Here's Why The Whisky Market's Crash Might Be A Good Thing

If you are relatively new to the whisky market, then 2023 and 2024 may not have felt that great. The Ultra Rare bottles in the Knight Frank rare whisky index were down 9% in 2023, while prices in my newly created Mark Littler 999 Index had dropped 11% in 2024.

But this apparent market correction—which has seen collectable whisky values return to 2021 levels—might be exactly what the industry needed. While short-term speculators are departing, seasoned collectors and industry experts suggest this reset is creating opportunities. For investors that took the long term view, figures are still up 99% on 2016, suggesting the fundamental strength of the market remains intact.

"The good news is the people who are most savvy about the market are the ones who remain. They know the niches within a niche, where value can be found, and where appreciation is still happening," said Ben Odgers in a conversation with me over email. Odgers is the founder of Spirits Sourcery, a specialist whisky brokerage who has seen the knock on impact for both buyers and sellers. "The people who queued up outside Harrods overnight to buy The Macallan James Bond collection are gone, as the profit from flipping has disappeared."

The 2024 Whisky Bottle Market In Review

The Mark Littler 999 Index is an index that is made and managed by Spirits Invest. It tracks the 999 most traded bottles on the market and the bottle selection is updated each January. The index tracks the prices of 999 collectable bottles from across the full spread of the secondary market, including historic gems and more modern releases that have been popular with some collectors. Spirits Invest is a whisky bottle collection, analysis and tracking specialist that uses data to help collectors and investors make informed choices.

Looking at the Mark Littler Index for 2024 paints a fairly gloomy picture. The first half of the year was dominated by a consistent slowing. The summer brought a respite that continued into the autumn but a question mark remains over the November auction results—a blip before the busy festive season or a continuation of the reprieve?

"It is fair to say that 2024 has not been easy for people who trade in collectable bottles. I would estimate that getting deals done has doubled in difficulty. There is no shortage of chatter and interaction between people in the trade, but little of it translates into actual transactions," said Odgers.

"My current favourite is the Macallan Red Collection 60-year-old, which is offered once a week at between $3,000 to $5,000 less than the week before. Everyone then goes off and asks their network if there's any interest. There will be no takers, and then the cycle repeats. There will, however, come a point when someone says, 'Yes.' This will be an inflection point where that buyer either becomes the smartest person in the room, buying at the new floor, or finds themselves in negative territory as prices continue to fall. However, it will come back; it just needs time."

That then is the crux of the matter. Whether it is a Macallan Red Collection or a historic release, it's about finding the point where collectors think the prices are worth re-entering. Until 2018, patient investing had been the cornerstone of whisky collecting. Then came a tipping point when quick profits could be made from flipping bottles in weeks or months. This success attracted new investors who drove up prices further. Now those short-term investors are gone, but the long-term upward trend remains intact.

2024 In Context

While the index has returned to early 2021 levels, it's still up 99% compared to 2016. The peak in 2022 saw values surge to 188% above 2016 figures - growth that was arguably unsustainable for many bottles in the index. This pattern of rapid growth followed by correction isn't unique to whisky. One needs only look at the crypto market for a similar story of heady highs and humbling lows. While Nobel & Co's 2024 report does a great job of discussing the changes in watches, art and other alternative investments compared against the ones we are seeing in whisky.

Why This Market Reset Could Be Positive

Whether the drop has been bad depends largely on who you ask. For those investors that joined the market in 2022—especially those buying supposed golden egg bottles like the Macallan Folios—2024 may have been humbling. However, for serious collectors and enthusiasts, the current climate presents genuine opportunities.

At the most basic level, the chances of getting hold of new releases have improved significantly. The market for flipping bottles has dried up almost completely, as evidenced by the Macallan Time:Space Mastery ballot—the first Macallan bottle released by ballot since 2018 that apparently hasn't sold out before reaching retail.

"For those with the money, patience, and strength of character, there has never been a better time to buy investment-grade bottles," Odgers suggests. "Taking the words of Warren Buffett on stocks should give brave souls the courage: 'Be fearful when others are greedy and be greedy when others are fearful.'"

The Whisky Cask Market

The changes over 2024 have also impacted independent bottlers. And once again, individuals' takes on the impacts vary.

The reason the cask market is impacted by a fall in bottle prices is because the pace of bottles selling at retail impacts the rate that casks are bottled. When the bottles are not leaving the shelves at retail then in turn the market for mature casks slows. My experience is that prices have not necessarily fallen for mature casks, it is simply that the pool of buyers for those casks has shrunk significantly compared to 12 months ago.

The knock on impact depends largely on the bottlers' and cask owners' models. Smaller bottlers who have a direct to customer model are faring well, while the impact for larger bottlers depends on whether they are storing their own stock and if they overpaid during the previous three years of highs.

For cask owners it comes down to patience again. Where casks have healthy fill levels and are part of a long term maturation plan then they can mostly be saved for later sale and bottling. Unfortunately where casks have been bought by misled private investors—who were promised short term investments opportunities and expect to be able to exit instantly—2024 may not feel like a great year.

I spoke with small independent bottler label Thompson Bros over email to find out how they were fairing with the changes. "We've applied a similar margin approach to our independent bottling as we do with the bottles served at the bar in Dornoch Castle. We don't operate with a fixed margin target—it's entirely flexible. Our goal is simple: to sell whisky while delivering maximum value to our customers," explained Phil Thompson.

"The market is currently in a very unusual place. For those holding excessive stock purchased during recent years of inflated prices, the down-market may present challenges. At Thompson Bros, we've avoided significant stockpiles of third-party inventory, consistently reinvesting in our own production. This positions us well to navigate the current market conditions. Ultimately, our focus remains on ensuring everyone in the supply chain earns a fair margin, while always providing excellent value to the end consumer."

Looking To Whisky Investing in 2025

While 2024's market correction has pushed out short-term speculators, it's created a more sustainable environment for genuine collectors and investors. With bottles returning to more realistic prices, this reset might prove to be exactly what the whisky market needed.

Asia Pacific remains a core market for single malt scotch, and the changes to how whisky is taxed in Hong Kong will have the largest impact for the highest value bottles. While this impact may take time to filter through the market, for patient investors who understand the current opportunities in undervalued bottles and casks, this more measured market environment could prove advantageous.