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.

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

  1. Please see below our response to comments made in the above article:

    “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.”

    Response: We have three owners so no single person has total control and also it protects the company against a deadlock. Our Companies House records have now been updated to reflect this.

    “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.”

    Response: Our clients do not invest in us, they buy their own casks through us. We have over 170 happy clients with over 40 reviews on Trustpilot, who have all received evidence of ownership for their casks. We also only work with established whiskey distilleries like Boann and West Cork Distillers.

    “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”.”

    Response: We’re not the only ones predicting returns 20% and above:

    https://www.irishexaminer.com/breakingnews/business/blacks-brewery-and-distillery-launches-whiskey-investment-fund-with-guaranteed-returns-928338.html

    https://www.forbes.com/sites/joemicallef/2018/02/07/whisky-bank-it-or-drink-it/#12633474037d
    https://www.thisismoney.co.uk/money/investing/article-3308328/I-invested-500-barrelled-whisky-make-mint-malt.html

    Cask whiskey investment presents relatively little risk to investors as casks of new make increase in value despite what happens with the housing or stock markets. The main factors contributing to profitability are the price at which the casks are initially bought, and the brand behind the whiskey.

    A commercial distillery with no brand associated with it will sell for a lot less than those that have a brand like West Cork Distillers or Boann with the Whistler, behind it. Buying casks at a low price with a prominent brand attached to the distillery is key. That’s exactly what Whiskey & Wealth Club offers.

    By comparison, other cask whiskey competitors sell generic whiskey with no brand associated for a much higher price.

    “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.”

    Response: As a market, Irish whiskey is very robust. The most recent figures from the Irish Whiskey Association (IWA) reported a 10.6% sales spike in 2017 to reach 9.7 million nine-litre cases compared with the previous year, meaning that Irish whiskey is on track to exceed its 2020 growth target (12m cases or 144m bottles) set by the IWA: https://www.thespiritsbusiness.com/2018/11/irish-whiskey-smaller-brands-face-the-biggest-challenges/

    With that said, we’re in the process of updating our brochure with more informative examples of when a cask may diminish in value such as an issue sealing the cask or the unlikely eventuality that the whiskey is not deemed worth the initial price paid. Should a cask be mis-sealed or hyper evaporate, we have a guarantee with the distillery to replace with one of equal value. So the only major risk is if you pay too much and the whiskey isn’t worth the resale value when an investor decides to sell.

    “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.”

    Response: It would be highly unlikely for whiskey to lose value as it aged unless something happened to the cask, it wasn’t sealed properly or the country you’re selling in experienced a severe recession. For a sealing issue, we have insurance. If a recession hits, everyone feels it.

    Regarding investors paying too much upfront, we agree with you, this is an issue happening all across Ireland. Some firms are charging up to €7,850 per cask of new make.

    Other distilleries are selling non-branded new make whiskey for the price of our casks from well known distilleries. We sell some of the most cost effective casks of whiskey in Ireland by well loved, award winning distilleries.

    “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.”

    Response: Because whiskey needs to be aged for at least three years, and the sustained growth in demand over the past few years, it’s likely that this gap will widen.

    New make distillery will almost never be worth the same as aged whiskey. It wouldn’t make sense if a distillery took the time and resources to age a cask and then sold it for less than a comparable new make. Your comment that “Its claim that its conjecture is inevitable is nonsense”, is somewhat correct and somewhat false. It depends on the purchase price. If you buy a single cask of new make whiskey for €48,000 like some cask firms are selling, then of course you will be waiting for many years for a profit. But if you buy a branded cask of new make for €2,900 from us, turning a substantial profit after five years is a very real claim.

    Sources for sustained growth:
    https://www.drinksireland.ie/Sectors/DI/DI.nsf/vPagesWhiskey/Industry_in_Ireland~whiskey-industry-in-ireland!OpenDocument
    https://www.euronews.com/2019/08/26/watch-millennials-help-double-sales-of-irish-whiskey-in-a-decade
    http://financexpress.us/26797/whiskey-market-2019-2024-with-growth-factors-and-trends-with-focusing-key-players-major-types-like-scotch-whisky-us-whiskey-canadian-whiskey-irish-whiskey/

    “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.”

    Response: The time frame between WWC receiving the capital and issuing the ownership of whiskey, is less than two weeks. We have 170 clients and 45+ glowing testimonials. You’re welcome to check out our Trustpilot.

    Our clients can come to our office where we have a long-term lease, they can meet the distillery owners face to face on the tours we conduct.

    We also recommend that any clients do any independent research they want to do, we’re in this for the long haul. You can also check our write up in The Sunday Independent where our revenue figures are revealed, over €5.9 million in revenue so far this year. It’s in our interests to keep our clients happy and deliver what we set out to deliver. With over 170 clients, and now adding 50+ new clients per month we have delivered every single time.
    https://www.independent.ie/business/irish/alternative-investor-whiskey-wealth-club-targets-24m-in-revenue-38432991.html

    Once proof of ownership of the whiskey is delivered, the risk of total loss is gone. The client now owns a tangible asset, fully insured and under bond. So the risk is in what price they can sell it for. Given the purchase price we offer, we’re very confident they can sell for a profit after five years.

    “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.”

    Response: We actively encourage our investors to carry out their own in-depth, independent research. If clients wish to employ a professional whiskey valuer then they’re more than welcome to. However, we try to reduce the need for this by only buying casks from established distilleries and brands.

    “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?”

    Response: This is why we regularly offer investors and potential investors the opportunity to visit our distillery partners and speak with the people making their whiskey.

    We sell casks at this low price because we want to offer people a cost effective way to invest in Irish whiskey while still making a small profit on each sale. We believe if we sell more at a lower price, rather than less at a higher price, we’ll make a larger profit and everyone wins.

    We then re-invest our profits into casks and hold a significant amount of stock. We started WWC to create a wholesale business and then use the profits to build our own whiskey brand. Over 80% of our profits go into building our whiskey brand and buying and holding whiskey for ourselves.

    We would be more than happy to share the manifest of the significant number of casks we own.

    “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.”

    Response: All casks are securely stored and insured against fire, theft and accidental damage, therefore minimising the risk of total loss.

    While an FSCS-protected account will mean your money is secure (up to the value of €85,000 through insurance), current savings accounts only have interest rates up to 5% and tend to have quite restrictive maximum investment clauses.

    “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.”

    Response: We foresee cask investment firms becoming regulated eventually and wish to be ahead of the curve. All our material is being analysed to ensure compliance.

    “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.”

    Response: Once the transaction is complete, the investor holds an asset of Irish whiskey that is insured and stored in a government-bonded warehouse.

    It is incredibly unlikely that somebody would lose 100% of their money and saying so is needlessly scaremongering. All our casks are fully insured and a cask of whiskey is almost always able to be sold unless the whiskey has somehow spoiled or been stored incorrectly. Spoilage can really only come from the air quality, as the whiskey and casks are all checked prior to ensure a premium product going in. The casks are checked regularly, on a quarterly basis in segments of the warehouse to maintain this level of quality. So if the casks are stored in good air quality, there isn’t really anything that can spoil them. If they were stored next to a water treatment facility where effluent is present in the air constantly, then this could possibly affect the casks. However this isn’t the case.

    “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 stock market fund.”

    Response: People have been buying and selling casks of whiskey for hundreds of years. As an industry it’s unlikely to go anywhere. The client is not investing in us, they are buying into the Irish whiskey industry which is the fastest growing brown spirit in the world, and countless experts are predicting a huge increase in value for this industry.

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