DYNAMIC GROWTH FOR RARE WHISKY.

COLLECTORS
AND INVESTORS ANNUAL REVIEW. RARE WHISKY 101

EXECUTIVE SUMMARY IN 2014

The number of bottles of collectable Scotch whisky

sold at auction in the UK was up 68.22% at
33,998 (2013 = 20,211).
The value of collectable bottles of Scotch whisky
sold at auction in the UK was up 69.37% at 7.656m
(2013 = 4.520m).

Supply on the Open (secondary/auction) Market

02

Values

04

Whisky Performance Is Lustre Maintained?

Rare Whisky Apex 1000 Index up 15.82% (2013 = 23.80%).

Rare Whisky Negative 1000 Index down 10.22%
(2013 = down 8.52%).
Silent distilleries lead growth as independent bottles
outpace distilleries official bottles.

Volumes

Apex Indices

06

Negative Indices

09

Individual Brand Performance

Market leader, The Macallan, sees values weaken

by 7.43%.

The Drink/Collect/Invest Relationship

12

The Rare Whisky Collectors Index

15

The Rare Whisky Investors Index

21

Silent Stills Official Bottles vs Independent Bottles

26

Summary

30

CONTENTS
01

2014

The chart below shows volume growth over the last five years.

sales

RECORD

2014 saw a record number of bottles sold at auction in the UK.

The number of full sealed single bottles (excluding bundled
lots) of Single Malt Scotch Whisky hit 33,998 up 68.2% on 2013
(20,211). Compared to the 42.8% increase in 2013 v 2012, 2014
saw a rapid acceleration in pure supply. With the number of
new entrants in the on-line whisky auction market increasing,
this growth in volume was almost inevitable. Whilst some of
the newer on-line auction houses prospered (Whisky Auctioneer
and Just-Whisky, for example), other smaller organisations such
as Islay Whisky Auctions and WhiskyAuction.co.uk failed.
The rise of on-line auctioneers is challenging traditional
auction houses from both a pricing and service perspective and
has created the corresponding commercial pressure.
Mulberry Bank Auctions appeared particularly badly affected,
with declining stocks consigned coupled with a significant
unsold lot rate.

VOLUMES

SUPPLY ON THE SECONDARY MARKET

02

03

The chart below shows the growth in the value of the UK auction
market for full sealed bottles of Single Malt Scotch Whisky.

Correspondingly significant growth in the overall value of bottles

sold at auction saw value growth just outpace volume growth at
69.37% to 68.22%. Strong demand kept pace with the huge
increase in supply.

VALUES

SUPPLY ON THE SECONDARY MARKET

04

Values held up impressively throughout the first three

quarters of 2014 with the Rare Whisky Apex 1000 Index
(RWApex1000 the top performing 1000 bottles) showing
a 14.54% increase to the 30th of September.

November and December proved challenging for all key

indices. The chart below shows the annual performance of
the RWApex100, 250 and 1000 (Annual increase RWApex100
+15.54%, RWApex250 +15.66%, RWApex1000 +15.82%).

These increases slowed to a near standstill through the

last three months of the year, where only 1.28% growth was
realised. In part, this can be attributed to the staggering
increase in volume witnessed at the end of the 2014 year.
December showed in excess of 100% growth in volume
over 2013 (4,153 bottles in Dec 2014 vs 2,007 in Dec 2013).
Another significant contributing factor was a general broad
based decline in Macallan values.
Such is Macallans prominence at auction that any protracted
downturn in prices sends ripples through the broader market.

The RWApex100 index peaked in October before a notable

year end re-trace to September levels, the RWApex250
softened slightly and the RWApex1000 flattened.

APEX INDICES

WHISKY PERFORMANCE

06

07

While the last two months of the year proved 2014 had
something of a sting in the tail for the Apex indices, the negative
indices were even more challenging moving deeper into the red.
The RWNeg1000, 250 and 100 indices (the worst performing
1000, 250 and 100 bottles) declined by 10.2%, 11.7% and 7.8%
respectively.
This effective polarisation of the market looks set to continue
with the least desirable bottles/brands decreasing further in value.
This critical insight confirms buyers must do their research in order
to select the right bottles from the right distilleries to avoid
punishing consequences.

NEGATIVE INDICES

WHISKY VALUES

09

The chart below illustrates the rapid decline in the negative

indices at the end of 2014.

NEGATIVE INDICES

WHISKY VALUES
10

Before looking at how some individual distilleries have

The relationship between the Drinker, Collector and Investor.

performed over the past twelve months, it is worth considering

some of the key drivers in making a bottle collectable or of
investment quality.
RW101 created the DCI (Drink, Collect, Invest) Model to
highlight how a bottle hits the sweet spot, satisfying the needs

Quality

of the drinker, the collector and the investor. The drivers are

DRINKER

by no means exhaustive, but provide context.

Output

Where distilleries release bottles in the DCI sweet spot they

tend to perform exceptionally as an investment, noting there

input

Need
Fulfilment

Costs
ID

will be high demand from all buyer types.

DC
DCI
THE SWEET
SPOT

INVESTOR
- Limited Editions
- Quality
- Single Casks
- Iconic Distillery

CI

COLLECTOR
- Single Distillery
- Birth Year Vintage
- Quality
- Catch-all Collectors
- Bottle From Every
Distilery

Individual brands are ranked according to their collectability

(total volume and total value of bottles traded at auction in
the UK Weighted 50/50) and also their investment credentials
(the highest average, the highest for a single bottle and
the overall % increase/decrease in value weighted 10/10/80)
from the 31st December 2008 to the end of the respective period.

COLLECTING VS INVESTING

INDIVIDUAL BRAND PERFORMANCE

12

COLLECTORS AND INVESTORS INDICES

INDIVIDUAL BRAND PERFORMANCE

13

The Rare Whisky Collectors index is used to track which brands

are becoming most traded (but not necessarily most attractive
to an investor) at auction and conversely which ones are seeing
a decline in the relative number of bottles.
This metric reports on market sentiment for a brand as defined
by the buying audience at auction. Moving up the table is not
necessarily a good thing for some brands if they are being
offloaded through oversupply or underperformance.

RARE WHISKY COLLECTORS INDEX

INDIVIDUAL BRAND PERFORMANCE

15

U3
The table below shows the top 30 brands according to their
total volume and value at auction.

BRORA

MACALLAN

DOWN

U5
RARE WHISKY COLLECTORS INDEX

INDIVIDUAL BRAND PERFORMANCE

16

ARRAN

LINKWOOD

U5
p

ARDBEG
PORT ELLEN

DOWN

BRUICHLADDICH

KILCHOMAN

DOWN

3
BOWMORE

Rather unsurprisingly, Macallan retains top spot (Macallan

accounts for 10% of the volume and over 25% of the total
value traded at auction) followed by non-movers Ardbeg and
Bowmore. Bruichladdich has been much more prevalent with
vast quantities of low value bottles appearing at auction
resulting in a significant re-trace in prices. The average cost
of a bottle of Bruichladdich at auction in the UK is 115.84.
This highlights a significant gap when compared to Ardbegs
average of 217.19, Bowmores average of 384.03 and
Macallans average of 561.34.

Both Arran and GlenDronach have made significant progress

taking an increased share of the wallet at auction. Both distilleries
are becoming more collected with GlenDronach in particular
starting to gain momentum. Islays newest distillery, Kilchoman,
has done well from a volume perspective, but the average
cost per bottle is solidly seated in the bottom quartile at 88.36.
The second overall lowest average bottle value comes from
Glenkinchie at 53.96 and the lowest is Glen Deveron at 45.07.
Both Brora and Port Ellen have moved down the index.
In relative terms, the amount of stock appearing on the secondary
market is dwindling. This trend is anticipated to accelerate
as fewer bottles become available. Two significant brands,
Laphroaig and Glenmorangie, have slipped two and three
places respectively.

RARE WHISKY COLLECTORS INDEX

INDIVIDUAL BRAND PERFORMANCE

19

The Rare Whisky Investors Index tracks changes in the %

increase/decrease in all bottles from a distillery (80% of the
index is weighed to % change with a 10% weighting on the most
expensive bottle and 10% on highest average price). Often far
less well known brands appear in the top 30 showing both
rarity and demand for certain bottles from certain distilleries.
From a pure investment perspective, volume is vanity and
profit is sanity, hence the pure volume/value of bottles traded
is excluded from this index.

RARE WHISKY INVESTORS INDEX

INDIVIDUAL BRAND PERFORMANCE

21

DALMORE

DOWN

U57
RARE WHISKY INVESTORS INDEX

INDIVIDUAL BRAND PERFORMANCE

22

DALLAS DHU

BRACKLA

MACALLAN

BRORA

18

DOWN

HILLSIDE

14

DOWN

U12
p

GLENUGIE

The chart below compares the top 30 distilleries from

the end of 2013 and the end of 2014.

NORTH PORT

DISTILLERIES

3
BALVENIE

U26
p

The most striking change through 2014 is Macallans movement

from top place down to seventh place. Total Macallan values
re-traced 7.43% over the course of 2014. Putting that into
context, as mentioned earlier, Macallan accounts for a quarter
of the total value (1.987m out of 7.656m in 2014) of the
whole UK auction market: That huge portion of the market
fell in value by 7.43%. Many iconic Macallan bottles remained
relatively static or increased slightly with others moving
down in value significantly.
The 25 year old Anniversary Malts increased by 3.77% over
the year and the 18 year old vintages moved up by 3.57%.
These heavily collected bottles appeared to buck the general
trend for Macallan.
Many limited edition and more modern Macallan bottles took
the brunt of the falls The Royal Marriage, Coronation and
Diamond Jubilee bottles had a combined worth of 3,190
at the end of 2013, and that fell by 17.71% to 2,625 by
the end of 2014. Market sentiment for Macallan appears to
have shifted significantly. There are a multitude of reasons
behind this rapid fall from grace.

RARE WHISKY INVESTORS INDEX

INDIVIDUAL BRAND PERFORMANCE

24

Silent distilleries saw strong growth through 2014 with,

interestingly, independently bottled limited releases showing
stronger gains than official distillery released bottles.
The chart below shows the gains of the top 50 bottles of
Scotch from silent distilleries by independent bottlers
compared to the top 50 officially bottled.

The value of the best performing 50 officially bottled

releases from silent distilleries increased by 18.36%,
whereas the top 50 by independent bottlers increased
by 21.98%. The growth in value for bottles from silent
distilleries again confirms the rapid polarisation of the market
where exceptional bottles perform exceptionally and
average/poor bottles fail.
Towards the end of 2014 the value of official bottles
from silent distilleries tailed off. The Port Ellen index
(which tracks the first 8 official releases of Port Ellen
from December 2008 to December 2014) fell by an
i n c r e d i b l e 1 5 % i n t h e fi n a l t h r e e m o n t h s o f 2 0 1 4
(however annual growth was still an impressive 32.28%
for the full year).
Anecdotally, the suspected cause is that the rapid
increase in primary market (retail) prices for the annual
releases is turning buyers away from the brand in search
of perceived better value elsewhere.
The last three years have seen retail prices for the
Port Ellen annual releases increase from 600 in 2012
through 1,500 in 2013 to 2,200 in 2014. This paper
is not the place to discuss or challenge primary market
pricing policy; however, these increases feel unsustainable.

SILENT STILLS

26

27

Diageos 2014 Special Releases had a combined total

retail sales price (RSP) of 24.741m more than three
times the total size of the UK auction market. The combined
RSP of the 2014 Port Ellen release was 6.5m alone.
C a n t h e m a r ke t c o n t i n u e t o a b s o r b t h e s e p r i c e s?
Independent bottlers are perceived as providing better
va l u e i n t h e m a r ke t f o r c e r t a i n s i l e n t d i s t i l l e r i e s .
Many Independent bottlers have stocks of equal and
sometimes superior quality to those of the original
b r a n d o w n e r w h o m a i n l y fi l l e d f o r b l e n d s , r a t h e r
than for single malts.

SILENT STILLS

28

2014 saw a significant change to the overall landscape of

collectable Scotch with The Macallan (25% of the market)
falling by almost 7.5%. Conversely, certain other less
traditional collectors brands succeeded, enjoying dynamic
growth, with GlenDronach (a possible replacement for
Macallan in many cases with its heavy Sherry influence) and
Arran being good examples.
Virtually all silent stills performed well, with some of
the less well known distilleries such as Banff, Littlemill
and Glenugie becoming both increasingly scarce and
increasingly sought after as evidenced by impressive
increases in price.
Volumes show no sign of slowing down to any significant
degree and it would be anticipated that some primary
market whisky retailers will dip their toes into the auction
environment during 2015. As auction houses become
the go-to places to buy rare and/or old whisky many
traditional retailers will lose customers.
RW101 research (carried out on 49 of the Icon 100 Index
bottles) points to an average 44.37% saving for bottles
bought at auction as opposed to retailers (VAT inclusive
retail price auction price includes an assumed 15%
co m m i ss i o n p l u s VAT ) . I n e ffe c t , b u y i n g b o t t l e s a t
auction costs almost half the price of buying from a
rare whisky retailer.
As the age of NAS (No Age Statement) whisky dawns,
grows and matures, older bottles, older vintages and
Scotch which has a perceived better quality should
ensure the secondary market stays buoyant, with increased
gains for the right bottles.

SUMMARY

30

DESIGN BY THREEBRAND

info@rarewhisky101.com
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