A leading Scottish accountant has tipped the dram to be one of the smartest investments in the new year.
Ian Williams, chairman of independent Scottish accountancy firm Campbell Dallas, said the investment into whisky distillery development and production in Scotland is on the rise – and for “good reason”.
“For many, many years the market was static,” he said. “There were no new distilleries in production, but now we’ve seen a complete turnaround.
“There’s been a huge surge in demand from the domestic and international market. Whisky has emerged as an attractive investment these past 12 months.”
Last month, Diageo confirmed that it had completed a £14million upgrade of Linkwood and Mannochmore distilleries.
Competitor Edrington Group, which owns the Macallan brand, also announced £100million plans for a production facility and visitor centre on the Macallan Estate near Craigellachie.
The Scottish drink has attracted major investment from China from a consumer perspective and India for production.
Indian beverages group Kyndal recently ploughed millions into creating new distillery capacity within Scotland.
Mr Williams also cited construction of new distilleries in the Isle of Lewis, Shetland and Islay as evidence of growing investment popularity.
“Recently there has been anxiety around capacity and if there will be enough whisky to sustain demand,” he said.
“Instead of hoping there will be enough quality whisky to sustain consumer appetite and product need, developers are starting to take a proactive role by investing in distilleries themselves.
“This strategy allows them to keep a percentage of the production, guaranteeing them access to the commodity. There has been a lot of discussion around China’s interest in the industry, but there’s also been a distinct rise in India. India recently reduced the duty on whisky, which had a direct impact on the rise in demand.”
Mr Williams, who has more than 30 years’ experience, credited whisky’s ability to retain its value despite external economic circumstances for the rise in investment.
He said: “Whisky is essentially currency-proof. Banks have also been more willing to lend against whisky.
“The view is that this product is so international, it doesn’t matter if you’re paying dollars, euros or pounds, it’s still going to be worth a lot of money. It’s become a great hedge against inflation and currency.
“Outside parties also view Scotland as safe from a security point of view, so it makes for a better investment climate.”
A new take on when the whisky could be sold has also increased the appetite for investment.
Mr Williams added: “Traditionally it was seen as a very long-term investment whereby the product had to sit in these casks for more than a decade. But it’s more common to unload short-term spirit after just three years. This enables cash flow at an accelerated rate.
“All early indicators for the new fiscal year tip it to be a strong one in relation to what we’ve experienced in the past five so years. During the economic downturn people had to be smarter with their money and make safer investments.
“Now that the reins have loosened a bit I expect them to continue to look for the safe investments and whisky fits the bill.
“Ultimately, whisky has a very, very bright future. It can make a really sound investment, because it’s a luxury commodity and will remain a rare, unique and sought-after item on an international level.”