In 2020, the Knight Frank Luxury Investment Index reported that the value of rare whiskey – including bourbon – had grown more than 560% in 10 years, causing purchasers of fine wine, gold, and other stereotypical investments to do a double-take.
Regrettably, for individuals looking to explore bourbon as a potential investment or business venture, venturing into the bourbon industry can be quite challenging. Among the main reasons for this are the long-term costs needed long before the return, as it takes years for whiskey to age, not to mention most banks’ unwillingness to lend money to distillery startups.
While it is a rather multifaceted and complex process, it’s not impossible! In fact, you can choose to invest in bourbon in several ways:
Brindiamo Group sources bulk liquor and offer third-party consulting for our clients, which includes financial solutions, beverage mergers and acquisitions, branding, and more.
While you can always search for and acquire rare bourbon on your own – a risk in and of itself – the truest form of investing in liquid sourcing, and the most cost-effective, is in a league of its own: buying in bulk. Why? Even if bourbon sells well by the bottle, the smaller the source, the quicker your stockpile will dry up.
Ensuring a consistent supply of top-quality bourbon is essential for your business or personal investment, especially if the whiskey you're acquiring needs several years to mature (minimum of three).
Considered a longer-term investment, selling or purchasing barrels through a distillery is another way to muddle your way into the bourbon world. If purchasing from a distillery, a single barrel can cost $5,000 to $15,000 – and even higher – depending on the distillery, their particular bourbon, and how they will price the bottled product. According to Wave Financial, barrels can steadily appreciate three to five times their initial value in five years (a 20% rate of return for investors).
Young distilleries, especially, are often seeking investors to purchase barrels to support their business growth and raise awareness of their brand. Some investors may find value not only in the return on investment but also in the exclusive barrel selections, or "bakes."
Something to be wary of, however, is which distilleries you choose to invest in. In addition to the risks characteristic of the industry (like theft and bankruptcy), not all distilleries are created equal. For example, not every distillery will produce high-quality spirits, meaning you may not see the return on investment you might have hoped for. For this reason, it helps to have a bourbon expert in your corner before purchasing barrels.
Another option to consider for investing in bourbon is to join the trend – either by starting your own distillery or creating your own brand. Opening a craft distillery, in particular, holds great potential.
Perhaps the initial downside, however, is that it takes an average of $3 to $5 million to open a distillery. Even when you know your investment can be profitable over time, several million dollars worth of startup costs can be intimidating.
When Bardstown Bourbon Company was first getting started and looking for the right investor for their business, they turned to Brindiamo Group. Contact us about helping you secure private equity or financing your business needs.
Networking is a crucial ingredient in your bourbon investment plan that you cannot overlook. Particularly in the adult beverage industry with its complex three-tier system, networking to secure liquid sourcing or business partners is vital for long-term success.
Brindiamo Group is in the perfect position to help. One of Brindiamo’s primary goals is to give our clients access to our global network of partnerships within the bourbon industry.
Want to learn more about what a partnership with Brindiamo Group could look like? It won’t cost you anything to have a conversation about how we can help your business. Contact us today!