Bourbon is not only good for sipping, it also is good for investing, according to Jeremy Kasler, CEO of CaskX, which is an alternative investment firm based in Los Angeles that specializes, in part, on investments in bourdon casks.
The firm identifies accredited investors who want to purchase quantities of bourbon casks and then arranges the sale, with the actual investor retaining ownership of the bourbon casks once they are produced. CaskX buys the quantities of bourbon casks, sometimes several months before the bourbon is actually produced, from distilleries in exchange for immediate cash. The infusion of cash is helpful for distilleries, which traditionally had to wait to get paid until the bourbon aged and was then sold, CaskX said.
“Investing in bourbon is at the same stage investing in Scotch was at a decade ago, and Scotch investments have gone through the roof,” Kasler said in an interview.
Investments in rare whiskey increased in value by 586% over the last decade, according to the Knight Frank Luxury Investment Index. Investors, especially early ones, have enjoyed massive returns on their investments, Kasler said, “and bourbon is poised to be the next big thing.” Bourbon casks have appreciated by double digits annually for the past several years, CaskX said.
Bourbon is one of the fastest growing categories in the spirits industry, averaging an appreciation of about 14% per year since 2010. “Now that European Union tariffs have been lifted, Kentucky distillers will be able to capitalize on this increasing demand to export some of the 10.3 million barrels of bourbon currently aging in Kentucky,” Kasler said.
CaskX opened an office in Los Angeles a little more than two years ago and is poised to expand its firm in the United States.
Kasler arranged investments in contemporary art for a decade when he started getting asked about valuable whisky, such as Scotch, which then brought him eventually to arranging investments in bourbon casks, which are still in the beginning stages of being brought to investors’ attention.
“We realized a couple of years ago that bourbon had the potential to be like Scotch was 10 years ago. Those investors who got in early reaped handsome rewards,” Kasler said.
Investing in an alternative commodity like bourbon has a lot of factors working in its favor. “People are developing a more refined taste for everything from specialty beers to Scotch to bourbon.”
The commodity provides another avenue for diversification for investors who are trying to avoid the current instability of the market and the effects of inflation.
Bourbon used to be mostly an American passion, but the love of the drink is spreading to Europe and elsewhere. And bourbon becomes more valuable the longer it ages.
“There are 18 million accredited investors in the United States and there may be a pool of about 2 million who would be interested in investing in bourbon,” Kasler said. “We think we have only scratched the surface for investment possibilities.”
CaskX has a small fund of about $10 million in bourbon investments so far but expects to double that next year. Trades now range from $50,000 to $200,000
“Every investment has some risk, but we consider bourbon a low risk investment,” Kasler said. “If you drive through Kentucky and Tennessee, you see a lot of new construction for whiskey distilleries.”