Over the last two decades whisky has emerged as, what financial planners call, an alternative asset class. That means it is seen as a legitimate investment vehicle on par with more conventional assets like stocks, bonds and real estate. More importantly, what makes it particularly attractive, is that it is an asset whose financial performance is uncorrelated with traditional financial markets
There is good reason for that designation. According to the Knight Frank Luxury Investment Index, the rare whisky category was up 586% over the last decade. Top ranked Japanese whiskies have had a comparable increase in around half the time. Those increases easily outpaced the gains of traditional financial investments. By comparison, during this period, the Standard & Poor 500 stock index was up around 225%.
Not all whiskies, however, saw such heady appreciation. Although most whisky prices are higher now than they were a decade ago, those increases are far less than the appreciation in the prices of rare and collectible whiskies.
Ken Grier experienced firsthand the emergence of investment grade luxury whiskies. As Brand Director and later as the Creative Director of The Macallan Distillers, Grier played a critical role in the transformation of that iconic Scotch whisky into a luxury brand.
He also served on the Macallan Distillers Ltd Board of Directors for more than 13 years, the last 5+ years as the company’s chairman. He’s since retired from Macallan and its parent company, Edrington Group.
Through his consultancy De-Still Creative, Grier now consults with beverage companies on how to transform their spirits into luxury brands. One of his current briefs is Dictador Rum, one of Colombia’s oldest rum brands.
Recently, I sat down with Ken to talk about which qualities give a spirit the potential to be investment grade and his belief that rare, ultra-aged rums in general and Dictador in particular are emerging as another investment grade asset class.
JM: Scotch whisky has been the best performing alternative asset class over the last decade. The Knight Frank Luxury Investment Index has Rare Whisky up 586% between 2010 and 2020. Other indexes that track baskets of rare whiskies have had comparable increases.
Expressions of The Macallan, a brand that you have an intimate knowledge of, are well represented in these indexes. However, these indexes are based on just a handful of the 3,000 odd expressions of Scotch whisky. How credible are these reported gains given that most Scotch whiskies did not experience anything like this level of appreciation? Is that experience transferable to other spirit categories?
KG: You are right. As with all investments it’s about choosing the right asset to invest in. Scotch whisky has been driven by and continues to be driven by true blue-chip brands like: The Macallan, Bowmore; Dalmore; Balvenie and Springbank.
As an alternative asset class Scotch whisky has had an incredible run and in my opinion consumers are now also looking for great investment value in brands that play in other dark spirit sectors as well as Scotch. Rum offers consumers the chance to get in at the ground floor.
The common factors that define investment grade spirits is: genuine provenance; superb and consistent liquid; scarcity and appealing consumer stories and appropriate aesthetics. The real danger in Scotch is over hyping of little-known brands that do not have these characteristics.
JM: Thirty years ago, when the industry began its current up-cycle, whiskies selling for tens of thousands of dollars were unheard of. Since then, there have been dozens of ultra-aged whiskies that have been sold for these kinds of prices, with a handful of expressions selling for hundreds of thousands of dollars. Are some whiskies simply becoming too expensive to drink? Are collectible spirits as an investment class in competition with spirits as a beverage? Is this a healthy development for the drinks industry?
KG: I think it is a logical result of supply and demand, given scarcity in the category. Remember that even a twelve-year-old Scotch or rum is over 100 years in the making, given that the oak has to grow for 100 years before harvesting; it then has to season for 4-6 years before it becomes a cask and then has to hold spirit for 12 years before this is ready. Dark spirits are an incredible investment in time and money for producers.
There are some superb dark spirits around to fit everyone’s pockets although it has been my pleasure to drink liquid history in Scotch and rum by savoring very old and complex liquids.
Although Scotch will continue to be a key player in the investment grade spirits market, in terms of value and creativity I think that this is another area where rums like Dictador are very appealing. Some of The Macallan Lalique editions that we launched are selling at up to £100k/$140k at auction. The Dictador Generations en Lalique can be bought to be enjoyed or collected at under £20k/$28k
JM: You have suggested that ultra-aged rums, and specifically Dictador Rum, will be the next beverage category to become an investment asset class. Why do you believe rums like Dictador have superior investment potential?
KG: Dictador has all of the features necessary to be an investment grade beverages: genuine provenance; superb and consistent liquid; scarcity and appealing consumer stories and appropriate aesthetics.
It also has fabulous credentials: a history going back over 100 years and 3rd generation active family involvement with Hernan Parra, our master blender; the greatest cache of aged rum in the world with rich complex and very old liquids, stored in unbelievably good barrels; category leading innovations in beautiful packaging very often in collaboration with stunning brands like Lalique (Dictador Generations en Lalique); Niepoort and Royal Tokai (Dictador 2 Masters recent collaborations).
The reason that Dictador in the rum category stands above other brands is a combination of: really old and beautifully matured rums with unsurpassed character and complexity; the innovative zeal that brings us really creative creations that are very limited, stunningly curated and increasingly a track record of excellence in drinking and of maintaining and even increasing their value. Once again, it’s not about just investing in any aged rum, as in Scotch, it’s about choosing the brands to purchase very carefully.
In terms of drinkability there are some outstanding and very affordable Dictador XO Perpetual expressions, they are real gems. Indeed, with collectibles like the recent Dictador 2 Masters Niepoort expression coming in at under $1,500 a bottle, these rums are bound to be an investment grade classic in the future.
As a keen collector and investor, the value Dictador offers is very appealing as the category is only just taking off as an investment grade play.
JM: Investment grade beverages are typically ultra-aged brown spirits. Do white spirits have the potential to become an investment category? Which white spirits do you think have the most potential to appreciate in value?
KG: It’s a tougher play for white spirits as: color; character via cask maturation and age of liquid are often strongly associated with value. Very often white spirits are made for more immediate drinking at a younger age or mixed.
Perhaps the only exceptions to this are: baijiu, and brands like Moutai in particular, where brand repute; cultural significance and a prestige market that is already established are strong motive forces or mezcal where Amaras is a great example of how to do this right via intriguing wild agaves; genuine scarcity and artisanal craft.
JM: Whisky/whiskey, rum and Brandy are the largest categories of brown spirits. Ultra-aged, extra Añejo Tequila is also growing rapidly. What makes rum superior to these other brown spirits as an asset class?
KG: Whisky/whiskey has set the pace and rare, superbly crafted Cognacs like Martell and Courvoisier are also performing well as they have all the hallmarks for success in the ultra-prestige sector.
Rum, and Dictador in particular, has the credentials to really accelerate as an investment grade spirit in the years to come as it’s superbly dark, rich and complex liquid; provenance, scarcity and the wish to make superbly collectable objets d’arts sees it really well positioned to appeal to not only the traditional investor but the art interested and more contemporary consumer.
JM: Historically, there is some evidence of a broad multigenerational cycle in consumer preferences between white and brown spirits. Brown rums, like whisky, went out of fashion between the 1970s and 1990s only to stage a comeback over the last two decades. Should such a cycle be borne out, how would it impact investment returns from investment in brown spirits?
KG: I think that we are only just entering the dark, aged rum investment cycle, which is currently in its infancy. Dictador has all the potential to drive this and to keep on building value through category leading innovations; relevant and contemporary arthouse pieces; the carefully curated cache of very old and authentic rums and the focus on scarcity, which appeals to collectors and investors around the world. Dictador truly has all the characteristics to become the investment grade leader in rum.
JM: Thank you.
Below are tasting notes of the range of several ultra-premium Dictador rums.
The Dictador 2 Masters series is a unique range of nine different rum expressions, each of which represents a collaboration between Dictador’s Master Blender Hernan Parra and master blenders from other, iconic spirit brands.
The barrels selected for each expression are hand selected by Parra and are then finished under the supervision of each collaborator. According to Dictador, collaborators are chosen “based on craftsmanship that is unmatched, exceptional, and beyond compare.”
Each expression is finished in a different cellar, on a different continent under the supervision of another cellar master.
The latest Dictador 2 Masters expression is Niepoort – a collaboration between Parra and Dirk Niepoort, the fifth generation Master Blender at Niepoort Port, one of Portugal’s oldest and most iconic Port wine producers.
The rum is a blend of barrels from the 1971, 1974, 1978 and 1980 vintages. It is bottled at 48% ABV in a 700-ml bottle. The rums span in age between 40 and 49 years. Niepoort aged them in two Port pipes, each of which were over 50 YO, and then blended them together for bottling.
The result is a rum with pronounced red cherry aromas bordering on cherry kirsch, along with walnut, old leather and dark chocolate on the nose. There are also spice notes of cinnamon, cardamom and nutmeg.
The palate features typical aged Port notes of plum, prune, raisin and fig, along with herbal notes of dried tobacco leaf and fennel, dark chocolate, new leather and orange zest. The finish is exceptionally long, with notes of orange zest, cherry kirsch and figs.
Other collaborations include a 2 Masters expression with Kovacs Zoltan, the Wine Director at Royal Tokaji in Hungry. This rum was matured for seven months in a 300-liter barrel of Zemplen oak that previously held a 2016 Aszú 6 Puttonyos.
The resulting rum offers up a rich, layered complexity that features notes of honey, tropical fruits on the nose. The palate shows sweet vanilla and dark chocolate notes and the sweet dried yellow fruits typical of Tokaji. The finish is long and nuanced, featuring lingering sweet, dried yellow fruit notes.
Other 2 Masters expressions feature collaborations with Drew Mayville, Master Blender at Barton 1792 Distillery (a Sazerac company), Jerome Cosson, Cellar Master at Sauternes wine producer Château D’Arche and one with Thibault Despagne, Winemaker at Bordeaux wine producer Despagne in the Entre-deux-Mers appellation.
There are also expressions that feature collaborations with Scotch whisky producer Glenfarclas, Hardy Cognac and Armagnac producer Laballe.
The most intriguing collaboration is the one with Hervé Justin, Master Champagne maker at Leclerc Briant. This expression features a 39 YO single cask rum distilled in 1978 that spent 14 months in a lightly toasted French oak cask.
The resulting rum features notes of stewed fruits, apple pie, candied pear and red cherry. There is just a hint of the cherry kirsch note that seems characteristic of Dictador rums. The palate features floral notes, along with fresh peach, ripe apples, with a bit of red cherry, mandarin and lemon zest. The finish is long, with notes of strawberry and cooked rhubarb (think a strawberry rhubarb pie), along with some vanilla and seasoned oak wood.
The next 2 Master selection, slated for release in late September, is a collaboration with Jose Antonio Zarzana of the Ximénez-Spínoza winery in Jerez. It features a 45 YO rum finished in Pedro Ximénez (PX) barrels. PX is a type of Sherry made from partially raisinated grapes. It’s thick, almost syrup like, and features intense flavors of raisin, fig and date.
The Dictador 2 Master series is a brilliant illustration of how creative and innovative cask finishes can create greater complexity and nuance in a rum. Twinned with extraordinary aged rums from one of South America’s premier rum producers, the result is a truly one of a kind collection of exceptional rums.
It’s hard to know whether these rums will have investment potential. They generally sell for between $500 and $2,000 a bottle, depending on the expression and where you purchase them. The earlier releases have certainly appreciated in value, whether that will continue and hold for the rest of the line remains to be seen. Worse case however, you can always drink the stuff. That wouldn’t be a bad outcome either.
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