Safety & Security

A lot of companies will promise and guarantee high returns per year of between 15%-20% and base this on ‘past historical data’. It is impossible to base this on historical market data unless it is internal data from a well-established organisation who have been running for many years. There is no reliable or recognised measurements of overall whisky cask performance. In other words there isn’t an index to track returns on whisky casks. It is also important to clarify that you do not receive an annual return on investment, you only receive a return once the cask is sold. Once the cask is sold then you can work out what the annual return would have been. This is the same with any physical asset, such as classic cars, vintage watches or fine art. We would also recommend to stay away from companies advertising the ‘Knight Frank Rare Whisky Index’ claiming 10 year returns in whisky being 586%. This figure is misleading and is reflecting the 100 rarest whisky bottles, not whisky casks. It is effectively comparing apples and pears. So if you see a company advertising this, and their enticing you in based around these figures, then we would recommend to tread extremely carefully and seriously conduct your due diligence as the Knight Frank Index is a reflection on bottled whisky, not whisky casks.

What Catton Casks Does – First and foremost we do not give any guarantees on returns that can be made and will make all risk warnings within the purchase apparent to each client before coming on board. We are aware of what the market can provide in terms of value and will make all information regarding the market clear to anyone who leaves their details with us, the positives & the negatives.

To operate within the Scotch whisky cask market as business, a company must obtain a WOWGR if they are deemed to be a ‘Revenue Trader’ or have a ‘UK Duty Representative’ acting on their behalf. WOWGR stands for Warehouse Keeper and Owners of Warehouse Goods Regulation. It is a certificate issued by HMRC and is extremely hard to obtain, but once obtained, your company is put onto the register and HMRC have given you the green light to buy and sell whisky casks in bond without having to pay VAT or Duty. If you have obtained this certificate and you are placed on the register then you are classified as a ‘Revenue Trader’. The definition of a revenue trader is a grey area, how many casks do you need to buy and sell before being deemed one if you are an individual and do you need a WOWGR if you are a private individual? So, to take any grey areas of out of the equation, we have obtained this certificate so our private clients do not have to, enabling them access to this market.

So what should you be looking out for? Does the company you are looking at have this license? Do they promote they have it on their website? If they do claim to have this certificate, then ask if they can send it to you for you see yourself. If they are not a UK based company, then they should have a UK Duty Representative who are on this register which will enable them to buy and sell whisky casks in bonded warehouses. Ask who this is and if you can see evidence that they have a UK Duty Representative.

What Catton Cask Does – We have our WOWGR number on the footer of the main page of our website along with our VAT number and company number. We also have this number on the ‘Investment FAQs’ tab under ‘What is a WOWGR’. If any prospective client wants to see this certificate then we will send this to them on email.

Any company should have their registered address on their website, if not you can search for this on Companies House. To go into further detail you can then search this address on the internet or on ‘Google Maps’. Does it look like an area or a building which a reputable company would work from? Does the company offer to meet you in the office or meet you face to face at all?

What Catton Cask Does – We are very transparent that we have 2 offices. One in Great Portland Street, where we are registered, and one in Lower Thames Street, London. We accommodate meetings regularly in both offices, and also hold meetings in whisky bars in London to meet our clients.

A huge red flag would be a company who has contacted you without your consent and without you leaving your details with them. If this is the case, then our professional advice would be to block their number or never speak to them again. Alternatively, you can sign up for free to the Telephone Preference Service (TPS) which will try and prevent you from receiving unwanted calls.

What Catton Casks Does – Catton Casks only provides the proposition of buying casks to prospective clients if they have contacted us directly and have left their details specifying this request. We never cold call, and we only onboard a client once we are comfortable that there is a good understanding from the prospective client on how the market and investment works. We also comply heavily with Anti Money Laundering checks prior to onboarding any client. If an individual who has left their details with us and no longer wants to be contacted, we will simply take those details off our system so there is no further communication. Our monthly newsletter also provides the option to unsubscribe if they wish to stop receiving these emails.

Anyone parting with funds should have full confidence they are doing it in the right fashion, and not unwillingly. Do you feel as if they are pushing you into something you do not feel 100% comfortable about? Are they bringing on unnecessary urgency, using old fashioned, pushy sales tactics? Ultimately, opportunities will always come up again, so if you do not feel fully comfortable, then take some time to digest all the information before making a decision.

What Catton Casks Does – As investors ourselves, we understand the process when parting with capital and how lack of information is daunting when making the decision. We ensure we provide as much information as possible surrounding the market and how the investment process works. We do this before discussing any clients personal investment. We have also created a buying structure which provides protection and time before any commitment is made. Firstly, we never ask for you to pay in full, even if you have digested all the information and are comfortable. We always recommend putting a legally refundable deposit down which allows you to go over the proposition in detail. This deposit is refundable for 14 days, so gives you two weeks to consider all the information and ask all the relevant questions. If you decide within the 14 days, you do not want to commit, then legally we refund that deposit back to you. All of our investments are backed by a 14 day cooling off period to ensure that investors are happy with the purchase. If the investor is not happy with the purchase within the 14 day cooling off period, then they also receive a full refund of the investment amount.

This is a simple one, a reputable company should have a Trust Pilot or Google account of testimonials from genuine clients about their experience. A charlatan company most likely will not have this.

What Catton Casks does – We have an active Trust Pilot account which you can access through our website to view verified client’s experiences.

Non legitimate companies are most likely to lur prospective clients in by claiming they have access to the biggest names and brands within the industry, such as Macallan & Port Ellen. The truth surrounding this is that since we have been operating, we have not had access to Port Ellen and Macallan casks come up very rarely. Below is some guidance on the purchasing of your whisky.

Have you received information surrounding the distillery your cask is from? Do you know the region, information on the master distiller, the current bottle price in the market for the casks in your proposal? Have you received the cask specifics, such as AYS, OLA/RLA, ABV, Cask Type and Cask number? Are the casks in question aligned with your investment strategy? Will they provide you with a contract and an invoice?

What Catton Cask Does – One of our main areas of expertise is ensuring that the proposal we put in front of a prospective client is aligned with their strategy. For example, if you are looking to hold the casks for the entirety of its life span, then we would most likely recommend a young cask such as a New Make (0-3 years and 1 day until classified as Scotch whisky) or 3-5 year old casks, to take advantage from the ground level up and get in at the best price possible. You should ask for an explanation of how the casks proposed are aligned with your strategy and also how they are going to be sold. We ensure each client receives a sufficient amount of information, ranging from the history of the specific distillery, why have you been proposed that specific cask, and the strategy associated to it. All proposals will come with the cask specifics which are Brand, Cask Type, Year, AYS (Filling Date) OLA/RLA, ABV, Cask Number and Price. Once a proposal is agreed on and the client wants to proceed, then you will receive a purchasing contract and an invoice. Our contracts have been over looked by HMRC consultants and multiple lawyers based in Scotland.

For an novice investor who has not had experience within the whisky market, we have outlined some key points which we believe are crucial when deciding what type of whisky cask you want. Naturally, some brands that we have access to can trade at premiums compared to others, however with any investment there is no guarantee on who will be obvious winners and what the ultimate financial return will be when you want to sell. The below is what you should bear in mind and look out for when considering a purchase.

• Single malt whisky is generally considered more valuable that single grain whisky
• Due to whisky maturing in cask, the general rule of thumb is that the older the cask the more valuable it will be compared to a younger cask.
• First fill barrels are casks that are being used for Scotch maturation for the first time, however may have been used previously for other spirits, such as sherry or bourbon. These casks are usually considered more valuable.
• Different casks and finishes mature whisky at different rates of time and also trade at different prices. For example, Olorosso or a Pedro Ximenez (PX casks) are Sherry casks and are much harder to source. They give the whisky a different finish in flavour. Whisky which are maturing in these rarer, more sought after barrels are typically more expensive.

Companies who are not transparent will downplay the risks within the investment. As transparency being one of our core values, it is important that you are aware of the pros / cons within the investment.

Pros

• Scotch whisky is a large market, contributing around £6.2 billion to the UK economy and is responsible for 25% of UK food and drink exports.
• There is a global demand for Scotch and exposure and demand is only increasing worldwide.
• Limited correlation to major indices and has limited exposure to devaluing currencies
• *Can be tax efficient. No VAT or Duty is applicable when buying & selling in bond and no Capital Gains Tax to pay on profits
• Overlooked by HMRC. Unlike other alternative assets, HMRC have a watchful eye on the market due to them taking their cut in VAT and Duty from when a cask comes out of bond. This means any company who is on the WOWGR register has to ensure they are following the correct guidelines and protocols.
• It is a tangible asset which holds intrinsic value. Unlike a stock or share which is a paper investment, whisky casks are in physical format, providing more stability throughout the investment cycle.

*We always recommend seeking a Financial Advisor and/or Tax expert surrounding the investment and your personal tax situation.

Cons

• If the global demand for consumption for Single Malt Scotch whisky slows down, this could impact negatively on your cask investment.
• If there is an oversupply of whisky. If the supply is outweighing the demand for casks and bottles then it would be harder to showcase your cask at a premium in the future when you want to sell.
• If there is damage to your cask whist in the warehouse. Even though we have the relevant insurance in place, it may mean that we would have to substitute your cask with a similar cask which may be slightly different. This could be a cask which is slightly different in age or OLA. If this is the case, we will ensure you are renumerated accordingly.
• Changes to legislation involving the sale of whisky.
• Certain countries implementing a prohibition of alcohol.
• Outbreak of global conflict or a natural disaster catastrophic enough to shut down global supply chains
• Inflating casks prices. If you were to purchase a cask well above the market value then this would effectively mean you are offside on the investment and not getting in at a competitive price.

Due to whisky casks not having a spot price such as gold or stocks and shares, prices surrounding casks vary and can seem quite vague. They vary due to a number of reasons, such as where they were distilled, the size of the cask it has been filled in, the finish of the cask and what is happening within the market at the time. Different companies offer casks at different prices. It is important to ensure if you are considering the market to ask what the price of the cask is being sold in the market currently. The best person to ask if someone you trust, such as a company you already work with or to shop around yourself and compare prices.

What Catton Cask Does – We are fortunate that we have multiple trusted suppliers within the market. These are either distilleries selling directly to us or for more matured rarer stock, suppliers that we have very strong relationships with who offer us great prices and only deal with selected businesses. It is extremely important that we as a company are purchasing at the right price which enables us to then offload this price to our clients, meaning our clients are getting into the market at the most competitive price possible. If we buy casks in bulk, we are able to negotiate wholesale rates which would not be achievable if you were to purchase the cask singularly.

Any legitimate business should have viable routes to go down to sell your investment. This is why Catton Casks are always networking and building relationships within the market to solidify these exit strategies. Charlatan companies will not go into detail on their exit strategies quite simply because they do not have them.

The questions to be asking are:

• Who will buy my cask afterwards?
• Is there actually a market for the cask I have bought?
• What are the costs in selling my cask?

At Catton Casks we have the below avenues to sell and are always looking for more. We are currently working on a new exit strategy which is extremely exciting and will inform all existing clients and prospective clients when it has been created.

• Sell to another client via our 3-tier strategy
• Trade the cask on the open market to a cask broker, supplier, investment company.
• Purchase the cask back ourselves to bottle or hold
• Create our own auction
• Sell the cask through a third-party auction house
• Sell to Independent Bottlers