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Do whiskey barrel sale and buyback schemes operate in your country?

A report on the fact that the whisky barrel sale and buyback investment scheme of Nant Whiskey in Australia is not overseen by any regulatory authority due to its structure.

Just wondering if similar schemes operate in your country

Whisky investment scheme instills doubts @ The Age

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Comments

  • edited February 2016

    Thanks @jacksonbrown that is another one in a slightly different vein to the same story

  • Don't know if that would work here, but if it's too good to be true....

  • edited February 2016

    How is nobody questioning that a single barrel of new make spirit be worth $25,000aud ($17,500usd)? Even if these are larger 63 gallon hogsheads, the price is so far outside reality it's insane. To put it in perspective, this is like a white whiskey selling on a retail shelf with a sticker price around $125usd for a 750ml. That 4 year would need to sell for what? $175? $200? If we are talking about 53 gallon barrels, push the prices up by 20%.

  • edited February 2016

    Or is it $25,000 for two? In which case, it would be only slightly less insane.

    Another comparison, someone over at ADI was selling 10yo Bourbon for $4,500usd a barrel.

    Even the silly Jack Daniels/Costco barrel promotion had a barrel selling at retail for $9,800 (bottled and delivered).

  • This is a very common way to get funding for your whiskey company here in Sweden. For example Box Whisky a few miles away from me sells a 10 gallon smokey whisky for $ 2,727 whereof $1,608 is a loan which is paid back after bottling.

    The owner of the barrel decides if he wants the whiskey to be store longer then 3 years and then pay extra for this. He also owns the barrel and can have it delivered home or chose to fill it again.

  • MoD that sounds like a business model. What I have a tough time understanding is the basic premise of giving someone money for a "guaranteed" return that's way above market. If you want to outperform bonds and treasury notes, then there's always risk. Like you mentioned, part of the barrel with you guys is a loan (essentially without securitization) plus you get a barrel.

    @grim 17.5k / 55gal sounds about right for retail. Assuming 60% ABV going in and a10% loss, I'm thinking you can get 375 750ml out of it. That's $47 a bottle.

  • edited February 2016

    Won't get a bottle of Nant for $47. A 500ml bottle starts at $150 and goes up over double that.

    Buy Nant Whisky

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  • edited February 2016

    Agreed, I thought that looked like a nefarious scheme.

    Sam's club is selling barrels of JD bourbon for under 10k.

    image

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    600 x 800 - 83K
  • JD's under $30 a 700ml bottle here, like i said, some of the Nant medal winners retail for over $400 a 500ml. They can't be compared.

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  • edited February 2016

    @BearRiver said: Agreed, I thought that looked like a nefarious scheme.

    Sam's club is selling barrels of JD bourbon for under 10k.

    What are the peticulars on that I wonder? Cask strength or proofed down?

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  • edited February 2016

    Jack Daniel’s By the Barrel

    It's offered at 45% once bottled in Australia, but if you buy the barrel it's your barrel and i assume they'll do whatever you tell em to do with your barrel, including shipping it to you full or bottling at whatever strength you wish.

    Buying Jack Daniels By the Barrel @ Maxim

    StillDragon Australia & New Zealand - Your StillDragon® Distributor for Australia & New Zealand

  • Barrel adoption programs seem to pretty popular. How are they different?

  • edited February 2016

    Looks like Starward do something similar too.

    Our Top Three Victorian Whisky Distillers @ Drinks Catering Blog

  • It's a cool idea, especially for enthusiasts. We are toying around with it too, but want to make it more of a hands on experience for the buyer and their close friends. Not that they are going to do the work, but that they can experience much more of the process than just a plain old distillery tour.

    The part that rubs me wrong is creating a perception that this is a risk free investment vehicle.

  • Its supply and demand. Nant and other Tasmanian whisky have won extreamly high praise and awards. They are all small batch and in limited supply So about the only way to get your hands on some when it matures is to book your seat by securing a barrel. One Tassie whiskey sold on the shelf for $180 a 700ml bottle but had a limited 2 year waiting list. The same bottle now is being traded for $5000 off shelf as you cant buy it in a shop.

    This brings me to the reason why i got into AG whisky. I live in Tassie and want the luxury of drinking the so called best but couldn't justify cost so i make my own using the same materials as they do. To me my port barrel single malt whisky tastes very similar to Nant's port barrel expression. I am sure the experts could pick it apart but i cant and thats all i care about.

    I am going to enjoy the rest of my life sipping on whisky that some people dream about for very little investment all thanks to taking the time and effort in learning this fantastic hobby. A big thank you to members sharing experiences and contributing to our knowledge base.

    My set up is 100lr rims mash tun, 50lt keg boiler, SD 4 bubble plates, ultrasonic bath, dominoes and 25lt burbon and Port barrels, malted barley, filtered tap water, yeast, time and patience.

    Many of the experts in the industry today started just like we have but had the courage and motivation to go commercial.

  • edited February 2016

    Sure sounds like there is no supply problem, maybe, maybe not.

  • I totally get the private barrel model, but wasn't the thread about Nant soliciting investors to fund their working capital through an 9.5% loan with the barrels as collateral. Based on the report, Nant seems to be in trouble now with the return becoming questionable. The questing is if the barrels are actually a collateral. Then, based on the pricing that @punkin was taking about, you're golden.

  • edited February 2016

    Who gives away a 9.5% risk free return? Priced like junk bonds, sold like blue chips.

  • @punkin said: JD's under $30 a 700ml bottle here, like i said, some of the Nant medal winners retail for over $400 a 500ml. They can't be compared.

    That seems like a fair assertion. I did not register your post above mine.

    Must be nice to have that sort of market.

  • @grim said: Who gives away a 9.5% risk free return? Priced like junk bonds, sold like blue chips.

    I guess there's a difference with the 'purchase, buy back' model. If it does all go to shit at least you should still be the owner of a barrel of top shelf, single malt rather than a piece of paper.
    Sounds like this maggot would have that sorted too.
    It's a bit like purchasing 'off the plans' with a house. You just bought something for a lot of money that doesn't actually exist yet.

  • What are Aus laws regarding bulk spirit sales? In the US, a retail buyer would not be permitted to take possession of the collateral in bulk form.

  • Good question. I don't know.
    Usually you would need to pay the excise on the amount of alcohol. (from memory it's about $65 per liter of 100% ETOH)
    Not sure what happens if it never left the bond store but at a guess the duty is calculated and is payable when it leaves.

    Maybe Mech can fill us in.

  • edited February 2016

    My mistake, looks like its over 80 bucks now.

    Excise rates for alcohol @ Australian Taxation Office

  • @jacksonbrown , yes you are correct. No member of the public can take possession of the whisky until the excise of $81.05 per LAL has been paid. Normally the excise is paid as it leaves, the exception is if it is leaving to a bonded store. Under that scenario it may be transferred under bond.

  • The latest excise rates have been indexed and it is now: 3.2 LAL Other excisable beverages exceeding 10% by volume of alcohol $80.41 per litre of alcohol
    This means that a 63 gallon (286.65 litre) barrel at barrel strength 65% would incur an excise $14982.19. Which must be paid within 5 days of leaving the bonded area where it was stored.

  • @ElectricEd said: The latest excise rates have been indexed and it is now: 3.2 LAL Other excisable beverages exceeding 10% by volume of alcohol $80.41 per litre of alcohol
    This means that a 63 gallon (286.65 litre) barrel at barrel strength 65% would incur an excise $14982.19. Which must be paid within 5 days of leaving the bonded area where it was stored.

    FECK!!!!!!!!!!!!!

    Kinda makes the "$10k" price a little deceiving. Actually a lot deceiving.

  • Yeah, down hear in Oz we have the second highest excise rate in the world. Its either Sweden or Switzerland which is higher.

  • The lucky country =)) How much is a pack of 20's these days?

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