Whisky: the best performing asset class of the decade

“Whisky is the best performing asset class of the last decade”. That’s a subject title designed to get you to open an email. And open the email I did.

I’m not sure if it was a scam or genuine – there is evidence it could be either – but with tempting “tax-free returns of 20% per annum” and an “export value growing by 7.8% ”, I decided it might be fun to research.

It turns out there are two principal ways to invest: buying bottles or buying casks. The challenge with bottles is that it’s difficult to invest serious money as you need an awful lot of them to make it worth investing at all, and you have to find buyers and sellers at auction. In the case of casks, blenders will always need whisky, so there is a stronger market.

But as with any investment there are no guarantees you’ll get a profit and prices can be volatile. Once you take out storage fees and trading commission, returns appear to be more along the line of 10-11% per annum in recent years*.

That’s not a bad return at all – but it’s not as good as some investments more familiar to me. For example, the average fund or trust investing in the technology sector has achieved annualised returns of 20.23% over the last decade after fees**. The average US equity fund or trust has returned 12%-15%** and the average UK Smaller Companies vehicle around 12%**.

Of course, there is another way to invest in a dram or two that combines the familiar with the unfamiliar: investing in the whisky companies.

Diaego, Pernod Ricard and Campari Group are popular holdings among a number of Elite Rated managers. We asked them why they believe they are good investments.


Diageo’s whisky brands include Oban, Johnnie Walker and Bell’s and the share price has risen 168% over the past decade – giving annualised returns of 10.38%^^. A top ten holding^^^ in The City of London Investment Trust, manager Job Curtis told us: “Diageo is the world’s leading spirits company and also owns Guinness beer and a 34% stake in Moet Hennessy. It is very well diversified internationally with 39% of its sales in North America, 22% in Europe, 20% in Asia Pacific, 11% in Africa and 8% in the rest of the world. In addition, it invests continually to improve production efficiency and quality.

“The company is well placed to benefit from the reopening of economies as people go to pubs, bars and restaurants again. The pent-up demand for consumers to spend, backed by the high savings ratio, should be supportive of its premium brands. Diageo has grown its dividend by 4.1% per annum over the last five years. It has for many years been a core holding in City of London’s portfolio and gives exposure to growth in both developed and emerging markets from the world leader in its sector.”

Diageo is also a top ten holding*** in Ninety One UK Alpha. Manager Simon Brazier added: “Diageo’s diversification by geography, category, channel and brand make for a resilient cocktail. Through the pandemic, Diageo remained committed to its marketing and brand investments – which runs at over £2bn a year – positioning it well for continued growth as key markets begin opening up this year.

“As the largest distiller, and one of the largest drinks companies in the world, it is perhaps counterintuitive to think that Diageo only has less than a 2% share of the estimated £850bn alcohol market globally, which gives an indication of the opportunity for growth ahead. Despite the small headline market share, as a large and mature consumer goods business, the company enjoys material barriers to entry, particularly in its aged brown spirits categories. Diageo should be able to continue compounding value for shareholders as it grows.”

Pernod Ricard

Pernod Ricard has Ballantine’s, Braemar and Chivas Regal among its whisky brands. Its share price has risen 62% over the past decade giving annualised returns of 4.89%^^.

Niall Gallagher, manager of GAM Continental European Equity, who holds the stock told us: “Pernod has high exposure to the recovery trade as economies reopen more widely. The pandemic has fundamentally shifted consumer preferences to more premium, trusted brands such as those in Pernod stable, while the step function in e-commerce is positive for long-term margin expansion.

“The company has consistently prioritised brand investment – with advertising stable at around 16% of sales, which bodes well for long-term brand equity and returns. Pernod has a higher combined share of sales derived from China and India than peers (20%) – two structural growth markets, the former of which has recovered sharply while the latter is presently on hold but will recover in due course due to young demographics and rising middle class. Looking out beyond the next 6 months, the shares offer compelling valuation upside from current levels.”


The Campari Group has a smaller range of whisky brands that include Wild Turkey and Glen Grant. It’s share price has risen 315% over the past decade giving annualised returns of 15.31%^^.

It’s a holding in Threadneedle European Select, along with the aforementioned Pernod Ricard. Manager Ben Moore said: “Both are excellent businesses with strong brands operating in concentrated markets. Drinks brands are difficult to replicate – the major whisky and cognac brands are centuries old, for example. Coupled with this, brown spirits need ageing to command premium prices and high margins – this creates a further barrier to entry owing to the capital cost and delayed returns. Pernod effectively controls a lot of the future stock in the industry, held in barrels in its cellars. Coupled with all of this, there are major distribution efficiencies if you own a number of brands – the client base (retail, bars etc) is similar for each brand.

“Campari is a different business, reliant more on the cocktail market, with brands that although old do not need ageing to the same extent. But they too have a strong market position: it is virtually impossible to imagine a Negroni, a 100-year-old cocktail, still popular today, produced without Campari. The cocktail market has clearly suffered under lockdowns, as most are bought in long-shuttered bars. But as those bars open, there is a chance this may reverse.”

Ben told us more about Campari in this podcast:

*Source: Whisky Invest Direct
**Source: FE fundinfo, annualised returns in sterling for IA and IT sectors over 10 years to 9 June 2021
^Source: Diageo, fiscal year ending 30 June 2020
^^As at 10 June 2021, investinganswers.com
^^^Source: fund factsheet, 30 April 2021

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice. Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.