Is the whisky market waking up after the Covid binge?

First there was the whisky market binge. Prices for rare single malt whiskies soared during the low-interest rate era of the pandemic. Stuck at home, collectors and speculators splashed out on bottles they hoped would continue to appreciate in value. The market in rare whiskies had, after all, already had a great decade in the lead-up to Covid. From just before the first lockdown in March 2020 until the market peaked in May 2022, valuations climbed 58%, according to the Icon 100 index, compiled by market watchers Rare Whisky 101 to track valuations of 100 sought-after bottles.

Then came the hangover. Interest rates rose with the end of lockdowns and investors could get better returns from more conventional investments. The index fell 42% to reach a post-pandemic low last month. The headache continues. Yet, just like at the pub, where top-shelf prices are out of reach for most of us, prices for trophy bottles have held up much better.

This month, another of the auction-record-breaking Macallan 1926 bottles sold for £2.1m at the Macallan distillery at an auction held by Sotheby’s. It is the second-highest price fetched for a bottle of whisky in sterling terms. Another from the same batch of 40 bottles drawn from the same sherry seasoned oak cask in 1986 fetched slightly more in 2023. That one had sported a label with artwork by Italian painter Valerio Adami (one of 12), while the bottle that sold this month was one of the 14 that features a “Macallan Fine & Rare” label, first released in 2002. (Another dozen bottles were given labels with artwork by British artist Peter Blake and the remaining two had been left unlabelled.)

How is the rare whisky market faring?

Over time, bottles get drunk – especially when valuations are falling – and some inevitably get dropped. One of the Adami Macallan 1986 is reported to have perished during an earthquake in Japan, according to BBC News. That helps to support prices for the rarest bottles.

More broadly, the Scotch whisky industry has had a torrid time of late. That has been mainly down to younger drinkers drinking less due to health reasons and cost pressures, as well as changing tastes, tariffs and, above all, a surfeit of new spirit that was put into casks in the 2010s and that is now reaching maturity at the worst possible time. Small, independent distilleries are struggling especially. Bottles from makers that have closed – so-called “ghost distilleries” – can be highly prized by collectors.

As anyone who has ever woken up with a hangover will know, the day can pass in a sort of a haze. In like fashion, the Rare Whisky 101 Icon 100 index has stumbled along year-to-date – not bouncing, certainly, but not falling over either. Could the bottom be in? Who knows? But there are still at least some buyers out there prepared to spend big money on a trophy bottle such as the Macallan 1926. And tomorrow is, after all, another day.

This article was first published in MoneyWeek’s magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.