Alternative Investments

The Benefits of Whisky Cask Investments

By Samuel Gordon, President of Braeburn Whisky

In today’s turbulent economic market, many top investors have begun diversifying their portfolios and leveraging alternative investments. One example of an out-of-the-box, yet lucrative alternative investment is whisky casks. While new to many, whisky cask investment has a rich history, and provides a unique opportunity for individuals looking for a long-term investment option.

How a whisky cask can increase in value:

Investing in maturing casks of Scotch whisky provides an investor with the unique opportunity to take advantage of whisky's natural appreciation as the whisky matures. Whisky only ages in a cask. Well-aged whisky is typically regarded as higher quality, as the casks can round out the spirit over time, creating a more pleasurable experience.

According to Braeburn Whisky, whisky cask investors serviced by Braeburn Whisky affiliated companies operating in Europe and Asia have, over the last five years, seen average annualized net realized rates of return of 31.46%, and median net realized rates of return of 12.45%, respectively.

Furthermore, mature whisky is less available, due to the fact that whisky bottled at a younger age is typically done so in the form of blends; close to 90% of Scotch whisky is bottled in blends and single malt expressions. This ultimately leads to higher price points for older expressions.

Why distilleries sell their casks:

It is important to understand why some distilleries sell their casks and how the whisky cask investment market benefits these distilleries.

Scotch whisky must spend at least three years in a cask before it can officially be classified as Scotch whisky. Historically, distilleries have sold a percentage of their whisky casks each year primarily to generate working capital. This provides investors with the opportunity to buy these whisky casks and mature them before selling them back to the distillery, an independent bottler or another investor.

Furthermore, another significant benefit to these distilleries is the exposure gained by working with brands, such as Braeburn, who are working with investors across the globe. This can help these distilleries boost their brand reputation in key markets such as the United States, which is Scotch whisky’s greatest single export market.

Building the right whisky cask portfolio:

Investors should consider buying the whisky as young as possible as it typically enables them to buy the whisky at its lowest price.

Younger casks may offer greater percentage returns for those with the patience to wait, as well as a more affordable initial investment, while cask choices at an older age will require a greater initial buy-in, as they are already in their prime, but every year are projected to yield a significant return in pure monetary terms.

Investors should also consider adding emerging whisky brands to their portfolios. By identifying brands whose reputations are growing, investors can look to bring those particular whisky casks back to market when the distillery has built their brand reputation and consumer demand. These opportunities have the potential to provide a lucrative long-term holding for patient investors. However, not all distilleries will reach their potential, so a company with substantial experience in the Scotch whisky market can assist investors in identifying distilleries which are likely to have outperforming brands.

Partnerships are also a key factor for investors to consider. Braeburn Whisky has formed exclusive partnerships with highly curated Scottish distilleries which allows it to buy and sell their whisky casks to investors across the world. This provides investors with options to purchase whisky cask investments from a Scotch whisky firm with a historical track record of selling and managing whisky cask investments from select distilleries.

For the right investor, whisky cask investing can be a profitable endeavor. This is typically achieved through building a diversified portfolio of whisky casks over a period of time that consists of different distilleries, ages and cask types, such as ex-Bourbon or Sherry. First-time investors should work with a qualified team who can provide guidance on building the best portfolio of whisky casks possible.

Braeburn Whisky offers whisky cask investments in the United States only to verified accredited investors through an offering under Rule 506 (c) of Regulation D. See the appendix for certain important regulatory information.

APPENDIX REGULATORY NOTICE AND RISK FACTORS

Under U.S. law, Braeburn’s whisky cask investment offerings are considered “securities” because of the nature of Braeburn’s support for the investor, the way the investments are marketed and other factors.

Accordingly, Braeburn offers the whisky cask investments under the exemption provided by Rule 506(c) of Regulation D under the US Securities Act of 1933, as amended. Under this offering exemption, each U.S. purchaser must meet “accredited investor” requirements as defined by the SEC, and Braeburn is required to independently verify that status through corroborative documentation or other means.

To ensure certain other securities laws requirements are met, Braeburn has engaged INTE Securities LLC, a registered broker-dealer in the U.S., to act as Braeburn’s agent for the sale of Braeburn’s whisky cask investments. Braeburn has also arranged that its warehouses will follow established custody procedures to ensure the investor that the cask will be maintained as the property of the investor, and that only the investor may authorize actions with respect to the cask such as transfer of ownership or physical transfer of the cask.

This complete framework further ensures that regulatory requirements are met to support a secure investment opportunity for U.S. investors. However, this does not ensure that the purchase of Braeburn’s whisky casks is free of risk. There are several risk factors, including that the purchase of Braeburn’s whisky casks is a speculative investment, market fluctuation, that past performance of price appreciation may not continue, and that there is no established resale market. These risks are outlined in investor subscription documents that are the only means for investors to acquire from Braeburn whisky cask investments in the U.S.

INTE Securities LLC is a member of FINRA (www.finra.org) / SIPC (www.sipc.org) . To view INTE Securities LLC, please go to www.finra.org/brokercheck.

To view Braeburn Whisky, go to https://us.braeburnwhisky.com/

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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