The 2024 Knight Frank Wealth Report has just been released to the public and their outlook overall is cautiously hopeful. For the specific part of the whisky market they analyze, but also the rest of the market as a whole, it doesn’t tell us anything we didn’t know, but it is still an interesting reminder of the importance of knowledge and patience when making any kind of investment.
The Knight Frank Wealth Report 2024
If you invest in whisky you have probably heard of the Knight Frank Index. Even if you don’t think you know what it is, if you’ve read somewhere about fabled 582% returns on some kind of whisky investment, then that was probably based on data from the Knight Frank Luxury Investment Index (KFLII).
Knight Frank is a hyper luxury estate agent for ultra high net worth Individuals (UHNWI), basically the most wealthy individuals in the world. The Wealth Report summarizes and analyzes the past 12 months of investments, especially house prices, but also other “investments of passion”. The KFLII is a weighted index that is currently made up of 11 different luxury investments of passion. An annual summary of the performance of the KFLII is released each year as part of Knight Frank’s Wealth Report.
Whisky has been included in the KFLII since the 2019 report (which looks at 2018 data). It is important to note that the Knight Frank Rare Whisky Index looks at the 100 rarest and most expensive bottles in the world. That means the index represents a biased sample of an already super niche part of the market. So while it can be super interesting, unless you are worth over $30million and want to look at the state of the very top of the market (bottles generally over $10,000) then it needs to be used with understanding.
The Knight Frank Rare Whisky Index in 2024
The 2024 Wealth Report tells us that the ten year performance for ultra rare and ultra expensive whisky has dropped to 280% and that as of Q4 the 12 month performance dropped to -9% compared to 373% and 3% respectively last year.
This is nothing that we wouldn’t expect given the ten year average has been dropping steadily as the crazy growth of the 2010s works through the results and is balanced by the more modest growth of that sector of the market over the last five years. The annual performance too is not a surprise given the state of the world economies and other investment markets in 2023.
However, rather than saying that the drop is despite the world record for a single bottle of whisky being set in 2023, we would say that it shows what we always emphasize: the importance of knowledge and understanding the limitations of the data you are being presented with.
This is echoed by Andy Simpson’s comments in the report. “The worst performing 50 bottles lost 26% of their combined value, the remaining 50 bottles gained 5%, with the 20 best performers increasing by a respectable 20%.”
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An index is a sample of the market and as you can see with Andy’s breakdown, even a relatively small sample like the 100 bottles used for the Knight Frank Whisky Index can show big variations.
So for me, the key takeaway for the Knight Frank Wealth Report 2024 is to make educated decisions based on an understanding of the market as a whole rather than just following trends. Patience and understanding are the keys for making a sound investment in anything, and whether you are buying $100,000 or $500 bottles, whisky is no exception.
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