 12% wiped off the value of a collection of Port Ellen OB’s (releases 1 – 8 incl). Values moved north throughout the whole of 2015 by over 23% but, even removing some of the price spikes, like the one in Feb 2015 (full collections being completed maybe?) and the chart suggests we might have reached the top of the current cycle. Could values plateau or even cool a little for the most iconic of silent distilleries?
Aside from Port Ellen’s erratic behaviour and a lacklustre performance by the Vintage 50 index, general values advanced impressively amid the challenges of our largest volume month on record and continued turmoil in other markets.
Bonhams – Hong Kong – had a massive 38.5% unsold lot rate at their recent whisky auction. Just 61.5% of lots sold on the day.
Conversely, Whisky-Online Auctions has an unsold lot rate of 0%. Zero percent! They have a no-reserve policy; and in the current buoyant market, that seems good practice. If the market softens, that good old reserve-price comfort blanket may well get dusted off, but for now it’s almost surplus to requirement.
I’d view Bonhams 61.5% lot-sold-rate (LSR) as a pretty disappointing performance from arguably one of the world’s most significant whisky auctioneers. So what happened?
Before we get into some cold hard facts about the winners and the not-so-winners from a brand perspective; in our opinion we suspect part of that poor performance is that we’re seeing a gradual homogenisation of global market pricing. Estimates, in some instances, were massively over UK values. Many of these bottles failed to sell. The rough rule of thumb used to be that auction sales values in HK were roughly double what they were in the UK. That really no longer applies. In-fact some sales prices, even for the mighty Karuizawa, were actually lower than prices in the UK. As the burgeoning UK internet-auction scene has become a truly world wide web, are we now seeing the creation of a level playing field… from a pricing perspective at least?
From a regional secondary-market brand perspective, (putting aside pricing differences and over-estimation), there are some clear trends emerging for popular bottles/distilleries.
Taking 61.5% as the average LSR let’s take a look at which brands are like a summer in Hong Kong… That’ll be hot then!
The highest LSR was Glenmorangie with 100%. Good old Tain titans, the 16 men pull out a perfect score (when is a lady ever going to permeate that most elusive of men’s clubs!?!?!). A whole two out of two bottles sold… so from that basis the data set is hardly revealing. Conversely, Bruichladdich saw three bottles at auction and took a big fat ‘oh’. Zero percent sold… Great bottles too, shame. Overpriced. No demand?
The two big guns were clearly Karuizawa and Macallan. East versus west in a sherry bomb barrage of superb open-market liquid.
Karuizawa reigned supreme with a market leading 89.7% LSR as 52 out of 58 bottles hammered-out successfully. Craigellachies finest, Macallan, managed a LSR of just 51.2% as 21 out of 41 bottles hit reserve. While the LSR was impressive, many Karuizawa prices fell in HK as they have in the UK… apart from that bottle (the 1960 50 year old), which again highlighted the krazy world of the professional Karuizawa collector. I am minded to think of the Pepsi-Max in sunny Blackpool whenever I delve into Karuizawa prices!
Staying with the sherried theme, the increasingly in-demand Glendronach took an 80% LSR as 4 out of 5 bottles sold. Not a conclusive victory at these miniscule levels, but none-the-less an interesting fact.
Closest to Karuizawa and just above Glendronach, from a Scotch perspective, came Highland Park with an impressive 87.5% LSR: 7 out of 8 bottles found new homes. It has to be pointed out that the bottles were exceptional rarities so it was scant surprise competition was particularly stiff. Springbank then came in with a convincing 66.7% LSR as 8 out of 12 bottles sold.
From this we know that Karuizawa is as popular in HK as it is in the UK but irrespective of the number of bottles sold, prices still softened. In some cases we saw bottles sell for less than they do in the UK. Have Karuizawa prices paved the way for harmonisation of values world-wide?
Particularly different to the UK, some of our silent stills appear like they have yet to appeal to the eastern hearts, minds and palates (or maybe they were simply too expensive?). Port Ellen had a good selection of 40 bottles at the auction but could manage a LSR of just 35% when 14 sold. Brora fared even worse with just 3 of 14 bottles taking flight, giving a 21.4% LSR. Rosebank, saw a little more action as 4 of 10 bottles moved. Whether estimates were simply too high (they were certainly eye watering from a UK viewpoint) or the frenzy for silent stills is yet to infect HK who knows?
A fascinating auction and one which suggests values are aligning globally. Worthy of note; just under a year ago, in the February 2015 HK Bonhams auction, Macallan had an 85.3% LSR when 29 out of 34 lots sold.
The challenge on Tuesday night (and early Wednesday morning if we’re being totally honest) was to wear this year’s Diageo Special releases…
For next year’s challenge I apparently have to abseil down Drummuir Castle while nosing the samples!?!? Thanks must go to Eli Larson from Diageo for that gem, thanks very much pal!
Anyway, daft stuff aside (and there was plenty), we got to test-drive this years bottles at Drummuir Castle (Diageo’s impressive fortress of solitude… or maybe Greyskull others may pose?) in the heart of Speyside. There are plenty of other articles out there now about detailed liquid profiles, so we’re looking at reviewing them with collecting/investing in mind.
That said, it would be plain rude not to at least briefly mention the liquid – That is what it’s all about of course. So, in order of preference and scored out of 10, they’re listed below. The way we (granted very rarely) score is that 5 is in the middle, therefore that’s a perfectly drinkable malt. These bottles should not feel offended by being a 5, that’s a good enough score for a good enough whisky. Most of your decent common-or-garden house malts are in and around the 5 mark from our perspective. 1 is undrinkable and 10 is the best thing we’ve ever nosed/tasted. Separately, I nosed a 22-year-old single sherry cask from Speyside Distillery on the way to the Diageo event… it got 1! It’s the first whisky this year to make me physically jerk my nose away from the glass… think molasses sweetened liquified rubber bands. Anyway; the legendary lowest score of 0.0 is solely reserved for Loch Dhu… it just has to be. Fact. Full-stop. The end.
Pittyvaich 25 yr old: Scores 4 – Actually below par for this one. It’s closed and un-revealing. You want it to give more but it doesn’t. A chastity belt of a whisky!!
Dalwhinnie 25 yr old: Scores 5 – My notes just say “is okay” … and it is.
Caol Ila 17 yr old: Scores 5 – Not blown away, but fine – average. Probably just prefer this to the Dalwhinnie but it’s close.
Cally (the) 40 yr old Grain: Scores 6 – You’d certainly not kick it out of the drinks cupboard but it’s really bourbon style sweet.
Lagavulin 12 yr old: Scores 7 – Nice juice. You know what to expect. You pretty much get what you expect.
Brora 37 yr old: Scores 8 – A mighty fine dram. Not the winner. Very much lighter, almost fresher than some of the previous 30 year olds. Amazing none the less.
Port Ellen 32 yr old: Scores 8 – Another top drawer contender from the Port. Really quite coal-smoky/tarry, especially with water.
Dailuaine 34 yr old: Scores 8 – Happily sit and drink this until the cows come home. Just lovely. Best of the 8’s, just edges it on the Brora and Port Ellen.
Clynelish Select Reserve: Scores 8.5 – My personal favourite. Loved it. Complex and multidimensional.
That’s the liquid – Least best was the Pittyvaich, best best was the Clyne-hellishly-good. It’s all personal though, I know others who really liked the Caol Ila and weren’t so keen on the Clynelish.
From a collector/investor perspective, we need to factor in some other variables. Some may be familiar with the Rare Whisky 101 DCI (Drink/Collect/Invest) model published in our 2014 annual review. This will evolve over time, but we’re going to start scoring bottles based upon those three criteria.
To explain – Take the Dalwhinnie 25-year-old – From a ‘D’ perspective, it’s already been given a 5 out of 10. The ‘C’ element is going to take into account its appeal to a broad collector base… is the distillery desirable, is the bottling limited, if so how limited, etc. We’ll award the Dalwhinnie a 3 out of 10 for that. It is limited, it’s a mid-old-ager but it has limited appeal to collectors. Finally, the ‘I’ investor dynamic takes into account the most important investment principles – point of entry and point of exit. Is it expensive for what it is? If it is, it scores low, if not it scores higher. And does it have the potential to increase in value over time? The Dalwhinnie will score a 2 out of 10 here. Historically, Dalwhinnie has been a poor performer at auction with values frequently falling significantly lower than RRP’s. Our Dalwhinnie 25-year-old therefore scores a total of 10 out of 30 represented by (D:5/C:3/I:2). If you want to buy it, it’s a clear drinker, not one for a hold. Not really even a long-term hold as there are far better things out there from a collector/investor perspective for £250.
It’s a little ambiguous but then so it scoring a whisky on its flavours and aromas. What we’re trying to do is answer one of our most frequently asked questions of “what should I be collecting?”
The other 8 bottles look like this –
DCI RATED IN ASCENDING ORDER –
40 yr old Grain – The Cally: (D:6 C:1 I:1) = 8/30
£750 per bottle. 5,060 bottles.
I really think this will struggle to sell. The price is just too high for a single grain. The whole single grain category has failed to capture the collectors market. Drink it, fair enough if it’s your style but don’t expect this to do anything other than bomb from a secondary market perspective. If you want to spend £750 on a bottle of Scotch for investment, go buy 5 or 6 bottles of Rosebank at auction. Don’t give this a second glance unless you’re simply admiring the packaging… which is actually very cool.
Caol Ila 17: (D:5 C:3 I:1) = 9/30
£90 per bottle. Limited release.
Highland style Caol Ila has not fared well at auction to date. It does have a fan-base as a liquid; however, all but the rarest of Caol Ila bottles do little from an investor’s perspective. Low interest for collectors but good pricing will, to some degree, appeal to generalist bottle collectors.
VERY good liquid. VERY high price. NAS. Last years release has appeared at auction and sells for c£300 per bottle. Expect the same losses to be crystallised from this years. Take advantage of that, buy this at auction and just drink it. The limited nature of the bottle at less than 3,000 means it has some appeal to a collector but anyone wanting to tuck this away expecting future gains should be prepared to hand it to their grand-children in 50 years.
Pittyvaich: (D:4 C:6 I:5) = 15
£250 per bottle. 5,922 bottles.
A relatively voluminous release but very keenly priced. The first rule of investing in whisky is that the whisky should be superb quality. That falls down here. That said, there is a certain appeal noting what you’re getting is a relatively old whisky from a silent distillery. At this price, that can’t be overlooked. There are utterly miserable bottles of Port Ellen out there from indie bottlers which still fetch the same market value as good-un’s.
12 yr old Lagavulin: (D:7 C:7 I:5) = 19/30
£80 per bottle. Limited release.
Accessible pricing and high demand will see this suited to many Islay / Lagavulin collectors. Early releases of the 12-year-old cask strength are performing reasonably well at auction but a lengthy wait is required. Don’t expect instant gains but a solid bet at the price. There are many Lagavulin collectors who will ‘need’ this to maintain the completeness of a collection so expect demand to be strong.
34 yr old Dailuaine: (D:8 C:6 I:7) = 21/30
£380 per bottle. 2,952 bottles.
Above average prospects for this relatively unknown brand. Attractive pricing and the high quality of liquid make it a compelling proposition to all three buyer-types. Depending what Diageo do with the brand moving forward will have an effect on values. £380 for ANY 34-year-old in this day is great value. One I’ll personally be buying to open and enjoy… If I can find one! It’s just one point short of pipping the Port Ellen but we actually see this as a stronger pure investment than the Port Ellen becasue the price is excellent for the quality and age of the liquid.
Port Ellen: (D:8 C:9 I:5) = 22/30
£2,400 per bottle. 2,964 bottles.
The last two years have seen these iconic bottles fail to sell out in their usual record time. £2,400 is a massive amount of money for a 70cl bottle of drink which is what it is when all’s said and done. To counter that, we’ve said it before, but the annual PE releases were vastly under-priced until recently. There needed to be an element of correction from a retail / primary market perspective. The rate of acceleration of those increases has been the main shock to the system. Still one of the most collected distilleries, but pricing has massively pared back these bottles as an investment. Are they going to be worth £5,000 in two or three or even 10 years? We think not but we’ve been wrong before. The key risk at this price is that many will be used to keep a complete collection complete, few will be buying two to drink one/keep one so supply won’t necessarily be taken out of the market.
Brora: (D:8 C:8 I:8) = 24/30
£1,300 per bottle. 2,976 bottles.
Recent price increases (which were needed, it was far too cheap a few years ago) have prevented this being an outright 10 from a collector/investor perspective. But it’s Brora, stocks are thin on the ground, time is running out for the highland heavyweight collectable. Full set collectors will need this. From an investment perspective, don’t expect instant gains, the pricing has removed any likelihood of that. But, given time, we still see this as the pick of this years bottles. We could actually argue it’s still under-priced for what it is.
From a pricing perspective, there are bottles here which represent true value, there are bottles we think are particularly good value (the Brora, the Dailuaine and the Pittyvaich) and also bottles we see as poor value (mainly the Cally). We have to also take a view on the rest of the market. The recent release of 25-year-old Littlemill for £2,000 moves the phrase ‘aggressively priced’ to ‘we actually don’t want to sell this to anyone with a modicum of common sense’. The price for the Littlemill is perceived as so immensely high that I’m hearing of retailers refusing to stock it. If customers pro-actively request a bottle then one can be sourced, but they won’t physically stock it or actively market it… when retailers show a new product the door, you know there’s a problem.
I absolutely must thank Diageo for their amazing hospitality on the evening, it would be utterly rude not to do so; it’s amazing to be able to try all the special releases in one fell swoop. However, this isn’t meant to advertise or promote these bottles, merely assist in answering a question we get asked many, many times.
Interestingly, the Dailuaine is the one to sell out in record time this year, it’s disappeared from a number of retailers already. The big guns are still on the shelves demonstrating the need for a careful balance of price, quality and age/NAS. I wonder how many bottles of Littlemill 25 have sold?
We’ve said it before and we still maintain – we don’t believe in bubbles. Not with a physical asset anyway. The reason we don’t believe in bubbles is they burst instantly and leave absolutely nothing… With a bubble, everything is gone in an instant.
Could that happen with whisky?
No, you’ll always have a bottle… More importantly (unless the broader economy implodes and we all go back to cooking on an open fire), do we see Port Ellen 1st release ever settling back to £100 a bottle or a Connoisseurs Choice Kinclaith 1966 ever being sold for its original retail price of £19.74? Again, simply no – no we do not.
BUT… do we believe in overheated markets being the subject of a significant correction, protracted slump or even a crash? Absolutely, we have to. Glenmorangie values almost halved within three months through late 2010/early 2011. Their values have now just clawed back their losses to reach pre-crash levels; it’s taken five years for a full recovery.
Over recent months, Karuizawa values have increased at a rate the broader whisky market has never seen. The Rare Whisky 101 Kauizawa Index was established on the first of July 2013, so it’s our most recent index. Exactly one year later, the index had increased from its base of 100.00 points to 146.83. That 46.83% increase outstripped Scotch, nothing could compete; but equally that would pale into insignificance compared to the gains we would see over the subsequent 12 months. 146.83 points on the first of July 2014 became a staggering 384.61 twelve months later on the first of July 2015. That’s a 161.94% increase. The index peaked at 399.32 at the end of July this year.
From a broader pure cost perspective, two years ago, the single cask 1980’s vintages were selling for between £600 and £800 per bottle (We’re not going to look at original retail prices because, quite frankly, it all gets a bit silly). In many cases these prices are now in the region of £2,500.
All this comes at a time when a bottle of 1960 vintage Karuizawa takes the record for the most expensive bottle of Japanese whisky ever sold (Bonhams Hong Kong £77,000). We would like to see a bottle sold at auction in the UK to see how values compare… But even in Hong Kong, hammer prices for certain bottles eased back from previous highs. The 1967 (cask 6426) sold for c£15,000 in May and made c£12,000 at the August sale.
The market looks overheated. £2,500 for a bottle of ANYTHING is a massive price to pay. Bottles of 1950 vintage Macallan can still be obtained on the open market for that amount. Karuizawa almost defies logic in terms of the prices being paid.
Scant surprise, one may argue, that we’ve now seen a drop in value through just one month by an eye-watering 7.41%. That brings the Karuizawa Index down from its peak 399.32 at the end of July to 369.73 on the 31st of August.
It doesn’t look like over-supply’s the culprit – The last six months have seen the number of bottles sold at auction in the UK remain relatively low and August even took a notable step back from July’s high (number of bottles sold – March 70, April 70, May 50, June 41, July 87, August 57).
7.41% is a steep drop in one month, so should we be worried? In our opinion we should realistically expect to see a continued short-term decline in values (at best a period of stability). We’re not expecting anything like the sort of 50% losses Glenmorangie suffered in 2010, however, we do see the current market as being in need of a natural correction before a more uniform pattern of growth is established. As a positive counterbalance to that, we need not forget that Karuizawa is almost gone from the cask and much of the (earlier releases anyway) bottled stock has been drunk.
Rarity and quality will absolutely continue to play a vital role in values – and Karuizawa has both in spades.
While it’s clearly impossible to know exactly how this will play out in the long run, we would certainly advise caution for those buying at the moment (particularly as an investment).
As Karuizawa experiences its most significant drop to date, how has the rest of the market performed?
The August Rare Whisky 101 indices ranked in order of increase/decrease are –
Without exception The Negative indices continued to slide, further polarising the market. The Neg1000 moved down 0.68%, the Neg250 retraced 0.83% and the Neg100 hit a new low of just 31.98 points as it fell 0.56%.
The other notable performance was the official Brora index which fell 6.04% through August. The Brora index peaked at 396.63 points in February 2014 and currently stands at 332.15, yielding a peak-to-present-day loss of 16.26%.
The Macallan 25-year-old Anniversary Malts took a slight decline through August with the 18-year-old’s remaining flat at zero growth. The remaining indices look relatively stable. Encouragingly, the benchmark Icon100 increased 1.47% and the Apex 1000 moved up by 1.66%.
As we move rapidly towards the early winter months of 2015, we head into what is traditionally the busiest time of the year. Supply usually peaks in October/November and with more bottles sure to go under the hammer than ever before, we find ourselves asking what might happen if there’s a Karuizawa late-year sell-off? Can demand keep pace if volumes do rapidly increase or will we see extended losses? We can’t forecast the answer but we will certainly report the results.
Cutting to the heart of the Scotch Whisky industry.