Readers will likely have heard recent rumblings about a supposed ‘whisky bubble’ popping. For many, this story came to a head with the recent release of data from number crunchers Whiskystats and the much-misquoted Knight Frank Luxury Investment Index (KFLII), compiled by Rare Whisky 101.

Whiskystats’ Insights Report 2022 reported how its Whisky Index lost 16.5 per cent of its value in nine months, and an overall market loss of 3.3 per cent on the previous year. However, it’s worth bearing in mind that this follows growth of 80 per cent between 2020–21, when secondary market prices soared. It’s a similar story from the KFLII, which reported whisky as the only luxury asset to see a decline, to the tune of four per cent, despite being the index’s strongest performer of the past decade.

In truth, the story is an old one, as signs of a slowdown were already appearing by late 2021, and these reports are really only telling us what we already knew: many newly released old and rare, and mid-range limited-edition whiskies aren’t selling, auction prices are flattening, some even dropping off cliffs, and many bottles just aren’t selling at auction at all, with the same items appearing at successive auctions without passing the reserve.

Locked in their homes with nothing better to do, the pandemic saw people spending on things they might not have usually bought, increasing demand, and logistical backlogs limited supply – the perfect recipe for the secondary market boom. Now we’re back to reality, but many haven’t read the memo.

According to insiders, there are a few internal factors and many more external factors at play. Firstly, excited by historic sale prices achieved during 2020–21, many sellers are setting very high reserve prices – this increases the likelihood of a lot not selling, which in turn causes the market to stagnate.

Secondly, distillers have massively increased retail prices of new releases, with RRPs for old stock particularly skyrocketing, from the low thousands to tens of thousands. Now, prices of more than £100,000 for old and rare whiskies are becoming normalised.

While this allows distillers to reap the financial rewards of burgeoning global interest, in practice it also makes whisky a less attractive proposition for short-term investors, who are unlikely to achieve an uplift in value in the 12 months after purchase because there’s less headspace between the purchase price and the actual market value.

Speaking to private client managers, I was also surprised to learn how small the pool of customers really is for these kinds of bottles – some saying the market has mostly been driven by the same couple of hundred people, despite the estimated number of billionaires globally hovering around 3,100, and Credit Suisse’s estimates that there were 59.4 million millionaires globally in 2022. Thus, it seems rare whisky has achieved relatively little penetration into the world of the rich, which could be seen as a failure or an opportunity, depending on how it’s framed.

But it isn’t all doom and gloom. Compared with other categories, whisky is faring well: luxury watches are down by between 19.4 and 33 per cent, depending on the method of measurement, and reseller Chrono24 is laying off staff. Grey-market Rolex prices are also falling. On the trainers scene, Nike shares have tumbled by 37 per cent and many models that were reselling for a 50 or 100 per cent premium in 2020–21 are now trading for less than RRP.

This suggests to me that what’s happening in the whisky market is actually only partly to do with what’s going on in the whisky scene and a lot to do with what’s going on around the world. Overall, the whisky business is looking good, as indicated by Diageo’s 2023 preliminary results (Scotch malt sales are up 16 per cent) and the SWA’s export report, which shows a reduction of 3.6 per cent that I understand to be a return to normal rather than a real-terms slump, following a surge of ‘restocking’ internationally in 2021–22 as logistical challenges eased.

To whisky bottle investors, I say this: don’t panic. I believe that the current contraction is a correction, not a crash, and taking a long-term view is vital. Whisky is a waiting game, after all.