The 2019 Half Year Collectors and Investors Single Malt Scotch Review
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THE 2019 HALF YEAR COLLECTORS AND INVESTORS SINGLE MALT SCOTCH REVIEW. RARE WHISKY 101 RECORD BREAKING VOLUMES FOR RARE SCOTCH WHISKY SALES. CONTENTS 3 Half Year 2109 Executive Summary 6 Supply and Demand HY 2019 8 Investment Comparison HY 2019 10 Market Share by Volume – Top 10 Distilleries League Table 13 Market Share by Value – Top 10 Distilleries League Table 16 Rare Whisky Collectors Ranking – League Table 18 Rare Whisky Investors Ranking – League Table 20 Macallan Secondary Market Woes. Echoes of a 2009 Bruichladdich? 25 What Goes Up Must Still Go Up? 27 The Next Big Thing? 31 Opinion – Flippers. Intelligent Marine Mammal, or an Actual Thing? 34 Fake Bottle Update 36 Crystal Ball Gazing – What Next? RARE WHISKY 101 HALF YEAR 2019 Executive SUMMARY SPRINGBANK BECAME THE NUMBER ONE DISTILLERY IN THE INVESTOR RANKINGS, CLOSELY FOLLOWED BY SILENT DISTILLERIES BRORA AND GLENUGIE. MACALLAN’S LATE 2018 DIP CONTINUED AS THEY MOVED FROM 4TH AT THE END OF 2018 TO 7TH. RARE WHISKY 101 HALF YEAR REVIEW 2019 | 3 VOLUME & VALUE ANALYSIS VOLUME VALUE £ 80,000 £30,000,000 £25,000,000 60,000 £20,000,000 40,000 £15,000,000 £10,000,000 20,000 £5,000,000 £4,604,000 £5,771,000 £11,176,000 £16,335,635 £25,873,963 20,638 26,527 39,061 49,719 71,544 0 £0 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 The number of bottles of Single Malt Scotch The £ value of collectable bottles of Single Malt whisky sold at auction in the UK in H1 2019 Scotch whisky sold at auction in the UK in 2018 increased by 43.90% to 71,544 (49,719 were rose by 58.39% to a record high of £25,873,963 sold in H1 2018). (H1 2018 value was £16,335,635). 4 | HALF YEAR REVIEW 2019 RARE WHISKY 101 AVERAGE BOTTLE VALUE AVERAGE £ PER BOTTLE APEX 1000 INDEX £400.00 14.00% 12.00% £300.00 10.00% 8.00% £200.00 6.00% 4.00% £100.00 2.00% 7.96% 11.76% 11.50% 9.91% -0.26% 0.00% £223.08 £217.55 £286.12 £328.56 £361.65 £0 -2.00% H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 While the average per-bottle price is up in H1 The Apex 1000 index crystallised its first ever 2019 (£361.65) compared to H1 2018 (£328.56), half year loss, dropping by 0.26%. it dropped 4.30% from December 2018’s record high of £377.91. RARE WHISKY 101 HALF YEAR REVIEW 2019 | 5 Supply AND DEMAND THE FIRST HALF OF 2019 SAW VAST SUPPLY ON THE AUCTION MARKET. IN OUR OPINION, OVERSUPPLY. PUTTING THAT INTO CONTEXT, BEFORE 2019, WE HAVE ONLY EVER SEEN MORE THAN 10,000 BOTTLES SOLD IN A MONTH DURING THREE MONTHS (OCTOBER, NOVEMBER AND DECEMBER 2018). BY CONTRAST, THROUGH THE FIRST SIX MONTHS OF 2019, THERE HAS ONLY BEEN ONE MONTH WHERE LESS THAN 10,000 BOTTLES HAVE BEEN SOLD (FEBRUARY). 6 | HALF YEAR REVIEW 2019 RARE WHISKY 101 MONTHLY VOLUME & VALUE ANALYSIS VOLUME&VALUE MONTHLY 14,000 16,000 18,000 12,000 10,000 4,000 6,000 8,000 2,000 0 per month. settled around back 11,000 to bottles 15,000 bottles sold and has subsequently Supply peaked in April 2019 more than with MONTHLY VOLUME 2018/2019 VOLUME MONTHLY JAN '18 7,111 FEB '18 6,885 MAR '18 8,870 APR '18 7,976 MAY '18 9,961 JUN '18 8,916 JUL '18 7,746 AUG '18 9,104 SEP '18 8,349 OCT '18 10,867 NOV '18 11,006 DEC '18 11,099 JAN '19 11,495 FEB '19 9,158 MAR '19 13,347 APR '19 15,830 MAY '19 10,554 JUN '19 11,160 £4,000,000 £6,000,000 £5,000,000 £3,000,000 £2,000,000 £7,000,000 £1,000,000 £0 MONTHLY VALUE 2018/2019 VALUE MONTHLY higher than the first of half 2018’s £16,335,635. than the whole (£25,060,058) 2017 of and 58.39% is in the UK more is that on Single whisky, Malt Scotch In value terms, £25,873,963 with spent auction at JAN '18 £2,349,077 FEB '18 £2,327,461 MAR '18 £2,562,155 APR '18 £2,627,833 MAY '18 £3,343,511 JUN '18 £3,125,598 JUL '18 £2,441,534 AUG '18 £3,342,756 SEP '18 £3,127,263 OCT '18 £5,418,466 NOV '18 £6,096,163 DEC '18 £4,010,733 JAN '19 £4,387,367 FEB '19 £3,148,340 MAR '19 £5,460,018 HALF YEAR REVIEW 2019 |7 APR '19 £4,845,076 MAY '19 £3,861,500 JUN '19 £4,171,662 RARE WHISKY 101 Investment COMPARISON THIS COMPARISON STARTED AT THE END OF 2015 OBSERVING PERFORMANCE FIGURES FROM THE 31ST OF DECEMBER 2014. WE CONTINUE TO PROVIDE THESE AS A RUNNING COMMENTARY ON SCOTCH WHISKY’S PERFORMANCE AS AN ALTERNATIVE ASSET-CLASS IN ITS OWN RIGHT. 8 | HALF YEAR REVIEW 2019 RARE WHISKY 101 THE HALF YEAR FIGURES ARE CHARTED ALONGSIDE A RUNNING TOTAL. 2019 YEAR TO DATE PERFORMANCE FROM DECEMBER 2014 25.00% 180.00% 160.00% 20.00% 140.00% 15.00% 120.00% 100.00% 10.00% 80.00% 5.00% 60.00% 40.00% 21.07% 13.09% 11.09% 10.50% -0.26% -2.04% 0.00% 20.00% 162.22% 85.13% 39.58% 19.16% 13.09% 11.09% -5.00% 0.00% FTSE 100 FTSE 100 GOLD $/OZ APEX 1000 APEX 1000 GOLD $/OZ DIAGEO (DGE) DIAGEO (DGE) LIV-EX FW 1000 LIV-EX FW 1000 BRENT CRUDE $PB BRENT CRUDE $PB In our 2018 year-end report we stated “With 2019 threatening even While Scotch whisky has underperformed against other markets and greater economic uncertainty with the only known being the vast traditional investments throughout the first half of 2019, the longer- unknowns for the next twelve months, what these charts look like term performance is still remarkable. at the end of 2019 is anyone’s guess.” January saw a dip in the Apex1000 index by 2.01%, and from January For the first time, we have seen a dip in the market for rare Scotch, to April, the index flatlined, yielding a marginal increase of just 0.49%. with most other asset classes/investments significantly outperforming From April to June the index returned to slightly more significant Scotch whisky. We will come to more detail as to why a little later. growth of 1.29%, moving from 825.92 points to 836.55. RARE WHISKY 101 HALF YEAR REVIEW 2019 | 9 MARKET SHARE Volume NUMBER OF BOTTLES SOLD. EACH DISTILLERY IS MEASURED ACCORDING TO ITS PERCENTAGE OF MARKET SHARE OF THE NUMBER OF BOTTLES SOLD AT AUCTION IN THE UK OVER THE COURSE OF H1 2019. THIS IS THEN RANKED AS A LEAGUE TABLE AND COMPARED TO THE FULL YEAR 2018. 10 | HALF YEAR REVIEW 2019 RARE WHISKY 101 TOP 10 VOLUME MARKET SHARE RANK TOP 10 – FY 2018 % TOP 10 – HY 2019 % MOVEMENT 1 MACALLAN 13.85% MACALLAN 16.62% = 2 HIGHLAND PARK 5.61% HIGHLAND PARK 4.72% = 3 ARDBEG 5.02% ARDBEG 4.65% = 4 BRUICHLADDICH 4.10% BRUICHLADDICH 4.01% = 5 BOWMORE 3.72% BOWMORE 3.79% = 6 SPRINGBANK 3.63% GLENFIDDICH 3.28% UP 2 7 GLENDRONACH 3.57% LAPHROAIG 2.85% UP 2 8 GLENFIDDICH 3.26% GLENDRONACH 2.80% DOWN 1 9 LAPHROAIG 3.09% SPRINGBANK 2.49% DOWN 3 10 GLENMORANGIE 2.92% LAGAVULIN 2.44% UP 3 Macallan have extended their grip on the market and now almost 17 in every 100 bottles bought at auction in the UK are from this famed distillery. RARE WHISKY 101 HALF YEAR REVIEW 2019 | 11 THE TOP 10 DISTILLERIES WHICH INCREASED THEIR VOLUME MARKET SHARE IN H1 2019 ARE BELOW. ROYAL LOCHNAGAR 295.74% OBAN 200.93% CLYNELISH 115.87% GLENDULLAN 48.36% NORTH PORT 44.52% (BRECHIN) MILLBURN 41.49% GLEN GARIOCH 39.67% HAZELWOOD 36.14% COLEBURN 31.34% FETTERCAIRN 31.32% 0.00% 50.00% 100.00% 150.00% 200.00% 250.00% 300.00% 350.00% As a percentage increase in market share through H1 2019, it is a Diageo clean sweep of the top three places. The reach of Game of Thrones is now so vast, it even powers the UK whisky auction market! Royal Lochnagar has also been driven by the Royal Cask release. It is fascinating to see three silent distilleries increasing their market share by such large amounts. Fettercairn’s re-pack and re-release appears to have also influenced the secondary market. 12 | HALF YEAR REVIEW 2019 RARE WHISKY 101 MARKET SHARE Value USED IN CONJUNCTION WITH VOLUME, THE £ VALUE ‘SHARE-OF-WALLET’ FIGURES CAN BE INSIGHTFUL FOR THE COLLECTOR/INVESTOR. RARE WHISKY 101 HALF YEAR REVIEW 2019 | 13 TOP 10 VALUE MARKET SHARE If volume for a particular distillery remains static or increases and the £ value declines, this could signal a RANK TOP 10 – FY 2018 % TOP 10 – HY 2019 % MOVEMENT softening in the market for bottles from that distillery. 1 MACALLAN 37.79% MACALLAN 37.11% = Conversely, if volumes decrease but values increase or remain the same, this could indicate a hardening of prices 2 BOWMORE 7.58% BOWMORE 8.79% = and increasing demand.