Rare Whisky mulls auction hub for market-beating spirits investments as Hong Kong buyers drive regional sales

Specialist investment firm Rare Whisky is mulling an auction hub in the region as Hong Kong buyers seen driving more sales

Through using blockchain, a £1 million cask of Scotch whisky can be authenticated, and tokenised into fractions of US$500 each to widen the pool of investors

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A very rare first edition ‘Yamazaki’ 50-year-old bottle of Suntory whisky is displayed during the 2018 Bonham’s auction. Photo: EPA-EFE

Published: 7:15pm, 28 Nov 2021Updated: 11:24am, 29 Nov 2021

Rare Whisky Holdings, a Hong Kong-based investment group that focuses on rare and exclusive bottles and cask investment, is considering setting up an auction hub in Asia to help owners resell their collections on the blockchain ledger.

The hub could be based in Hong Kong, Singapore, China or Taiwan, co-founder Rickesh Kishnani said. While the pandemic has provided the impetus for more businesses to trade online, an auction hub could also “promote opportunities for consumers in Asia to get access to whisky investment.”

By locating in Asia, on-the-ground works related to authentication, storage and shipment can be closer to the growing clientele in Asia, he said. About 60 per cent of the Asian buyers of high-end spirits auctions conducted by Sotheby’s last year were Hong Kong buyers. Asia drove 80 per cent of those sales in 2020 for the auction house.

Co-founder Rickesh Kishnani says rare whisky can be an alternative asset class to traditional investments like stocks and bonds.

The intended hub would complement its recent expansion plan. The firm in July bought a 49 per cent stake in online auction site Whisky Hammer from its two founders for an undisclosed amount. The online site hosts monthly whisky and other fine spirits auctions.

Rare Whisky raised US$12 million from investors for a platinum whisky fund in June 2014 and grew to US$26 million at its September exit. It traded 25,000 bottles of the liquor and handed investors 17 per cent in annual rate of return during the fund’s life. The Hang Seng Index produced a 4.4 per cent annualised gain over the same period, according to Bloomberg data.

The exit justifies whisky “as a legitimate alternative asset class” and a source of diversification from bonds and stocks, Kishnani said. “Spending half a million pounds on a bottle of whisky would have been impossible five years ago,” he added. “That’s not uncommon today given a surge of demand in Hong Kong and mainland China.”

The 50-year old Macallan Lalique, estimated at HK$700,000 to HK$950,000 at the Bonhams auction in January 2021. Photo: Dickson Lee

By using blockchain, the so-called delivery order - which is the paper contract proving a change of ownership of the liqour - can be tokenised. Apart from providing a digital copy that is tamper-proof, the technology would also enable investors to track the ownership history and authenticate the bottle.