Scotch is consistently listed amongst the United Kingdom’s top five export earners, and year by year, it regularly beats its own export earnings records - all of which creates considerable interest in Scotch, whose appeal as a drink of style and quality is amply demonstrated by its export success.

The Scotch Whisky Association is not in a position to offer any advice on the purchase or sale of Scotch Whisky as an investment. Nevertheless, it believes that potential investors, in order to assess these offers, should understand something of the structure and operating methods of the Scotch Whisky industry.

It is on the basis of this way of doing business that Scotch Whisky distilleries are able to plan and maintain production at viable levels.

As a result, there is no external market for mature or maturing Scotch Whisky, no "Whisky Exchange", no officially published list of buying and selling prices for whiskies from different distilleries and of different ages, no established mechanism for selling.

It is possible, subject to availability from distillers, and their willingness to sell, to purchase Scotch Whisky, either newly-distilled or maturing, for personal use. Both new fillings and maturing whisky are also purchased from time to time as a form of speculation, with the intention of re-selling them at a profit.

However, it should be emphasised that only an extremely small proportion of the total amount of whisky distilled in Scotland is bought and sold in this way.

Thus, any investment made by an individual with a view to selling it on at a profit must be made on the basis of his personal assessment of the risk, and the value of the investment to him.

Whisky, however, is no different from other commodities, whose value rises or falls according to supply and demand. The only certainty about owning a cask of Scotch is that it will lose roughly 2 percent of the contents through evaporation each year. Everything else in this context is pure speculation.

The current rate of duty (November 1996) is £18.99 per litre of pure alcohol (to which VAT must be added).

Additionally, whilst the cask is in the warehouse, annual storage and insurance charges are likely to be levied, increasing the cost of the investment. Finally, the bottling of small quantities of whisky can prove expensive, if a bottler can be found willing to handle single casks.

• Identify clearly the whisky on offer - sometimes unidentified whiskies are offered. Any company offering Scotch Whisky for sale should be able to confirm whether it is Malt or Grain Whisky, the name of the distillery where it was distilled, the year of distillation and a cask reference number.
• Check the current offer price by contacting the distillery or the company whose whisky is being offered, or an established Scotch Whisky broker.
• Check any claimed increase in value during maturation with an established Scotch Whisky broker.
• Insist on receiving a receipt for the purchase price and a copy of the contract of sale which should:

• describe the whisky bought, stating the whisky type, distillery and year of distillation,
• identify the casks which have been purchased, by way of cask number, type and volumetric content, and,
• identify the bond in which these casks are held.

By way of added safeguard, ask the seller to issue a Delivery Order. This instructs the warehousekeeper to hold the goods to the purchaser’s order.

Check that the details on the Delivery Order are correct, countersign it and send it to the warehouse at once. The warehousekeeper will then have a record of the purchaser’s signature against which any Delivery Order can be compared.

In due course, the warehousekeeper should issue an acknowledgment confirming that he has received the Delivery Order.

Please note, neither the Delivery Order nor the warehousekeeper’s receipt is a document of title. Ownership is determined by the contract of sale.

On considering their investment decision, potential investors should be aware of the unique nature of the trade in maturing Scotch Whisky.

They should realise that there are risks involved, both as regards the potential value of their investment, and the opportunities to dispose of it in due course.