$20 Million Fund Gives Investors a Taste of Soaring Market for Rare Whiskies and Fine Wines

Winston Art Group and its subsidiary WineAdvise—which for years have counseled wealthy individuals on their wine and spirits collections—has teamed with Artory, which offers a blockchain registry of verified information on fine art and collectibles, to create a vehicle for accredited investors to realize those potential returns. 

The Cask100 Fund, a US$20 million five-year closed-end vehicle, will invest in a diverse basket of rare and collectible whiskies, whisky casks, and wine, from Macallan’s Red Collection of single-malt whisky to bottles of Burgundy’s Domaine de la Romanée-Conti. 

“We did a ton of research about how to make this work, how to make a return on investment that’s going to be interesting to people,” says Elizabeth von Habsurg, Winston Art Group’s founder and managing director. The question was, “can we do it with these asset classes? It was clear that we could.” 

Cask100 isn’t the first Artory/Winston fund. The joint venture between the companies is also currently raising more than US$100 million from accredited and institutional investors for an art fund holding works by a collection of emerging, midcareer, and established blue-chip artists. 

To get into the wine and whisky fund’s first closing—expected sometime in October—requires a minimum investment of US$10,000; that minimum will later rise to US$50,000. The fund is expected to achieve an internal rate of return about 15% to 20%, and similar to private-equity funds with such returns, generally will charge investors an annual management fee of 1.5% of assets and 20% of profits earned above a predetermined benchmark. 

Cask100 is not the first or only wine and spirits fund. Among available offerings, Vinovest claims to be democratizing access to fine wine and whisky by enabling individuals to create portfolios of their own for as little as US$1,000. Cult Wine Investment, based in the U.K., also creates personalized portfolios for investors, and currently manages a collection of about £290 million (US$362.2 million). 

Over the last several years, the value of both rare whiskies and fine wines has soared, but their skyward trajectory has softened in the last year. The Cult Wines Global Index—based on data from the website Wine-Searcher—is down nearly 3.9% for the year through Aug. 31, compared with a gain of 37.68% for the five-year period through the end of August. 

Similarly, whisky bottles tracked for the Knight Frank Rare Whisky index rose 322% over 10 years through June 30, although the index fell 4% in the 12-month period through the end of June. The index measures U.K. auction prices of 100 bottles of the “oldest, finest, rarest single-malt Scotch,” according to Knight Frank. 

A selling point for Cask100 is that the fund won’t only buy examples of single-malt whisky or classified Bordeaux, for example, but instead will diversify its portfolio by buying across producers, vintages, and regions. 

For instance, the fund will own rare Scotch whiskies, but also Japanese whisky and bourbon in bottles and casks, says Brian Ward, Winston Art Group’s director of fine wine and whisky. Currently the fund is looking at buying a cask from the now shuttered Japanese Karuizawa whisky distillery in addition to a cask of Scottish Bowmore 30-year-old, Ward says. 

That diversity will “help offset adjustments in the market,” he says, and will help compensate for any misses, which are “somewhat inevitable.” 

The fund already has bought a Macallan Red Collection 78-year-old, noting that a bottle of this single-malt sold for US$106,000 within the last six months at Sotheby’s. It also has a single-owned collector of 145 rare bottles of bourbon that have a track record of appreciating 41% over five years. Producers in the collection include Pappy Van Winkle, Orphan Barrel, Colonel E.H. Taylor, and WhistlePig. 

About 60% of the Cask100 portfolio is likely to be in whisky, including bottles and casks, and 40% in wine, because of the faster appreciation being realized in whisky at the moment. That mix could change in the future, however, Ward says. 

Unlike funds that are offering investors personalized portfolios of wine and spirits that operate more like separately managed accounts than mutual funds, Artory/Winston will create a single portfolio.

The bottles and casks purchased will first be identified through Ward’s expertise as a long-time appraiser of fine wine and whiskies. His approach will be to look for producers and regions that are likely to appreciate more than others. 

According to Winston’s data, wine, for instance, has appreciated by about 10% a year. Yet there are producers and individual vintages that are likely to perform better than that, especially as recent price drops have created opportunities to find good values, Ward says. 

“There’s been a slight downturn after Covid, kind of a correction, which is something that is actually kind of exciting that we could take advantage of,” he says.

All bottles or barrels that Cask100 buys will be valued by a committee that includes Ward in addition to a master of wine, a master sommelier, and a Scottish whisky expert. Any purchases also will be independently appraised.

For Cask100, due diligence and other legal data will be recorded on the blockchain, says Nanne Dekking, Artory’s founder and CEO. Eventually, Dekking expects there will be digital trading in these and other collectible assets via tokens. 

“It has always been our mission to combine technology with exceptional domain expertise,” he says.