A recent spike in single malt Scotch auction prices has us wondering if these bottles are meant to be opened.

By Adam Campbell-Schmitt
October 15, 2018
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Whisky is a spirit that certainly has range—from the watery well whisky served as part of a $5 beer-and-a-shot special to premium and rare labels that demand thousands of dollars per pour. Recently, the top of that range has ascended even higher as record-breaking auctions have raised the bar on what people will pay for a single a bottle. Over this past weekend, expectations were high that we’d see another whopping figure when Sotheby’s put a Peter Blake-designed bottle of The Macallan 1926 60 Year on the block in New York City, but the actual sale price (buyer's premium included) fell short at only $843,200 (only!). That same Scotch (with a label designed by Valerio Adami) had previously raked in $1.101 million at Bonhams in Edinburgh earlier this year, setting the current world record. So what happens now? Why is Scotch suddenly so valuable? Has the luxury liquor market peaked? And should these buyers actually drink their million-dollar whisky? I asked experts from The Macallan and Sotheby’s to weigh in ahead of Saturday’s auction.

What creates value in whisky?

Before we dive into why whisky auction prices have boomed, it’s important to understand why not all whiskies are created equal. Some valuable attributes—like which ingredients and water are used (and from where), which barrels are chosen, and the time spent letting alcohol age before bottling—are apparent, but they're also, seemingly, duplicatable by any number of distilleries. That's where supply and brand recognition come into play.

“There are various things that increase the value in whisky. Limited runs that are in short supply or rare bottlings from established, high-end brands like The Macallan tend to be the biggest drivers of value increase,” Nicolas Villalon, Brand Education and Prestige Manager for The Macallan, told me via email. “In the case of The Macallan 1926 60 Year Old, only 40 bottles were ever produced—12 of were given to British artist Sir Peter Blake, who co-created the Beatles’ album cover for Sgt. Pepper’s Lonely Hearts Club Band, to design. Twelve more were given to the Italian artist Valerio Adami, one of the most acclaimed pop artists of the 21st century, to design. In addition, at the time only one bottle per continent was released. Finally, one was commissioned to internationally acclaimed painter Michael Dillon so it could be customized by hand. The rest were either gifted or the location is unknown which makes these bottles extremely rare and valued by collectors across the world.”

Does the artwork outweigh the whisky?

Beyond the whisky, the artwork is a major factor in value as Jamie Ritchie, Worldwide Head of Sotheby’s Wine, pointed out. “The artwork on the labels brings a third element, adding to the uniqueness and rarity… In addition, the aesthetic enjoyment of the labels enhances the appeal. Sir Peter Blake incorporates popular culture into his collages, bringing the events of 1926 into focus, such as Bobby Jones winning the U.S. and British Open in golf, the death of Rudolph Nureyev and the attempted assassination of Mussolini. If you look at the record cover of The Beatles’ Sgt. Pepper's Lonely Hearts Club Band, you see the similarities of his creations.”

But, Villalon insists, the Scotch is still the star: “While the artwork certainly drives up the value, the 60-year-old liquid inside is exceptional and rare on its own, which combined with the art makes for a wholesome masterpiece.”

Why are whisky sales records breaking right now?

While rarity is enough to increase the asking price on a bottle, part of what drives the market higher is, simply put, buzz. “The interest from connoisseurs and private collectors has been growing in both the U.S. and Asia for a number of years, as people look for the combination of quality and rarity in what they collect and enjoy drinking,” Ritchie explained. “As prices have risen, with valuable transactions occurring in public auctions, the news coverage has increased both awareness and demand.”

Who is buying this stuff?

Ritchie said the buyer for luxury beverages is pretty much whom you’d expect: diehards and collectors who want the “best of the best.” Another opportunity exists to sell to “family offices who seek alternative investments.” With that third market sounding much less like the aforementioned connoisseurs, I asked if Ritchie thought the market for rare whisky was going mainstream. “There is definitely a broadening of the market from both a geographic and demographic perspective, similar to wine. As wealth is created by a wider group of people who aspire to enjoy the finer things in life, consuming and sharing great wines and spirits provides a memorable experience that is more greatly appreciated by today’s consumers. These unique experiences are what people value more and more today.”

What does a bottle not selling for $1 million mean?

With this most recent auction falling short of its publicized potential sale of $1.2 million, it begs the question of whether the market has spiked. Prior to the auction, Ritchie said a lower sale price would represent a lull, rather than a burst bubble. “Records are there to be broken, it’s just a matter of how long that takes between each record. In the long term, quality and rarity will always be valued, so as additional wealth is created, prices will rise and records will be broken. The Macallan 1926 won the Guinness World Record for the most expensive bottle of spirit in 1987 when it sold for £5,000. Today, adjusted for inflation that would equate to roughly $19,000. The fact that [a] bottle of Macallan 1926 has sold for over $1 million, which equates to a 5,500 percent increase after inflation—it’s a pretty good return.” Same goes for the bottle that just sold for $680K (the hammer price minus the 24 percent house fee), it would seem.

What does this ultra-rare Scotch taste like?

All of this also begs another question: If the quality of this whisky is so high, then it must taste incredible, right? I asked The Macallan’s Villalon to weigh in and there’s no doubt a 60-year-aged Scotch is going to deliver on deep, complex flavors. “A whisky as old as this one, having matured over such a long period of time in oak, will develop a complexity like no other. As the flavor compounds are extracted from the oak they will react with each other in the whisky to create new flavors. The more time they spend together, the more reactions can occur, which adds layers of aromas and increases the richness of the whisky.”

But given that only one bottle of The Macallan 1926 60 Year has been known to have been opened (some are unaccounted for), the prospect of its exceptionalism is still mostly speculation and reliance on the extreme quality control of the distillery’s whisky makers. “The Fine & Rare range, which The Macallan 1926 60 Year Old is part of, represents the very best cask from a specific vintage year identified by our whisky makers. This, in and of itself, can be regarded as a badge of excellence.”

Should you drink your million-dollar whisky?

And all of that begs a final question: If whisky is meant to be enjoyed, should the owners quit sitting on these bottles and just go ahead and enjoy ‘em already? I asked both experts for their professional and personal opinions as to whether a million-dollar bottle should be opened and drunk.

“In my personal opinion, if anyone is comfortable opening a bottle at this price [to] enjoy drinking and sharing it, then they should certainly do so, as they will be drinking a piece of history and be one of very few people alive who have ever tasted it,” Ritchie said. “The interesting thing is that we all have a price point for spirits that we are comfortable drinking every day, and on a special occasion. In my professional capacity, it is more likely to be kept as an investment that should appreciate over time.”

Villalon defers to the collector but admits it’d be a hard opportunity to pass up. “It’s really all up to the collector or whisky aficionado that purchases the bottle. These limited and priceless bottles are truly works of art, but it would definitely be difficult for me to resist a taste!”

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