Forget Facebook's IPO. The newest investment on Wall Street is whiskey.
The global demand for the potent amber fluid has been steadily rising over the last few years, leading to triple-digit returns for investors and collectors of the top-performing whiskeys, according to Whisky Highland, a firm that provides valuations.
"Whiskey is emerging as a new alternative investment because the supply of rare whiskeys is very limited,” said David Clelland, a Scottish entrepreneur who is planning a fall opening for a New York City luxury club called 1494 to cater to whiskey investors. He told The Huffington Post that he believes the club is the first of its kind in the United States to focus exclusively on whiskey investing and collecting.
With rare bottles going for as much as almost $200,000, the annual fee for his new club seems modest in comparison. The price of a basic membership starts at $15,000, and a premium investor's membership can run as much as $25,000, which includes collection storage and investment advice. The services of on-site Saville Row custom tailor are free.
Why the sudden interest in whiskey investments? Clearly, the popularity of the stuff as hooch has been long established; the first record of a batch of distilled whiskey being made is from 1494. But interest in whiskey as an investment has grown rapidly since 2007 when the United States changed a law to allow auction houses to sell it. In countries like China and Russia, where there has been a boom in cash wealth, rich investors have taste for high-end collectables including art, whiskey and wine. Together, the collective 1 percenters of the world are snatching up rare bottles for private collections and driving up prices.
People investing in high-end whiskeys are buying their way through auction houses, like Bonhams, or high-end spirit stores. But as the price for a premium bottle rises, so do the chances of its being counterfeit. Sites like eBay have listed counterfeit booze, Clelland said, noting that his club will have experts to identify labels and judge a bottle's contents to make sure it's genuine. Concerns over quality can curbed by joining the new club, Clelland claimed.
"To start buying and collecting is an arduous task," he said.
Whiskey is not the only high-end luxury commodity receiving a closer look from the investment community. The diamond market is poised to become a full-fledged commodity exchange. According to The New York Times, the Securities and Exchange Commission is reviewing a proposal to create the first diamond-backed exchange-traded fund in the United States, which would be open to investments by anyone with an online trading account.
While the market for whiskey has not reached the level of that for diamonds, investing in whiskey does have a leg up over investing in wine in that the commodity never goes bad in the bottle. Plus Clelland noted, "It's great for the market when people taste and enjoy it because it helps keep supply down.”
For investors, rare bottles from brands like Macallan and Glenlivet have been popular, along with anything from a distillery that's no longer in production, Clelland said.
But other whiskey experts say that the current mania for the drink is all hype.
"If the whiskey you buy is just for investment, then -- since it's never going to be opened -- the bottle may as well contain cold tea," stated a recent article in Whisky Advocate. "Today whiskey, tomorrow pork belly futures."