Is Scotch on the rocks?

There’s been much discussion around the secondary market for high end Scotch, and last month saw one of the rarest offerings ever from The Balvenie Distillery failed to sell at auction.  Is this just a case of nervousness around high prices due to the geopolitical backdrop or is there more to it, asks Arabella Mileham.

The Balvenie 50 Year Old Private Cask #16560 Trunk was the headline lot of the Sotheby’s sale, a “hyper-rare… treasure chest” of 10 bottles of single cask 50-year-old whisky with an estimate of £240,000-450,000. It marked the first time that any bottles from The Balvenie’s rare cask programme had come to auction and the proceeds from the sale were to be divided between two charities: WWF and The King’s Trust. It was donated by the collector who owns every one of the 220 bottles produced from this cask – as well as the 22 wooden trunks in which they are housed. However, it sadly failed to sell at auction on 29 May. Was this just because of the ultra-high price tag at a time of market caution? Or is there more at play?

As db has previously reported, whisky on the secondary market has been undergoing a “pronounced market correction” following a “preposterous peak” during the preceding years. This unusually intense spike in demand for trading expensive whiskies really hit its stride from mid-2020 (around six months into the pandemic) before peaking in late 2022. In this time, a bottle of The Macallan 1926 seg a new world record for wine and spirits, selling for £2.1m at Sotheby’s.

However the latest figures from Scottish financial advisory firm Noble & Co are sobering. Overall volumes of high-end Scotch down 21% in the three months to January 2025, compared to the same period the previous year. Not only have bottles over the £1,000 mark seen a fall in volume and value terms, but bottles priced above £10,000 were also affected. These represented around 32.5% of value last year, but in the latest quarter, this had fallen to just 6.8% in value terms, which Noble & Co attributed to a contraction fuelled by both vendors and collector appetite.

According to independent consultant and whisky broker Mark Littler however, this is more than just the result of geopolitical uncertainty and nervousness in the market.

Speaking to the drinks business at the height of the boom in 2021, Littler noted that since 2015, single malt whisky had “transformed into a status symbol”, not unlike the luxury watch market. It wasn’t “just seen as a drink to consume” and as a result, distilleries had bought into this paradigm by increasingly targeted collectors and investors rather than drinkers, releasing limited release rebottlings of older vintages and modern non-age statements whiskies packaged in luxurious one-off decanters.

He still maintains that this happened by accident rather than by design. Speaking to the drinks business this week, he said it coinciding with a time of almost near zero interest rates, COVID, and the rise of NFTs and cryptocurrencies, reaching a fever pitch in 2022 before going “pop” when interest rates went up.

“If you look at the Liv-ex 1000, you can see this peak, which topped on 31st of October,” he said, adding that the the spirits index shows exactly the same trajectory. “The watch market peaked out slightly earlier, in April 2022 and has seen a steady decline since… but  across three luxury markets, you’ve got this peak happening with the decline in line with the rise in interest rates.”

There are, he argues three main issues in the market now.

The first one is that the current release prices of whiskies is not aligned with the market – perhaps unsurprisingly considering that producers from companies such as The  Macallan and Bowman develop the next limited edition five years ahead of its actual release.

“So they were designing products in a peak and now they’re selling in a trough, but it doesn’t mean that their costs and exposure are different,” he said.

The second problem, he argues, is slightly less obvious. “The industry’s meteoric rise went hand in hand with new collectors and investors who weren’t buying deliberately or consciously. They were just buying what was going up in value,” he explains.

One example he gives is The Macallan Archival Folio 1 series, a no-age statement bottle released in 2015 as a limited edition of 2000, which hit around £15,000 at its peak. However the Macallan 1957 Anniversary Vault, a “hyper-rare”, genuinely old whisky first released in 1983, peaked at around half that price. Why is there such a disconnect between the genuinely old and rare and the luxury limited edition releases, he asks.

Luxury whiskeys have ended up on a pedestal, he argues but without “all the foundations that other luxury products have” – a disconnect between the product itself and communication that largely talks about the distillery’s heritage or gives tasting notes rather than the product itself and how it came to be.

“They sell Scotland’s heritage, but people are buying products, and that disconnect is what’s really, in my opinion, very important. That is evidence in this hyper-inflated market that came about because all of the consumers didn’t know what they were buying,” he argued.

One solution he suggests would be to follow other luxury items, such as watches, by rolling out the kind of boutiques that currently only exist in travel retail, in London with their own curated selections.

“They need spaces in London where they can connect with their brands, so they can start to build up closer connections, because most people will just experience a Balvenie as a bottle on a shelf in a retailer,” he argued. “Look at Lego, for instance, and the rise in the success of Lego shops. And even Lego has got an archive of where they’ve come from!”

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