We review Whisky Cask Company – investment in whisky offering returns of 8 – 12% per year

Whisky Cask Company offers investment in casks of Scotch whisky.

Whisky Cask Company describes its role as “facilitating the sale”. The actual filling of the casks is done by the Malt Whisky Company.

Casks are matured for a minimum of three years, after which they can be sold on the market. Whisky Cask Company projects returns of 8 – 12% per year. It claims the investment is “A Sure-Fire Investment for The Future” and that investing in whisky “gives increased financial security — products cannot go bust in the way a company can”.

Who are Whisky Cask Company?

Whisky Cask Company was incorporated in June 2019 and due to its young age is yet to file accounts.

Founder and CEO Alexander Johnson owns 100% of Whisky Cask Company, according to its incorporation document.

Johnson is also 95% owner and non-executive Chairman of Viderium, whose unregulated cryptocurrency bonds paying 9.85% per year were reviewed here last year.

Johnson’s bio states that he is “CEO and Chairman of Annandale Group, an investment company with interests in finance, real estate, media and food and beverages.”

Neither Annandale Group nor its interests seem to actually exist. Its website, annandale.group, gives its full name as “Annandale Investment Group Limited”. No company of that name exists on Companies House or anywhere else in the world according to Google and OpenCorporates. Annandale Group’s website provides no corporate registration number.

Viderium CEO Ross Archer has also joined Whisky Cask Company as Head of Operations. Both continue in their roles at Viderium.

How Viderium is doing financially is currently unknown, but the company is due to file its first accounts (to December 2018) within the next few weeks.

In an October 2018 press release, Viderium stated that it was considering listing on the stockmarket in 2019. Or to use their exact words, “Directors have hinted at a possible future IPO”. Press-release writing tip to Viderium CEO Ross Archer (who is the only Viderium director, and listed as the author of the press release): you can’t use the word “hint” while talking about yourself in the third person. Either you are planning an IPO or you aren’t. Anyway, with only five months of 2019 left, a 2019 IPO probably isn’t going to happen.

How safe is the investment?

Despite Whisky Cask Company’s claims that investing in whisky provides “increased financial security”, the reality is that investment in commodities (which includes whisky) is inherently high risk.

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

The fact that whisky will mature as it ages is already known by both Whisky Cask Company and the Malt Whisky Company and is priced into the price they offer investors.

Unless investors are already professionally experienced whisky dealers, they should employ a professional whisky valuer working for and paid by them (not by Whisky Cask Company) to confirm that WWC’s whisky 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.

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

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

Should I invest in Whisky Cask Company?

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 8-12% per year is inherently high risk. As an investment in a commodity contract arranged by a newly formed company with a risk of total and permanent loss, Whisky Cask Company is much higher risk than a mainstream diversified stockmarket fund.

Before investing investors should ask themselves:

• How would I feel if Whisky Cask Company 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 to provide “increased financial security”, you should not invest in a commodity supplied by a small company with a risk of 100% loss.