Spirits Invest<\/a>. \u201cLike wine and watches, speculative buying during Covid exaggerated the highs, and the subsequent correction has brought prices back to more sustainable levels. Long-term fundamentals remain strong.\u201d<\/p>\nIt was an intriguing set of data, and got me thinking. In the alcohol and spirits sectors all we are hearing is how tee-total gen z, zebra striping and low alcohol are killing the market. But looking at the data from whisky, wine, watches and art indexes layered over each other it seems clear they\u2019ve all experienced a very similar pattern over the last three years. Changes in drinking habits certainly can\u2019t explain a drop in the watch and art markets. But global economic uncertainty can.<\/p>\n
The Great Market Booms<\/p>\n
In 2018 the Macallan distillery made national news for causing tailbacks on the road for people queuing to get the distillery exclusive Genesis. The $670 (\u00a3495) bottle sold for over $6,000 when it reached auction in September 2018. In spring of 2019 the Knight Frank Wealth Report launched the whisky market into the limelight: Their whisky index showed 40% growth in 2018 and 582% over the previous ten years. The rest of 2019 saw a cooling as the market took a breath, but then a bottle of whisky made more than $1.5 million at Christie\u2019s London in November. In 2020 I brokered the sale of a 42 bottle collection of Macallan 18 year olds that had been collected by a father for his son, the sale made international news when it sold for $59,000 (\u00a344,000), some of them still had their \u00a327 price labels on. Whisky was making people money. Then the Covid-19 pandemic hit and people suddenly had nothing to do, and nothing to spend their money on.<\/p>\n
Spirits Invest data shows the 999 Index peaking in 2022, before falling in line with wine, watches, and art.<\/p>\n
Spirits Invest<\/p>\n
Some people bought whisky, others bought wine, or watches, but it’s all the same kind of drivers: inexperienced consumers pushing up prices and reinforcing their own dreams. It was great until the world changed and those consumers left because that money was needed elsewhere. However they didn\u2019t just leave with their assets, they sold up, flooded the market and compounded the issue. Prices plummeted, people got scared and more people sold\u2026 It\u2019s a tale as old as the markets themselves.<\/p>\n
Common Market Themes<\/p>\n
When I spoke to each of the experts in their own markets it became clear that they had all experienced something similar. Watches, wine and art all shared striking similarities with whisky: Their markets had been growing prior to the pandemic, but in the immediate aftermath of the covid pandemic consumers had money to spend and this drove prices to record highs.<\/p>\n
\u201cFlippers were a major contributing factor for both the rise and fall of the watch market; at first driving up prices and then contributing to the decline by flooding the market with excess inventory as they tried to cut losses.\u201d\n<\/p>\n
Hamza Masood, Head of Partnerships at Watch Charts<\/p>\n
The abundance of wealth that drove peaks in the whisky market also drew people to the art and fine wine markets too. Minguet of Artprice explained, \u201cIt seems that art has been the subject of particular enthusiasm around 2021, fueled by a wealth of available money.\u201d And Tom of LivEx had a similar story: \u201cTo a degree a broadening of interest in fine wine due to covid lockdowns and cheap money did spark a surge in speculation into the wine market.\u201d<\/p>\n
Artprice Global Index: A surge in 2021 followed by a gradual decline to its lowest level in 25 years.<\/p>\n
Artprice.com<\/p>\n
Speaking to these experts and looking at the data it\u2019s clear that both watches and art have experienced similar patterns to the whisky and wine market. But no one is claiming that the world is turning away from art or not bothered about telling the time. They simply assess that consumers are buying less watches and art because they have less money to spend on those things.<\/p>\n
A Shift To No And Low Alcohol?<\/p>\n
The drops across all the markets I assessed were exacerbated by the boom that came before; the combination of the loss of the additional buyers to the market alongside larger economic changes. Rather than being taken as a sign that these alternative assets no longer have value, these are simply cycles in a maturing market.<\/p>\n
Rather than the doom and gloom picture painted across wine, beer and spirits at the moment, which largely claims gen-z are just drinking less, perhaps the answer is that they are drinking less because they have less money to spend on booze? Alcohol doesn\u2019t have to be a luxury, but it is something that people don\u2019t need and there are ways to cut back like buying less or going for the cheaper option over your favourite brand.<\/p>\n
Scotch whisky as a drink is increasingly premiumised and you can see the impact this has on consumers in Diageo\u2019s <\/a>most recent report: scotch is down but the accessibly priced Crown Royal is up. People are still drinking whisky, they\u2019re just drinking differently.<\/p>\nWhat Does This Mean For The Whisky Market?<\/p>\n
What does that mean for your whisky collection? There are signs of stabilization in both the primary and secondary markets as Diageo\u2019s most recent results show unexpected positivity and the MLL999 index shows a slowing market that hopefully indicates the bottom of the drop. There are similar notes of positivity from the other markets too.<\/p>\n
\u201cWe are seeing some early indications of some green shoots in Asia, certain recent vintages have now corrected to levels that look sensible,\u201d said Tom on the outlook for the current outlook on the wine markets. \u201cThere are still some hurdles to overcome\u2014US tariffs are still uncertain, although it looks like 15% is now the worst case scenario. Overall, there is still uncertainty, and one would expect that a lengthy period of stabilisation before confidence returns and prices might start to tick up.\u201d<\/p>\n
For whisky it is important to remember that the secondary market is still up over ten years, more or less back at 2019 prices. If you bought before 2019 and you need to sell\u2026 then that\u2019s the right choice for you. If you bought more recently I\u2019d suggest holding whatever asset it is as long as you can with the aim to ride out this low. And if you are an educated investor, whichever market you\u2019re in, buying when others are fearful is often the most profitable way to go.<\/p>\n","protected":false},"excerpt":{"rendered":"Are alternative assets like whisky, wine, watches, and art really in decline, or just resetting? Mark Littler LTD…\n","protected":false},"author":2,"featured_media":17759,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[16753,138,220,111,139,69],"class_list":["post-17758","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-alternative-investment","tag-business","tag-markets","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/17758","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=17758"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/17758\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/17759"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=17758"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=17758"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=17758"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}