How Much Does It Really Cost To Bottle A Cask Of Whisky?

In 2023 more that £3 million of losses were reported to Action Fraud over alcohol investments. The nature of buying a whisky cask means people lock their investment away for ten or more years. That means the real losses may be higher simply because some consumers don’t realize they’ve been victims.

Let’s be clear: Not all whisky cask investment is fraud. As well as being editor in chief of The Whiskey Wash, I (Mark Littler) am also a whisky broker, and help people buy and sell both bottles and casks of whisky. My approach to guiding people through buying a cask has always been through education, so if you are thinking about investing in a cask of whisky, then welcome.

Casks can be a rewarding and interactive asset, and as more outside regulation comes into the industry it makes it better, and safer, for everyone from distilleries to private individuals. However the reality is that cask investment remains unregulated. That means potential investors need to remain vigilant. There are checks you can do yourself before you buy as well as red flags to look out for before you purchase.

A key piece of due diligence is to check you are not overpaying for the cask. One way to do that yourself is to turn your cask price into a per bottle price. However, if you are doing that, then you also need to be aware that you cannot simply divide the cask price by the number of bottles to get this value.

Be Wary Of Cask Sizes Listed As Number Of Bottles

Sometimes when you are looking at buying a whisky cask you will come across cask sizes listed as a number of bottles. At first glance this may seem helpful for members of the public compared to liters or generic cask descriptions like barrel, hogshead or butt. However there are a few potential issues when cask sizes are listed in this way.

First of all, how big are those bottles? Standard size for bottles of spirits in the USA is 75cl, but in Scotland it’s 70cl. For a 500 liter butt that’s a difference of up to 47 bottles/37.5 liters.

Secondly, we need to consider the ABV. Scotch whisky can legally be diluted to 40% ABV when it’s bottled, but casks are filled at around 63% and a “cask strength” can be anywhere between those figures. So are the bottle numbers quoted at cask strength or 40% because that will make a difference to your potential value and yield.

Most importantly in my opinion, is that cask sizes as a bottle number tempts potential consumers to divide the cask price by the number of bottles to “check” the value of a cask they’re being offered. Most private cask owners have a basic understanding of the whisky industry, but as most never intend to bottle the casks they own, bottling costs can be a big gap in education.

If you divide a cask’s offered price by the total number of bottles then the “per bottle price” you generate is going to be significantly lower than it should be. As a result it is almost certainly going to look very compelling when compared against a quick online search of comparable products at retail. Unfortunately this is one of the easiest ways to end up overpaying for a whisky cask.

How Do You Turn A Cask Price Into A Bottle Price?

You can turn a whole cask price into a per bottle price as a way to check the price you are being offered. You will need to do a few calculations and have the cask fill details to hand.

Before you can turn your cask price into a per bottle price you need to calculate the taxes that are due to take the whisky out of bonded storage. You also need to estimate bottling costs, such as the use of a bottling facility, bottles, labels, label design, capsules and transport for the cask and then the bottles.

The additional costs mean a simple division of cask price by estimated number of bottles can vastly underestimate a per bottle cost.

Not sure what I mean? Let’s work through an example: At first glance a £5,000 cask of 250 liters, or approximately 357 bottles, may look like £14 a unit. If you plan on keeping the cask for over ten years (as you should, casks are a long term investment), then even taking into account natural losses from evaporation then there would be scope for healthy long term profit. However for an ABV of 63.5% (standard for newly filled casks) then the per bottle cost is actually close to £50 per bottle, which means a considerably longer hold to make a potential profit.

A Step By Step Guide To Calculate Bottling Costs

In the following sections I’ll walk you through the steps to get to the real per bottle price. Before you start you need the following bits of information to turn the cost of a cask of scotch whisky into a per bottle cost:

• The total amount of liquid in the cask: known as Bulk Liters
• The alcoholic strength of the liquid in the cask: known as the ABV
• The purchase price of the cask
• You’ll also need to know the current UK duty rate on scotch whisky, which is £31.64 as of the most recent increase in 2023.
• Finally a rough cost for the physical bottling etc. for a single bottling run around £10 +VAT per bottle is suitable for an estimation.

If the size of the cask has been provided as a number of bottles, you can times that number by 0.7 to get the Bulk Liters. Although it is worth checking with the cask seller that they have used a standard bottle size.

Step One: Calculate VAT

Take your purchase price and times it by 1.2. 

We’ll use an example purchase price of £5,000, which gives you a plus VAT price of £6,000.

Step Two: Calculate The Liters Of Alcohol

Divide your Bulk liters by 100, then times that by your ABV. This gives you the liters of pure alcohol in your cask.

If an OLA or RLA (original or regauged liters of alcohol) has been provided as well as or instead of bulk liters then you can use this directly.

For 250 bulk liters at 63.5% ABV, your Liters of Alcohol is 158.75.

Step Three: Calculate The Duty + VAT Due

Times your Liters of Alcohol by £31.64. Then multiply that by 1.2.

So for 158.75 Liters of Alcohol, your Duty + VAT is £6,027.42

Step Four: Calculate Bottling Costs

If you don’t have a per unit price then you can use £10 as a starting price.

Times your number of bottles by 10 and then multiply by 1.2, finally add on £700 for cask uplift and shipping your bottles from the warehouse

For our example 250 liter cask that gives 357 bottles, which equates to £4,987.

As a side note, for the purpose of validating a cask price, a cask strength calculation, 70cl bottle and £10 +VAT per until will suffice. But if you’re actually bottling a cask then this is where things get a bit more flexible. The reality is that packaging makes a big difference to what you can charge for a bottle; a good box can be upward of £100 per unit, but it can add more than that to your potential price. You also have to consider if you are going to bottle at cask strength and what your bottle size will be. This all impacts your margins and should be considered before you start.

Step Five: Add It Up

Adding the totals from step one, three and four gives a total bottled price of £17,013. Which equates to £48 per bottle.

Are You Being Charged A Fair Price?

The above calculation is just the cost to get the liquid into a bottle and ready for sale. It doesn’t consider a profit margin, marketing, or all the other small costs needed to actually sell your whisky and get it to the end buyer. Whether the resulting figure means you are being charged too much depends on a few things.

First of all, you’ll need to compare the price to wholesale, independent bottlings, not official bottlings.

Secondly, you need to consider your seller has margins too. You are only purchasing a few casks so your margins may be tighter and you may pay a bit more than a full time independent bottler. However as long as there is scope for growth in your intended investment period then it is up to you to consider the balance between your and the seller’s margins. 

Thirdly, consider the age of the cask; new make is relatively expensive as the value goes up slowly in the first ten to twelve years of a cask’s lifetime. 

There are other things to consider as well, such as brand potential and current versus past market values, but for the sake of an initial guideline, those are the main points to look at.

Other Due Diligence Checks

Validating the price you are being asked to pay is a key step when looking at buying a scotch whisky cask. Those checks should form part of a series of steps to ensure you are not falling foul of a scam.

I’ve always had an education driven approach to the work I do as a broker. Giving buyers and sellers the tools they need to understand the prices they are being offered is a core part of my business ethos. I understand however that it is important for consumers to get advice from a body that they can be sure is impartial.

My advice is to go by the guidance from the Scotch Whisky Association. You can also check the 2023 ASA guidance for Cask Investment companies to ensure you are buying from a cask broker who is following the rules.