The Analyst

The Analyst

Jonny McCormick talks to Andy Simpson of Whisky Highland, the man at the heart of the Investment Grade Scotch debate.

Interview | 01 Jun 2012 | Issue 104 | By Jonny McCormick

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What is Investment Grade Scotch and what is your view of the debate?
Investment Grade Scotch is simply single malt Scotch whisky that has the potential to increase in value. This is something very new and therefore, it’s always going to be divisive because there will always be people who believe whisky is just for drinking. The only time I get a bit grumpy is when people start saying that the market is being shaped or manipulated. All I’m doing is reporting on the numbers, I’m not shaping anything. It’s demand that shapes what happens in the investment market. Imagine me like an analyst. In the City, there are analysts that specialise in oil, biotech or finance. I am akin to that. I enable people to make their own decisions.

How did you start Whisky Highland and what service do you provide?
It’s been my passion to start a company and I’ve just passed my second anniversary. I provide an instant online valuation tool which charts the performance of whisky bottles at UK auctions. It’s market intelligence on what price you should be paying or selling at. You’ll see performance since 2008 with the average, highest and lowest sale price and a graph of the sale price trajectory. It’s completely global and I have customers from America, Taiwan and Japan to Australia. They include private individuals, businesses and brand ambassadors from some of the largest whisky companies. Your first two credits for valuations are free which is ideal if you’ve just got one or two bottles. After that, it costs £1.45 to £3.80 per valuation depending on the number of credits you buy.

Can reporting hammer prices without transaction costs mask the true costs of auctions?
The only way we can compare apples with apples is to use the hammer price. I mean, what are you going to use? The price the seller gets or the price the buyer pays? You’ll pay a 10 per cent premium for a bottle bought at but buy the same bottle through Bonhams, and you’ll pay 25 per cent plus VAT. If you use the price the buyer pays, you are inflating the whisky and giving an unfair advantage to the sellers.

Do you see a potential conflict of interest when you offer investment advice to individuals when you are in partnership with a distiller?
Let’s be honest, I work with Whyte & MacKay, primarily because of The Dalmore and I write their monthly investment journal. The guarantee that we both agreed to was complete impartiality and I’ve had free rein with what I write. They know that I may sometimes be talking about The Dalmore decreasing in value. It gets people to return to visit their website and they’ll read the journal and who knows, they might even buy a bottle of The Dalmore.

Are you running a Whisky Investment Fund?
Not at the moment but I’m working on one. If it does happen, I will have nothing to do with the running of the fund. I will advise on which bottles to buy and that’s it. It’s called a Collective Investment Scheme and it’s just a group of passionate enthusiasts who want to build one of the best whisky collections in the world (although they have an eye on the investment). I have no desire to run a fund and there are absolutely no guarantees that the whisky will increase in value. Is it good for whisky?Well, there will be a fairly significant amount of money spent in the whisky industry.

Personally, do you only buy whisky to invest?
Whisky is the accidental investment. You start off as a passionate drinker, then you turn into a collector and inadvertently, your collection becomes an investment.

I have always loved every aspect of Scotch: the process, how it’s made, what affects the flavours and aromas, the whole thing.
Now I don’t just buy bottles for investment, I buy interesting bottles. I’ve bought old blends just because I like the label. I do still collect, I do still drink and I estimate I’ve tried around 3000 single malts. You’ve got to love whisky; because if the market ever comes falling down, you’re left with something wonderful to drink.
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