We review Whiskey Wealth Club – returns of 10% to 20% per year with “relatively little risk”?

Whiskey Wealth Club logo

Whiskey Wealth Club offers investment in barrels of Irish whiskey, the premise being that the barrels will increase in value as they age.

Its website claims that

Investor returns are currently in the 10-20% per annum region.

and that

Investing in barrels of whiskey as they age and increase in value in bonded warehouses offers potentially massive rewards with relatively little risk.

Its brochure goes further, claiming various eye-popping potential rates of return, including a claim that whiskey offers “15 YEARS TO TURN €2,550 INTO €160,000” – a 32% per year rate of return.

Who are Whiskey Wealth Club?

Scott Sciberras and William Fielding
Directors and joint owners Scott Sciberras and William Fielding

Whiskey and Wealth Club was incorporated in November 2018.

A confirmation statement filed with Companies House claims that no-one exercises significant control over the company. This appears to be contradicted by the incorporation document, which states that co-founder and CEO Scott Sciberras, co-founder and COO William Fielding, and Bradley Jay own the company in 34/33/33 shares.

I couldn’t leave WWC’s “About Us” page without noting that one of their Senior Wealth Managers rejoices in the name of Becci Toogood.

When she’s promoting whiskey investments projecting returns of 32% per year, Becci’s clients must be hoping that Ms Toogood actually is to be true…

How safe is the investment?

Whiskey Wealth Club claims that investing in whiskey carries “relatively little risk”.

The reality is that you are investing in a commodity supplied by a company that is less than a year old at time of writing, which is inherently high risk.

The reality is also that no investment projecting returns of 10-20% per year or 32% per year to the public carries “relatively little risk”.

Whiskey is a commodity and the price of all commodities fluctuates considerably.

In its brochure, WWC does acknowledge this fact – only to sarcastically dismiss it. In a miniscule disclaimer it states:

Like anything in life, nothing is guaranteed. America (Irelands biggest export market) could change laws and reinstate Prohibition again. Other countries could follow suit which would cause an oversupply of the market and bring whiskey pricing down. It’s unlikely but could happen.

There are plenty of reasons why a whiskey cask could be worth less than the buyer paid for it that do not involve America reinstating Prohibition.

Whiskey and Wealth’s economic illiteracy manages to get even worse from there.

In an email promotion sent to investors, it states:

Whiskey increasing in value over time is inevitable as it’s based purely on its age. It doesn’t suffer the ups and downs of financial markets. How much it increases depends on supply and demand.

Securities on financial markets go up and down because of supply and demand – and so does whiskey.

Whiskey will not increase in value over time if supply goes up, or demand goes down. Or if the investor paid too much in the first place.

Whiskey Wealth Club’s claim that demand for Irish whiskey currently exceeds supply may well be true. Its claim that the gap will widen even more over the next few decades is conjecture. Its claim that its conjecture is inevitable is nonsense.

The worst case scenario is that investors hand money to Whiskey Wealth Club and they are unable to fulfil their contract to supply the whiskey – which not a criticism of WWC, but an inherent risk when dealing with any small company. In this case investors would be looking at up to 100% loss.

Due diligence

The second rule of investment is “don’t invest in what you don’t understand”. (The first is “don’t lose money”.)

Unless investors are already professionally experienced whiskey dealers, they should employ a professional whiskey valuer working for and paid by them (not by Whiskey Wealth Club) to confirm that WWC’s whiskey casks are as valuable as they say they are.

You would not buy a house as an investment and simply assume the seller’s estate agent’s valuation was accurate – you would hire your own valuer. The same applies here, unless you are willing to take a total gamble.

Verifying that Whiskey Wealth Club are able to supply whiskey as promised also requires professional due diligence into the firm. Note that speaking to Whiskey Wealth Club representatives or visiting their premises is not due diligence. Due diligence means independent verification of their claims.

The simple question investors need to answer is: if WWC’s whiskey casks will increase in value by 10-30% per year with so little risk, why does WWC need to sell them so cheaply?

Regulation

Whiskey Wealth Club inaccurately describes its investment as “relatively little risk” and misleadingly compares investment in a commodity with a small newly-formed company with saving in an FSCS-protected deposit account.

In the world of regulated investments, misleading promotions like this would be subject to intervention by the FCA. Investors in whiskey, however, are considered to be buying booze – even when it is explicitly promoted as an investment – and consequently the adverts do not fall within the oversight of the FCA.

While this leaves Whiskey Wealth Club’s adverts subject to regulation by the Advertising Standard Authority, the ASA is a national joke, with virtually no power.

Investors will therefore need to make doubly sure they are able to assess Whiskey Wealth Company’s claims for themselves.

Should I invest in Whiskey Wealth Club?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any commodity investment, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Any investment offering returns of 10-20% per year or 32% per year is inherently extremely high risk. As an investment in a commodity supplied by a small newly-formed company with a risk of total and permanent loss, Whiskey Wealth Club is much higher risk than a mainstream diversified stockmarket fund.

Before investing investors should ask themselves:

  • How would I feel if Whiskey Wealth Club defaulted on the contract and I lost 100% of my money?
  • Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?

If you are looking for an investment with “relatively little risk”, you should not invest in a commodity supplied by a small company with a risk of 100% loss.

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