How One Investment Company Is Banking on Bourbon

Aficionados of the whiskey world have long appreciated the value—and flavor—of bourbon. However, in recent years, investment companies, such as CaskX, have also acquired a penchant for “America’s Native Spirit.” The acceptance of whiskey as an “alternative asset” appeals to the affluent on several fronts. For one thing, it offers greater stability and diversity amid increasingly volatile capital markets. As a marketing segment, the last decade has seen American whiskey go from passé to premium. Rare bourbon and rye are considered as fine as European scotch and brandy. For spirits marketers, the introduction of investment companies like CaskX is a further vote of confidence in the enduring value of whiskey, even as global challenges emerge. Combined U.S. sales for bourbon, Tennessee whiskey and rye whiskey rose 8.2%, or $327 million, to $4.3 billion in 2020, according to the Distilled Spirits Council of the United States. “There’s more and more interest in high quality American bourbon,” said CaskX CEO Jeremy Kasler. “People are now drinking bourbon as a single drink, not as a mixer, as they may have 10 or 15 years ago. There's a lot of attention on bourbon in the U.S., of course. But there's huge interest in Asia, Europe, South America and everywhere.” The company first opened offices in Sydney and Hong Kong before setting sail to the U.S., specifically Los Angeles. “The feedback we were getting was like, ‘Look, this is great. We want to invest in scotch, but even more we'd love to invest in bourbon,’” stated Kasler. He and his team quickly realized there were whiskey consumers keen to invest in bourbon more so than scotch. Knob Creek’s New Short Films Pair Whiskey With Guided Reflections Led by a Meditation Expert Though Kasler began trading scotch whisky about 10 years ago, CaskX debuted to the world in 2017. “The bourbon industry forecast investment is probably where scotch was about 10 to 12 years ago, where the entry level is fairly low, but the upside is very high. So, of course, this is something that we're trying to achieve with trading in the States,” said Kasler. ‘Fear of the unknown’ Prior to becoming CEO of CaskX, Kasler was involved with a variety of alternative investments, such as property, wine, art and whiskey. Outside of the world of stocks and bonds, the more people acquire wealth, the more they want to invest into lifestyle opportunities as well. “People enjoy investing into things that they can enjoy themselves, whether it's a picture on the wall, a violin that people love to play or a car that people drive,” Kasler stated. “So, it's that marriage of enjoying the products [and] enjoying making money—somewhere in the middle. That's the inspiration.” Kasler cited the “fear of the unknown” as their biggest challenge as a company. “Although the bourbon industry is hugely advanced—it’s been around for years—the general public or your normal investor previously has never been able to invest into bourbon casks,” he said. To counter that notion, Kasler and his team show investors that it’s the “same product, just in a different country.” He added, “This is what's happened in Scotland when people have had the foresight to invest into this product at an early stage. So, then the people have more confidence.” One of the differences between trading scotch and trading in bourbon is that scotch is owned by conglomerates such as the Diageos and Brown-Formans of the industry. “You can source a cask of scotch, but the entry level is a lot higher because the huge corporations sell it to a supplier, the supplier then sells it to somebody else,” Kasler said. “The difference with trading bourbon, we're dealing directly with the distillery, we are putting money straight into the pockets of the distillers or the distilling companies. It allows them to monetize their products from day one rather than wait four years or six years further down the line.” "Quite a few of our clients who are buying bourbon for investment are from Scotland; which sounds surprising, but they know the entry levels for a barrel of scotch is about $6,000-$8,000, whereas the entry level for bourbon is around about $2,000,” said CaskX's Kasler. An exclusive appeal for investors Currently, CaskX offers casks from Kentucky Artisan Distillery. The company is also in discussion with other distilleries to bring two additional ones onboard for investors. Since Kentucky Artisan Distillery began working with CaskX, it has had more inquiries from potential customers about starting their own brand. “We have gone from orders for new fill production from 2,500 last year to an expected 6,500 next year,” said Chris Miller, Kentucky Artisan Distillery’s director of operations. "Because of the increased demand we have invested more in the distillery and bottling expansion this year than we have spent on the distillery since it started in 2012.” “There’s so many different types of bourbon and whisky,” Kasler added. “Interestingly, quite a few of our clients who are buying bourbon for investment are from Scotland, which sounds surprising, but they know the entry level for a barrel of scotch is about $6,000-$8,000, whereas the entry level for bourbon is around about $2,000.” The marketing of whiskey as an asset CaskX tends to do most of its marketing via social media with a focus on Facebook and Instagram. Kasler stated, “This approach may not have worked even five or 10 years ago, but today the majority of our target market is engaging in one way or another on one of those platforms every day.” As the world starts to reopen, CaskX will return to some more traditional approaches such as whiskey events and investment shows. One advantage bourbon holds over scotch is that the American spirit’s maturation process is much quicker. If you want to age a barrel of scotch, you have to wait at least 10 years or longer until you get the quality you’re looking for. In contrast, you can have a brilliant bourbon matured in four years and trade it out for a healthy profit, rather than wait a decade. CaskX places orders before the barrels are filled. So, distilleries are getting paid, even prior to filling the barrel. “Without preselling, that couldn't happen,” Kasler said. “They’d be forced to sell everything they've got. So, on an economic scale, it's a win-win. It's good for us. We're getting lots of sales, it's good for our clients, because they're able to invest at the ground floor, and then make really good money; and of course, it’s great for the distillery.”

Alcohol Industry News

How One Investment Company Is Banking on Bourbon

CaskX offers investors a chance to get involved with the American spirit industry by buying into shares of unaged whiskey

Gabrielle Nicole Pharms

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Gabrielle Nicole Pharms