In the realm of alternative investments, whisky casks have emerged as an enticing avenue, attracting both whisky connoisseurs and investors looking to own a cask of Scotland’s ‘liquid gold’. However, within this burgeoning market, a pressing question looms: which companies can I really trust?
You might have seen a recent article in the Daily Mirror that shines a spotlight on the whisky investment industry. This timely piece was published in the wake of new regulations from the Advertising Standards Agency (ASA), specifically around the advertising of whisky investment services, with the aim to tighten up misleading claims for would-be investors. The article highlights a handful of whisky investment firms that are deemed to have advertised their services – and the expected results of cask whisky investment – in a way that’s considered misleading.
While there are undoubtedly a number of firms that are less than pleased with the new ASA regulations and their impact on advertising, at Hackstons we welcome more stringent rules and regulations in a market that is, at times, unfortunately plagued by unscrupulous individuals and organisations. With this in mind, we want to share some of the red flags to watch out for and factors to consider when exploring cask whisky investment, to avoid falling victim to scams.
Guaranteed returns: a dubious promise
Unfortunately, as with any industry, there are individuals and organisations who will make promises and guarantees aplenty. A quick Google search for ‘whisky investment’ and you’re likely to be met with a wide range of ‘expected’ figures, some of which are even positioned as guarantees.
The first thing to mention here is that there are no guaranteed returns in this market, or many investment markets at all for that matter. Let’s use stocks as an example. We can make predictions, and in some cases very accurate ones, on what a particular stock or market is going to do, but we never know. A market can dive or spike overnight depending on a huge range of factors. Whisky is not dissimilar in that the value of its casks can fluctuate due to various factors such as market demand, age, distillery reputation and cask quality. Of course, there are plenty of instances where casks of whisky have achieved staggering returns. Equally, there are many that don’t hit anywhere near these heights.
While the supply-demand nature of the whisky industry and the fact the drink continues to mature in the cask mean that typically, the older a whisky gets, the more valuable it becomes, the actual figure associated with these returns is not guaranteed. One figure that is consistently touted as a means to highlight cask whisky’s potential is the ‘568 per cent growth’ of rare whisky in the past decade, from the reputable Knight Frank Index. However, what many organisations won’t tell you is that this data relates to bottled whisky, not cask whisky returns – two very different things. As such, to use this data in relation to cask investments is misleading.
The bottom line here is to do your due diligence, both on the market and the companies that you’re considering working with. And remember, there are no guaranteed returns, so it is good practice to be wary of companies that make any sorts of promises to that tune.
Pushing the sale: what’s the rush?
Anyone who’s occupied a sales role will understand the excitement that comes with clinching the sale. It’s a natural part of the selling process. That being said, there’s a fine line between excitement and pushiness: the latter may well be an indicator of untrustworthy companies or individuals.
While legitimate cask whisky investment opportunities do exist, unscrupulous individuals may employ high-pressure tactics to persuade potential investors into making hasty decisions. It’s crucial to exercise caution and remain vigilant when confronted with such tactics, as they might indicate a potential scam.
Scammers may employ a variety of techniques to rush the sale, such as offering time-limited offers, promising unrealistically high returns or creating a false sense of urgency. Genuine whisky investments should stand on their own merits, and reputable professionals – like our team of incredibly experienced account managers – will provide you with all the necessary information and time to make an informed decision.
When considering cask whisky investment, remember that haste can lead to costly mistakes, and it is always wise to take your time, consult experts and carefully evaluate all aspects of the opportunity before committing your hard-earned money.
Lack of social proof: validating authenticity
Social proof through genuine reviews, testimonials, or referrals serves as a beacon of authenticity for businesses, including those in whisky investments. Legitimate whisky investment companies actively seek and proudly display client feedback to reinforce credibility and build trust. At Hackstons, we couldn’t be prouder of the hundreds of five-star reviews our clients have shared with us. Conversely, companies lacking genuine reviews or testimonials should raise a question mark regarding a firm’s credibility for any potential investors.
Whether Google reviews, Trustpilot reviews, written or video testimonials, this social proof is vitally important to how a business is perceived by potential clients, and rightly so. In fact, 76 per cent of consumers ‘regularly’ read online reviews when browsing for local businesses – a practice we encourage for those looking to invest in an asset, purchase a product or work with a new company.
You should consider testimonials and reviews from existing clients as one of many indicators of a company’s authenticity and reliability. A wealth of positive feedback from satisfied clients validates a company’s track record and commitment to providing quality service. The absence or scarcity of such social proof may well suggest a lack of satisfied clients or – worse – fabricated claims aimed at deceiving potential investors.
Conclusion
While this is far from a complete list, these are some of the key red flags to look out for when beginning your whisky investment journey. Much like Hackstons, there are several legitimate companies out there who will ensure they’re running all the necessary checks to keep both you and themselves safe during this process. But there are just as many opportunistic firms with nefarious intentions looking to make a quick buck, so due diligence is key. New endeavours into this market should be approached with caution to mitigate your risk of falling victim to scams.
If you’re interested in cask whisky investment you can find out more here, or give us a call on 0203 307 0410
