World: Whisky market faces challenging times as decline deepens

The latest Whisky Intelligence Report by Noble & Co reveals that the bubble of soaring prices for rare whisky may have finally burst, The Drinks Business reported on December 10.

The fine and rare whisky market, historically known for its stability and investment potential, has hit a rocky patch in 2024. According to Noble & Co’s latest Whisky Intelligence Report, the market is experiencing a sharper-than-expected decline, with auction values and volumes falling dramatically.

The report reveals a 50% year-on-year drop in auction values for Q2 2024, accompanied by a 52% decline in the number of bottles transacted. These figures mark an acceleration from the already tough conditions in the first quarter. May, historically a key month for high-value auctions, accounted for just 24% of annual value traded, significantly below expectations.

The narrative was similar last year, with Noble & Co’s 2023 report stating that the whisky market had “taken a turn for the worst.” Duncan McFadzean, the head of food and drink at Noble & Co, said: “If whisky investors and collectors were in choppy waters last year (2023), this year they’re in the eye of the storm and are battening down the hatches,” The Times reported.

Economic factors are playing a major role in the downturn. With inflation squeezing household budgets, consumers have turned to more affordable options. Bottles priced under £1,000 now account for over half of the total value transacted, an increase of 43% since last year. Meanwhile, the average price of bottles sold at auction fell by 19% in Q2, with the steepest declines in April and May.

“Top-end investors and collectors are very cautious about price and value. While there is always room for record-breaking prices for the rarest bottles, the bubble in which fine and rare Scotch whisky has been traded for so long may have finally burst.”

While luxury whisky has traditionally been more resilient, the current economic climate has weighed on the premium end of the market. Bottles aged over 50 years saw unsold rates soar to 37% in Q2, up from just 16% in the same period last year. Collectors appear unwilling to part with prized assets at significantly reduced prices, further compounding market stagnation.

Even bottles priced above £10,000, typically sought after by international collectors, suffered significant volume declines, with May recording a dramatic 91% decrease. However, average prices in this segment showed a slight increase, underscoring that the decline is driven more by volume than value.

Speyside remains the dominant region, driven by The Macallan, the single malt owned by Edrington Group. Yet, even this powerhouse has faced challenges, with a 34% decline in auction value from April to July compared to last year. Notably, The Macallan accounts for nearly half of the total volume drop across all distilleries.

Despite the challenges, there are glimmers of resilience. Brands like Glenfarclas and Port Ellen posted modest gains, offering a rare bright spot in an otherwise bleak landscape.

Noble & Co suggests that easing inflation and stabilising interest rates may offer some relief in the coming months. However, the whisky auction market has yet to reflect these broader economic improvements. Buyer caution remains high, and the anticipated recovery is proving elusive.

16 December, 2024