Beware Cask Investment Scams

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Why not invest in whisky casks?

If you’ve read the whisky press in the last few months or even just been on social media, you’ll probably be aware of the massive increase in those claiming to offer investment opportunities in the world of whisky. Indeed, it seems like every other day I encounter a new Facebook advert that tells me how much money I could make. Many have already expressed concern on this subject but I’d like to throw in my two cents, if you’ll indulge me. I was encouraged to do this because of a recent experience and I’ll be using that as a sort of case study.

Before I get into all that, lets talk about cask investment for a moment. The basic idea is you buy a cask of whisky, hold onto it for a number of years and then make a profit by selling it on. However, there’s a number of issues that complicate the situation. The laws around who is allowed to own a cask are a little tricky and complex documentation is required to prove ownership. In order to have all that in place, you really need to know what you’re doing or have the utmost trust in those arranging the deal for you. There is also the issue of value. It’s probably fair to say casks are steadily increasing in price but the big question is, will that continue to be the case going forward?

If it isn’t already clear, I myself am not an investor. I know nothing about investing. In fact, making and keeping money has always been something of a problem for me! That said, I know a wee bit about whisky and there are certain things that ring my alarm bells. There’s never been more single malt whisky being produced than there is now and new distilleries are coming online regularly. Many of them are selling casks to bring in much needed income whilst their spirit matures. The concern is, with all this stock being sold to private investors, what happens when they all want to sell up? Has there ever been a situation where excess stock has led to increased value?

There have been important articles already published about this subject from the likes of Cask & Still, Whisky Magazine and Forbes. All of them expressed serious concerns about some of the “investment brokers” that have appeared over the last couple of years. Many of these businesses seem to lack experience yet talk themselves up as experts. Worse, many deliberately misquote data to paint a deceptively optimistic picture.

Scams are not unheard of within the industry, sadly. Back in the 1990s Stephen Jupe persuaded 2,000 people to invest a total of £4 million in his Grandtully Distillery. He promised investors massive returns of 18% each year. The trouble was, Grandtully closed down in 1909 and Jupe had nothing to do with it. He was convicted for fraud and jailed in 2004. Then there was the case of Nant Distillery in Australia. In 2013, customers who invested in casks were shocked to find that the same cask had been sold to multiple people. In some cases, the cask never existed at all. Some of those people are still trying to fight their case now. Elsewhere in the wine industry, the Australian Wine Index (AWI) persuaded thousands to invest. They charged 60 – 80% over market value and lost their investors millions. Worryingly, some of the people involved in the AWI are allegedly now dealing in the sale of whisky casks.

A bizarre experience…

Whilst I’ve been aware of the issues surrounding cask investment I had largely ignored it. I had no interest in investing myself so it didn’t affect me but recently I’ve been asked by several people if it was something they should look into. I would make them aware of the concerns and give them links to the articles above and I would leave it at that. But then I had my own experience with an investment broker. I was contacted by an associate who works in the whisky industry to ask if I would be interested in doing some content writing for a new company they had just agreed to do some ambassador work for. I expressed an interest and went off to check the company out. My heart sank a little when I saw they were involved in the cask investment trade but I tried not to jump to conclusions. There are some respectable businesses out there, after all. I just had to find out if this was one of them.

The first thing that concerned me were some grammar and spelling issues on the website. Now, no-one is perfect. God knows I’ve made plenty of errors myself but you’d expect a certain level of professionalism from a business dealing in high-value investments. To find out more about them, I decided to dig into the people involved. The website listed a whole team of staff. A good sign. Transparency is key.

I took the name of the company founder and CEO and put it into Google to find out about their background. I found details of two businesses linked to the name: the one I was investigating and one other venture, which appeared to be a construction firm. A quick look at the accounts for the second business on the gov.uk website showed what appeared to be the frequent late submission of accounts and several instances of compulsory strike-off action being instigated. That did not scream “successful business” to me, though in fairness, it has been a tough couple of years for the construction industry. Besides that, there was no obvious experience in the whisky industry, to be found.

There was also a Portfolio Director described as “a pioneer in the whisky industry”. A Google search for their name and the word “whisky” turned up nothing. Then there was the Senior Portfolio Manager, described as the “in-house whisky specialist”. A search for their name with the word “whisky” also found nothing. Another search for a second Senior Portfolio Manager, described as having been in the whisky industry for a number of years, brought up a LinkedIn account that mentioned their current employer and nothing else.

Now I’m not suggesting this proves there is skulduggery afoot. Not everyone involved in the whisky industry has been extensively written about. Not everyone leaves a large online footprint that can later be scrutinised by curious bloggers. But in the days of social media where entire careers are recorded on LinkedIn and such like, I would expect to find… something. Shouldn’t the website at least be a bit more specific about where and how their staff gained their apparently-extensive experience? And if they aren’t being entirely transparent about that, what else might they be hiding?

Despite having only existed since June of 2021, the company already had some positive reviews on Google. That can be taken as a good sign but I have a couple of issues there, as well. Firstly, it’s extremely easy to fake Google reviews and people do it all the time. Secondly, even a genuine review can only possibly be covering the early stages of the process. No-one has written to say how happy they are with the money they made from their investment because no-one has got that far yet. What the reviews say, essentially, is that the company are really good at taking money from you.

In any case, there was another issue. One that had me very concerned about the integrity of the business in question. It was so ridiculous I feel like I must have imagined it but I am reminded by the screenshots on my phone that it did, in fact, happen. The brand ambassador that initially contacted me about the content writer vacancy was featured on the website. Incredibly, however, the picture displayed above their biography was not of them. Well, it was… and yet it wasn’t. It was a picture I had seen of them before, but the face had been altered. Now, if I was being extremely generous here, I could suggest that a smile was added to make the picture look more welcoming. It’s harder to explain the addition of spectacles. I found this utterly bizarre and deeply troubling. I can think of no good reason for changing the physical appearance of an employee and if this employer is willing to give their customers a false impression of their frontline staff, I worry that they might be willing to mislead in other areas, too.

Don’t let it be you

For me this case perfectly highlights why so many people are expressing concern about this new trend. It’s like people are claiming vast knowledge of an industry they only entered a few months ago. So much has been made about whisky’s increase in value that people in pursuit of a quick buck are jumping on the bandwagon. It comes as no surprise that some of them appear to come from a Property Development background. The coronavirus pandemic slowed that sector to a crawl and made it an increasingly complicated area in which to succeed. Now those people need a new cow to milk and whisky conveniently fits the bill.

My advice to anyone considering an investment in whisky casks would be don’t. Not unless you really know what you’re doing. However, if you must, please take your time and do your research. Ensure that you’re working with the right people.

Before rushing in, ask yourself this… Why would someone be advertising a great investment opportunity on social media? If such fantastic profits were guaranteed, wouldn’t they be snapping up all the casks themselves and raking it in when selling up time came? The truth is, they’re not doing that because they’re not in it for the long haul. They’re trying to make fast money now and they do that by taking it from you. Can you trust that they’ll still be around in 5 to 10 years when you want to cash in your investment? Are you certain you’ll be able to trace your cask and prove your ownership? I like a gamble, but I wouldn’t touch that bet.

For the record, I obviously won’t be doing any content work for this company. Likewise, the ambassador that contacted me was angered to learn about the website and has withdrawn from the role and demanded that their details be removed.

Be careful out there folks. There’s nothing wrong with wanting to own your own cask. Just be wary of anyone promising that it’ll make you rich. Let whisky be something you enjoy. Don’t let it become a source of anxiety because of a careless investment.

Thanks for reading.

Neill Murphy

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