Whisky Investment

[Ijustnewit]

Hi , I'm considering buying a barrel of whiskey from a local Tasmanian distiller (NANT) as an investment. Do any other forum members have any experience in this sort of investment ?
Cheers IJN

 

[Tyler Durden]

Hi , I'm considering buying a barrel of whiskey from a local Tasmanian distiller (NANT) as an investment. Do any other forum members have any experience in this sort of investment ?
Cheers IJN

I don't know man, it sounds kinda..."risky"...mwahahahahaha.

Sorry I couldn't let that one go

 

[prawn_86]

Cant find the article now, but if you bought the top 10 scotches every year for the last 10 years and held them as a collection, your portfolio would be up well over 50% pa for the last 10 years

 

[sinner]

Cant find the article now, but if you bought the top 10 scotches every year for the last 10 years and held them as a collection, your portfolio would be up well over 50% pa for the last 10 years

I'd take the figures with a grain of salt since they come from an industry body

http://www.whiskyhighland.co.uk/discover/whisky_highland_index/getting_it_right.html

http://www.worldfinancialreview.com/?p=1165

Recent analysis carried out by Whisky Highland, an investment house specialising in so called “liquid gold”, backs this up. According to their statistics, if you had invested £100,000 in the top 10 performing bottles back in 2008 they would now be worth more than £400,000 – an incredible gain of more than 300%.

 

[jimmyizgod]

The best thing about Whisky as an investment vehicle is it's a highly liquid asset.

 

[prawn_86]

I'd take the figures with a grain of salt since they come from an industry body

Fair enough.

The issue for me would be needing to buy 2 bottles so i could drink one and leave the other as an investment. Same as wine, whenever i want to cellar something i have to buy a few bottles

 

[boofis]

Do whisky barrels have environment requirements for storage conditions?

 

[Ijustnewit]

The investment I'm looking at is buying a 100 litre barrel . It is kept at the distillery and is matured, they are a government registered bond store , taking around 4 to 5 years. The returns are guaranteed at 9.5 % per annum with a " guaranteed buy back on maturation". Insurance is included in the price , but you can opt for additional insurance to comply if you're using it as part of a SMSF. Any thoughts ?
You also get the bonus of a few 500ml samples of the product along the way.

 

[chops_a_must]

The best thing about Whisky as an investment vehicle is it's a highly liquid asset.

Yyyyyyyyyyeeeeeeeeessssssss.

 

[prawn_86]

The investment I'm looking at is buying a 100 litre barrel . It is kept at the distillery and is matured, they are a government registered bond store , taking around 4 to 5 years. The returns are guaranteed at 9.5 % per annum with a " guaranteed buy back on maturation". Insurance is included in the price , but you can opt for additional insurance to comply if you're using it as part of a SMSF. Any thoughts ?
You also get the bonus of a few 500ml samples of the product along the way.

Got a link? Im interested just for fun

 

[boofis]

Got a link? Im interested just for fun

http://nantdistillery.com.au/barrel-sales/
I assume that's it, wouldn't mind it if they payed you to take the barrel for storage as it'd be a nice way to use up dead space but they retain control :bad:

 

[prawn_86]

haha had a look, it is quite interesting. Title stays with the buyer incase of insolvency which was my first concern

 

[Garpal Gumnut]

Hi , I'm considering buying a barrel of whiskey from a local Tasmanian distiller (NANT) as an investment. Do any other forum members have any experience in this sort of investment ?
Cheers IJN

I'm a bit confused, are you interested in buying "Whisky" of the Scottish type, or "Whiskey" of the Irish type.

There is a huge difference, the former being far inferior and thus less likely to accumulate value than the latter.

gg

 

[DJG]

haha had a look, it is quite interesting. Title stays with the buyer incase of insolvency which was my first concern

I also read that.
The terms/conditions seem quite reasonable and straight forward.

Basically a high yielding bond, without the coupon payments (or they're
accumulated and only paid at maturity + face value), also with a 'guarantee' repayment.

 

[Serpentis]

I do like a good whisky, and given the return and terms that sounds like it could be fun.

But some things seem a bit odd. If you include the GST you have to pay then this 4 year investment becomes 6.9%p.a. Can you do anything with that GST paid, deduct it from the tax paid on the profits at the end or anything?

And they say on the site there that you save about $3k if you buy the trilogy set. Does that mean that buying an individual barrel is (12,500 + 3000) / 3 = $5166, and the return from that is the same as the 3 barrels 17970 / 3 = $5990 per barrel. Which is a 3.77%p.a. yield. And that's before GST, after GST it's almost nothing!

I do like whisky, but I like getting a good return on my money even more. And since I don't live near any of their bars, that offer of a membership and events doesn't appeal either. Might buy myself a bottle of their whisky though!

 

[galumay]

What worries me is how 'loose' they are in documenting the real rate of return, the 9.5% is irrelevant and misleading because of the GST component, not sure how they are legally able to promote it in this way.

I wonder if a taxpayer who is registered for GST would be able to claim an input for the GST when purchasing and then 4 years later pay 10% GST of the total sale price. If this is how it works then the real return is less than 9.5% - but not much.

Ok, my rough maths for this is, effective purchase price is $12500 after claiming GST input credit, effective sale price after GST is $16336 which means the effective compound rate is about 9.2%

Still looks an interesting deal!

What risk am i buying for my 9.2%??

 

[harj]

I do like a good whisky, and given the return and terms that sounds like it could be fun.

But some things seem a bit odd. If you include the GST you have to pay then this 4 year investment becomes 6.9%p.a. Can you do anything with that GST paid, deduct it from the tax paid on the profits at the end or anything?

And they say on the site there that you save about $3k if you buy the trilogy set. Does that mean that buying an individual barrel is (12,500 + 3000) / 3 = $5166, and the return from that is the same as the 3 barrels 17970 / 3 = $5990 per barrel. Which is a 3.77%p.a. yield. And that's before GST, after GST it's almost nothing!

I do like whisky, but I like getting a good return on my money even more. And since I don't live near any of their bars, that offer of a membership and events doesn't appeal either. Might buy myself a bottle of their whisky though!

Dont they state on their "offer" document that the guaranteed return is based on the ex-gst price of $12500 and the end return is $17970, which doesnt equate to 9.5% as per my calculations??

I work in the SMSF sector and a few funds are investing in this.

Seems interesting, might have a go at it.

 

[galumay]

I did a bit more research on this company and found they are also seeking to raise money via a $5m convertible note issue, minimum $50K, 3 year term, 10% paid quarterly.

I thought a bit more about the risks with either investing in the barrels or the notes and I dont think the returns are enough to offset the risks.

The barrels in particular would leave you in a very bad situation if Nant folds, sure you own them and the whiskey within, but they are in bonded store in Tasmania, you will need to pay excise and then find a buyer, organise freight and gain access to the store to secure possession - the potential to earn 9.2% compounding seems to me to be far too little for the risk.

The other thought that I had was I would only risk a small amount of capital in such a high risk and speculative purchase, so even if everything went smoothly the overall gain in dollar terms would be small - i would then regret not having risked more capital! Conversely, if they folded I would likely lose most of my initial capital - and regret having gambled on such a risky proposition.

So at the end of my consideration it appears to be a "lose, lose" situation and I decided to give it a miss.

 

[galumay]

Dont they state on their "offer" document that the guaranteed return is based on the ex-gst price of $12500 and the end return is $17970, which doesnt equate to 9.5% as per my calculations??

I work in the SMSF sector and a few funds are investing in this.

Seems interesting, might have a go at it.

See my post above yours for my calculations of the real returns.

IMO if it is true that SMSF's are speculating in this sort of scheme then perhaps more regulation is needed!! Next people will be buying lotto tickets with their SMSF's.

 

[Ijustnewit]

Hi , Thanks everyone for your great comments and ideas on this post. Some things have come to light for me from people that are way more experienced investors than me . So thank you all I'm still considering a small investment and nothing I can't afford to lose. But I have to get a better idea or prospectus of what the insurance actually covers.
Cheers IJN