MARKET ANALYSIS

The Whiskystats Annual Report of 2018 (I/II)

5. March 2019 | 937 Views

Name any measure and chances are high the whisky auction market of 2018 broke the record. More bottles traded, more money spent. Prices are increasing too, especially for the most rare and collectable releases. 

In a nutshell, the secondary whisky market shows no sign of slowing down. More and more people use the chance to buy and sell their whisky on auctions. On the tip of the iceberg we see bottles being sold for more than 100.000 Euros a piece and even the 1.000.000 (yes million) Euro barrier was touched for the first time in 2018. But all of that you could have heard from other resources too. We at Whiskystats want to dig deeper into this ever-growing pile of whisky data. Is the market changing or just growing? Did prices for the different segments alter equally? And, most importantly, how did your very personal whisky collection performed last year?
 
Note: Compared to our previous annual reports some figures may have changed. The reason for this is obvious. During the last year we added WhiskyAuctioneer.com to our watch list. In addition, we now track prices for Blends, Bourbons and Ryes too!

The Market Growth

So first let’s get the obvious figures out-of-the-way. In 2018 we observed no less than 123.000 bottles of whisky being sold on auctions. Compared to 2017 this equals a 19,5% increase in the number of trades. Yes the growth rate decreased compared to the 26% in 2017 and almost 40% in 2016. But still, it is quite a significant growth.
Annual Number of Trades Closely tied to the sheer number of trades is of course the total trading volume, i.e. the money flowing around on the market. In 2018 we observed more than 51,5 Mio. Euros being spent on whisky auctions. And here comes the interesting bit. Compared to 2017 this equals a 37% increase. As we have seen above, the number of trades only increased by 19,5%. So either prices did increase or more of the valuable bottles have been traded.
Annual Trading Volume So what is the most obvious way to put the number of trades and the total trading volume into relation? Yes, the good old average price per bottle. In 2018 the mean price per bottle was 416 Euros. In 2017 this figure was at 363 Euros and in 2016 we saw 321 Euros being paid on average. So quite a significant increase there.
 
But wait, the mean is prone to be skewed by extreme observations, and didn’t we say that prices at the very top of the iceberg exploded? So let´s have a look at the median instead. The median price per auctioned bottle of 2018 was 156 Euros. This means that 50% of the whiskies traded for less than 156 Euros. The median price of 2017 was 156 Euros too and the median price of 2016 was 154 Euros. So in fact not much movement there. Yes, prices at the top reached new spheres, but at the same time more and more affordable whisky is being traded too!

The Market Data Sources

What we miss most about other market analysis we find on the web is that hardly anybody explains the data her or his report is based on. At Whiskystats we currently process the prices of three auctioneers. These are WhiskyAuction.com (WA), WhiskyAuctioneer.com (WAE) and ScotchWhiskyAuctions.com (SWA). And yes, we do have plans to add other auctioneers. In addition we restrict our attention to single bottle lots. Once you become a Whiskystats member (for free), you can even search our whisky database on your own!
Trades by Auctioneer Traditionally, the whisky auction market is most active in the late months of October, November and December. Also unsurprisingly we observed the fewest trades during the summer months, even more so as WA takes one month off during the hottest time of the year. You will also notice that SWA accounts for the most trades we process. So in total we currently cover the two major UK auctioneers (SWA and WAE) as well as the pretty much one and only mainland european based whisky auctioneer (WA).

The Market Composition

It might be quite obvious that single malt whiskies dominate the secondary whisky market. But to what degree? And did things change over time? To find out we visualized the relative share of trades of the whisky types we differ in the below graphic. The areas are stacked on top of each other and sum up to one (or 100%). These monthly observations reach all the way back to January 2013.
Number of Trades by Whisky Type Back in early 2013 about 93% of the auctioned whisky bottles were single malts. Blends accounted for roughly 5% while Bourbons and Ryes only had a 2% market share. More than five years later things have changed a bit. Blends almost doubled their share now accounting for 9% of all trades. Almost 5% of the bottles nowadays are Bourbons or Ryes. But yes, single malts are still dominating the scene with a 85% share of the market.

The Market and Age

Another way of segmenting the market is of course the age. The time the spirit spends in a cask is a major indicator for the value of a whisky bottle. Whether this should be the case is the topic of a whole other discussion. The same is true for the rise of the so-called NAS (No Age Statement) releases. Anyway, let’s have a look at what the market thinks about this. To do so we clustered the whiskies into six different age classes ranging from NAS (no information about the length of maturation) to 30+ years.
Number of Trades by Age In the above plot we again stacked the relative market shares (measured by the number of traded bottles) on top of each other. By the end of 2018 nearly 30% of the traded whiskies lack an age statement. Back in 2013 NAS whiskies only represented about 20% of the market. So yes indeed, NAS is on the rise on the secondary market too! Turning to those releases having an age statement we see that only around 5% are 10 years or younger. A quarter of the market consists of whiskies aged 20 years or more. And this did not change over the past six years.
Trading Volume by Age In this second visualization we measured the market share by the trading volume. Unsurprisingly the picture has changed. The oldest segment with 30+ years of maturation now accounts for 30% of the money spent. And while the market share with respect to the number of trades stayed constant at around 6-7%, this figure increased from 18% in early 2013 to the mentioned 30% nowadays. So prices for the oldest releases massively increased. A completely different behaviour is observed for NAS bottlings. While the market share with respect to the number of trades increased from 20% to 30%, the share of the trading volume pretty much stayed the same.
Median Price by ABV Finally we want to compare the annual median prices of these age clusters. Most obviously it was the oldest releases which experienced the highest gain. Back in 2013 half of the 30+yo bottles were sold for less than 360 Euros. In the following years this median price constantly increased, except for 2016. In 2018 this measure then reached 800 Euros. For those releases with an age statement between 20 and 30 years the median price even declined in 2018 after it grew from 200 to 300 Euros in the previous years.

The Market and ABV

Out of curiosity we repeat the same analysis for the alcohol level. Again we split all whiskies into six different clusters, this time ranging from less than 42% to above 60% ABV. In below visualization we see that cask strength whisky (above 50%) accounts for around 40% of all the trades we observe. It also seems like this hasn´t changed much over the past years. This seems true for all the clusters. So looks like the market composition with respect to the alcohol level and measured by the number of traded bottles has not changed much.
Number of Trades by ABV Again we change the measure to the share of trading volume. Now we see that those whiskies with 55% or more alcohol gained market shares from 2013 to 2015 and lost market shares ever since. At the peak around 40% of the money was spent for those releases. In 2018 it was only around 27%. In contrast the releases with an alcohol level between 42 and 45% are on the rise. While the number of trades stayed pretty much constant (see above), the relative market share with respect to the trading volume increased from around 15% in 2015 to almost 25% in late 2018.
Trading Volume by ABV A quick look at the annual median prices reveals some other interesting insights. For 60% or more ABV the median price increased from 170 Euros in 2013 to 260 Euros in 2017 and then dropped to 190 Euros in 2018. In addition our observations from above for the 42-45% cluster are confirmed. The median price for these releases constantly climbed over the past six years. In 2018 half of the bottles with 42 to 45% of alcohol traded for more than 170 Euros.
Median Price by ABV In the upcoming second part of our Annual Report of 2018 we continue this analysis by having a look at the vintages too. Then we will also focus on the different distilleries and of course take a look at how our market indices performed in the last year.