If you have spent more than five minutes on Facebook recently, you will have been bombarded by whisky cask investment adverts. Whisky beats the banks. Whisky is tax-free. Whisky always goes up in value. These claims are everywhere, and they are, frankly, laughable. The problem is that people believe them and people follow them.
So I thought it was time to run through the most common myths these companies peddle and explain why the reality is far less glamorous than the glossy adverts suggest.
Let’s start with the “cash loses value” myth. Yes, cash does lose value. My research suggests that cash has lost roughly 19% of its purchasing power since 2022. But here is what these adverts conveniently omit: the average whisky cask investment over that same period has likely lost closer to 30%. And unlike cash sitting on your kitchen counter with zero associated fees, casks come with storage costs, insurance, regauging, sampling, and whatever other charges get tacked on along the way.
Cash is also liquid. If you need it, you spend it. If you have locked your money into a whisky cask bought in 2022 and need to sell now, good luck. It is a buyer’s market, and anyone in the industry will tell you the same thing.
Then there is the “tax-free growth” myth, and this one has a seed of truth, which is precisely what makes it so effective. Whisky casks are broadly exempt from capital gains tax because they are classified as a wasting asset. The liquid inside is literally evaporating and dropping in ABV. Once it falls below 40%, it can no longer legally be called Scotch whisky, and your investment becomes worthless.
HMRC grants that exemption because the risks are monumental. A poor investment with a tax benefit is still a poor investment. You would almost certainly make more by putting your money into a stocks and shares account.
My favourite adverts are the ones boasting 35% or 41% returns. How do they generate those figures? They simply buy the casks back from their own customers and publish their own numbers. That is no different from making the figures up. They are buying casks back to resell to the next customer, and that, in essence, is a pyramid scheme.
The comparison to buy-to-let property is equally absurd. Property offers lending ability, rental income, formal valuations, and an established resale market. Casks offer no income, ongoing maintenance costs, and in many cases, these companies do not even transfer proper title to the buyer. You get a certificate, a piece of paper. If you want proof of the dangers, look at the collapse of Cask 88 and Braeburn Whisky.
And finally, do not be fooled by those “Rated Excellent on Trustpilot” badges. Those reviews are generated at the point of sale, when the customer is excited and the salesperson has done their job. The real proof comes at the point of exit, when an investor actually tries to realise a profit. That is when those stars should be earned, and conspicuously, those reviews are far harder to find.
Whisky cask investment can work over very long timeframes, if done the right way. But the Facebook adverts selling it as a sure thing are, at best, deeply misleading.
Have you come across any particularly outrageous cask investment claims? I would love to hear about them.
Check out my YouTube video to see the ads yourself, and for advice on cask investment, you can visit marklittler.com or protectyourcask.com.
Read the full article at The Whisky Cask Investment Myths Facebook Ads Won’t Stop Selling You
