Interview: Discuss Bourbon Investment with Jeremy Kasler, CEO of CaskX
CaskX is looking to bourbon as the next big thing to invest in.
Like stocks and bonds before, those who collect valuable spirits are turning to whiskey, and more specifically bourbon, for investment.
As technology evolves, it is now easier than a year ago for investors to get their hands on stocks of rare and fine spirits previously reserved for distillers and super collectors.
CaskX, a Los Angeles-based investment firm, first proved this pattern with Scotch, and last year turned to bourbon as it continues to steer qualified investors towards this piece of the fastest growing category in the spirits industry.
CaskX CEO Jeremy Kasler paid a visit to The Whiskey Wash and gave insight into how high net worth individuals can access it, especially as the barrier to entry for whiskey investment( e) is traditionally raised there.
Long-standing conventions in the industry stipulated that casks could only be sold to private individuals in order to provide the cash needed by distilleries, which meant that investment was really only open to insiders, large retailers and institutional buyers.
The Whiskey Wash: What about this time period do you think investor appetite for bourbon and whiskey is at an all time high?
Jeremy Kasler: Appetite for bourbon as an alternative investment is certainly at an all-time high due to two major factors.
The first factor is an increased desire among investors to diversify their holdings with tangible assets. With the continued uncertainty surrounding traditional financial markets and the volatility of new asset classes, such as cryptocurrency, investors are drawn to the relative safety offered by an investment in bourbon barrels. Unlike most types of investments, barrels of bourbon are a physical asset that has real intrinsic value – every barrel will eventually be consumed.
The second factor is the growing demand for bourbon in international markets. Currently, more than 10 million barrels of bourbon are aging in Kentucky alone, but distilleries are still unable to keep up with demand. If you take a tour along the Bourbon Trail, this growth can be seen as distilleries invest heavily in expanded production and storage facilities. Investors who recognize market growth naturally want to find a way to capitalize, and investing in barrels of bourbon gives them that opportunity.
TWW: How do you become a certified private investor? And how do we do that with CaskX?
JK: Due to CaskX’s commitment to offering bourbon barrel investments in an SEC-compliant manner, investors must meet the Accredited Investor Requirements as defined by the SEC. Investors who meet these conditions can open a CaskX account and access current investment offers.
TWW: In the world of investing in stocks, bonds, classic cars and real estate, where does bourbon stand in terms of desirability?
JK: Bourbon and Scotch whiskey casks have become more than just a niche offering. Today, cask spirits are considered a mainstream investment product that offers a powerful alternative to other tangible assets such as wine, art, diamonds and cars.
The most intriguing aspect of bourbon barrels as an investment product is the fact that the liquid inside continues to improve over time. While most tangible assets stay the same or even depreciate, bourbon barrels naturally improve over time.
Historically, a bourbon that has matured for 6, 8, or even 10 years has commanded a significantly higher price than a bourbon that has only been aged for a short time. Investors can buy newly distilled liquor for a fraction of the price of a well-matured bourbon and reap the benefits as that distillate is processed over a period of years.
TWW: How has the lifting of EU tariffs helped the world of bourbon investing?
JK: Fortunately for bourbon producers, the short-term impact of EU tariffs has been offset by continued strong growth domestically over the past three years. However, the removal of tariffs will likely lead to a 30-50% increase in exports to the EU in 2022, adding additional demand to the already limited supply of bourbon. As distilleries seek to increase production, investors can play an important role in providing the financial resources needed to expand production capacity and be rewarded for their investment as cask bourbon becomes increasingly scarce.
TWW: How does your average investor start the process?
JK: Investors start by opening an account with CaskX. After opening an account, clients speak with an advisor about their individual investment objectives, desired holding period, risk tolerance and overall budget to make recommendations accordingly. When a suitable investment offer is identified and acquired, the investor receives full documentation of their purchase and can access their portfolio from a web portal.
TWW: How did CaskX do with the previous investment in Scotch?
JK: Scotch whiskey casks remain a strong alternative asset for many investors and CaskX remains bullish on the industry. To date, every investor who has purchased Scotch whiskey casks from CaskX has seen an increase in the value of their holdings. CaskX’s entry into barrel bourbon offerings was the result of careful analysis of the bourbon market and investors’ desire to access these investments. While the Scotch whiskey industry has already seen a period of massive expansion and growth, the bourbon industry is only now entering a period of rapid growth that is expected to parallel or even exceed that of Scotch whisky.