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Speaker 1: Today we're talking whiskey not just for drinking, but for

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Speaker 1: investing too, and why there might be trouble brewing in

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Speaker 1: the premium whiskey market. I'm Michael Thompson from Fear and

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Speaker 1: Greed Business News, and I'm joined by Stefan from Olds

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Speaker 1: dot Co, the alternative market research You need to be

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Speaker 1: a better investor, Stefan, Hello.

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Speaker 2: Welcome back.

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Speaker 3: Hey, good to be here.

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Speaker 1: Now, before we get going acrosse, this this podcast isn't

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Speaker 1: investment advice starting point for your research. Only get professional

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Speaker 1: advice before investing. And even as I was, even as

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Speaker 1: I was introducing the start of the show there, Stefan,

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Speaker 1: I was just talking about trouble brewing in the premium

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Speaker 1: whiskey market. It probably should be trouble distilling in the

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Speaker 1: premium whiskey market, Isn't it used? I've used the wrong

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Speaker 1: words right from the offset.

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Speaker 3: Yeah, that's it, mate, It's definitely a distillery problem. Look,

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Speaker 3: the whiskey market's been on a wild ride over the

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Speaker 3: past decade. We saw some explosive growth, but now there's

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Speaker 3: kind of a big calibration happening in the market. So

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Speaker 3: there's a lot going on.

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Speaker 1: So take us through it. Then, who who is drinking

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Speaker 1: whiskey and what are they drinking? Because I mean there

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Speaker 1: is a perception of whiskey drinkers that we are talking

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Speaker 1: about kind of old men in clubs kind of thing.

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Speaker 2: But it's not the case, is it.

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Speaker 1: It has certainly changed and evolved over the last decade

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Speaker 1: couple of decades.

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Speaker 3: Yeah, today's whiskey drinkers are much younger, more global, and

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Speaker 3: they're a lot more selective than they used to be.

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Speaker 3: So there's kind of there's two camps, you know, here

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Speaker 3: we've got the West in the East. So you know,

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Speaker 3: here in the West, you know, millennials and even Gen

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Speaker 3: Z to some degree is driving demand, but it's really

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Speaker 3: demand for premium bottles. So they're kind of, you know,

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Speaker 3: more influenced by social media and a desire for drinking

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Speaker 3: like higher quality spirits as opposed to you know, maybe

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Speaker 3: what grandpa was drinking. And then over in Asia, you know,

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Speaker 3: obviously it's the same story with so much else, right,

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Speaker 3: the rising middle class, especially in India and China, that's

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Speaker 3: what's fueling the growth in China. It's interesting too because

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Speaker 3: like China has a real the culturally they really value

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Speaker 3: you know, like craftsmanship and whiskey is often bought as

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Speaker 3: like a luxury gift or or even like a collectible.

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Speaker 3: So the premiumization trend is happening in China as well.

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Speaker 3: But yeah, it's basically it's shifting from a market where

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Speaker 3: you know, it's shifting from a quantity to a quality market,

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Speaker 3: Like people are buying less bottles, but the bottles that

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Speaker 3: they are buying are you know, higher.

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Speaker 1: Priced, Okay, And there's a couple of kind of strands

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Speaker 1: to it. I suppose that there are the big established

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Speaker 1: distilleries You've got a lot of them in Scotland, Ireland,

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Speaker 1: Japan too as well, that have got this premium, established product.

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Speaker 1: There's also the really a craft boom that's occurred, particularly

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Speaker 1: in the US in Australia as well, so there are

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Speaker 1: the kind of different streams here to the market.

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Speaker 3: Yeah, the craft boom is kind of similar to what

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Speaker 3: we saw with with beer and actually kind of like

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Speaker 3: during the same timeframe. So you know, like the craft

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Speaker 3: boom in the beer market kind of started in twenty

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Speaker 3: ten at least in the US, but I think the

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Speaker 3: same in Australia as well. But yeah, the boom for

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Speaker 3: whiskey kind of began or craft whiskey rather began around

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Speaker 3: twenty ten and it ran strong for really like about

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Speaker 3: a decade. There was just a lot of optimism, growing demand.

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Speaker 3: The industry started expanding rapidly. But as so often happens,

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Speaker 3: as this craft whiskey movement exploded and new distilleries popped

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Speaker 3: up everywhere, you know, the production just started to outstrip

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Speaker 3: the demand. So as high as the demand was, there

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Speaker 3: was so many catch up players that were just starting

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Speaker 3: to pump out whiskey and they just got ahead of themselves,

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Speaker 3: and then we're kind of left with this like inventory glut.

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Speaker 3: Now that's where we're at today.

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Speaker 2: Okay, so that's the problem, is it? Then?

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Speaker 1: So that we've got all of these distilleries, the big

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Speaker 1: established players, the new ones that have come through, and

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Speaker 1: they're all producing quality products. But now there's just too much.

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Speaker 1: There's just too much sitting there, and the consumer habits

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Speaker 1: are shifting more towards really quality over quantity, and now

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Speaker 1: there is this quantity that's just remaining.

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Speaker 3: Yeah, and I think that the consumers helped, you know,

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Speaker 3: inflat the bubble, right like you know, chasing bottles for

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Speaker 3: you know, packaging hype or maybe what some influencer told

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Speaker 3: them to buy and you know, perceived quality. But yeah,

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Speaker 3: it's definitely kind of come back down to earth. Now, Okay,

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Speaker 3: is that really what has caused this?

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Speaker 2: Then?

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Speaker 1: Kind of buying on hype and this premium packaging that

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Speaker 1: you mentioned, and also then is there a secondary market

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Speaker 1: I suppose for this premium whiskey, which I imagine would be

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Speaker 1: very hard to have any visibility over kind of what's available,

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Speaker 1: what things are selling for, and it kind of makes

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Speaker 1: it all a little bit opaque.

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Speaker 3: I think that the reason that the main reason the

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Speaker 3: craft whiskey boom kind of plateaued is because it was

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Speaker 3: maybe rooted in authenticity, you know, in regional identity, but

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Speaker 3: it just quickly got you know, pun intended diluted, you know,

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Speaker 3: into like a really crowded, saturated space where there's just

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Speaker 3: too many brands, too little differentiation, too much product. Like

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Speaker 3: I don't know about you, but like my you know,

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Speaker 3: when I go on Instagram or at least about you know,

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Speaker 3: a year ago, when I was going on Instagram, I

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Speaker 3: was just getting like inundated with with ads for different

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Speaker 3: you know, whiskey investment firms, and it just felt like

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Speaker 3: everybody was kind of like trying to get on this

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Speaker 3: hype train, and you know it's like that's that kind

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Speaker 3: of has hit the wall. There was even the supply

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Speaker 3: chain problem with the barrels too, So right now it's

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Speaker 3: a strange kind of paradox. So barrels are actually in

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Speaker 3: short supply thanks to lumber shortages and kind of climate volatility,

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Speaker 3: and so the warehouses are filled all full of all

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Speaker 3: this unsold whiskey. Especially again the load demand kind of

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Speaker 3: like non premium casks and so like the stillers are

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Speaker 3: basically cite between like an inventory glot and a resource crunch.

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Speaker 3: There's just not enough demand in the West to fill

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Speaker 3: that demand. China and India are part of the solution,

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Speaker 3: but it's complicated with tariffs. I don't know if they

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Speaker 3: can save the market. It's going to be rocky for

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Speaker 3: a while.

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Speaker 1: Well that I mean that to me feels like that

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Speaker 1: is the obvious solution. China, India big populations, There is

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Speaker 1: a rising middle class there and as you mentioned before

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Speaker 1: that there is there is really it is quite a

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Speaker 1: cultural thing, isn't it. There is an allure to some

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Speaker 1: of these premium whiskies is that it's not going to

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Speaker 1: be able to bring those markets online fast enough because

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Speaker 1: of the tariff issues, because of what other issues affecting

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Speaker 1: access to those markets?

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Speaker 2: Is that not going to be possible?

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Speaker 3: I think that the tariffs are going to hold back

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Speaker 3: a lot of foreign brands. I think, like take India,

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Speaker 3: you know, still has massive growth, right, Premium consumption is

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Speaker 3: up twenty percent year over a year and a new

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Speaker 3: trade deal with the UK. So what's actually gonna happen

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Speaker 3: is that Scotch whiskey. It should do really well, especially

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Speaker 3: in India. But yeah, like the high import tariffs still

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Speaker 3: hold back a lot of foreign brands. So yeah, it's

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Speaker 3: not the it's not the panacea or the saving grace

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Speaker 3: that I think the industry hopes it will be.

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Speaker 1: All right short term, what's gonna happen here? We are

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Speaker 1: going to say distilleries in trouble. We're going to say

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Speaker 1: perhaps consolidation within the industry and then the flow on

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Speaker 1: effect putting some self interest into this. What's it mean

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Speaker 1: for consumers? We're gonna be getting some bargains.

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Speaker 3: I think you're right. I think distilleries are going to

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Speaker 3: face pressure and there's gonna be a lot. I think

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Speaker 3: M and A is going to start heating up. There's

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Speaker 3: gonna be some distilleries to close. That's already happening. There's

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Speaker 3: gonna be cask in whiskey investment companies that go out

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Speaker 3: of business. That is absolutely happening right now. There's gonna

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Speaker 3: be a lot of consolidation. Only the strongest with real

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Speaker 3: cash flow and real true brand loyalty will will weather

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Speaker 3: the storm and thrive. But you're right on the consumer side, Yeah,

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Speaker 3: I think consumer should benefit. You know, there's basically better

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Speaker 3: liquid available at better prices right now than any point

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Speaker 3: in the past, you know, decade, So maybe less gimmicks,

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Speaker 3: more transparency, shift towards true premium, true authenticity. Basically, I

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Speaker 3: think the error of hypers feeding and the quality and

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Speaker 3: trust are kind of the new path forward, the new

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Speaker 3: Stata symbols.

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Speaker 1: Okay, in terms of investing, And we've got about a

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Speaker 1: minute and a half left, so I just want to

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Speaker 1: talk a bit about investing. Can you take me through

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Speaker 1: kind of cask investing firms. Is there still potential for

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Speaker 1: kind of whiskey investors here and what needs to change

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Speaker 1: I suppose in order to make whiskey perhaps a more

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Speaker 1: stable investment, if that's even the right word.

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Speaker 2: To use.

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Speaker 3: Look, I don't think cask investing is dead. It's definitely evolving.

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Speaker 3: But as an alternative investor, you know, we're always looking

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Speaker 3: for like something that's one step more alternative. So for us,

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Speaker 3: that kind of looks like you know, whiskey cash financing

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Speaker 3: or infrastructure or like ensured warehousing.

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Speaker 1: Okay, just to explain how those work, just just quickly.

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Speaker 3: Well, basically there's a with with with whiskey financing. There's

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Speaker 3: a real opportunity to basically become a lender to these

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Speaker 3: these these whiskey companies. That's not buying the barrels directly,

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Speaker 3: but actually you're just acting as a lender. And it's

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Speaker 3: actually it's a pretty fast area growing area of whiskey investing.

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Speaker 3: And so it's kind of a little bit behind the scenes.

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Speaker 3: You know a lot of people don't think about it

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Speaker 3: and know about it, but that that's the kind of

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Speaker 3: stuff we're interested in here. And then you know, on

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Speaker 3: the on the warehousing side, I think the important thing

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Speaker 3: is if you're going to you know, look at investing

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Speaker 3: in uh warehouses, everything's got to be tracked now, right,

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Speaker 3: Like the reason these whiskey cask investing companies went out

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Speaker 3: of business is because they didn't track properly. There wasn't

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Speaker 3: enough transparency. So you can use technology QR codes, blockchain,

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Speaker 3: you know, to add to that transparency. And there's there's

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Speaker 3: a lot of platforms that are working to bring this

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Speaker 3: to life. So I think that's where the real alternative

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Speaker 3: opportunity is here.

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Speaker 2: Okay, all right, bumpy road ahead.

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Speaker 3: Really to summarize, I think so, but look the boom

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Speaker 3: hears me be behind us. But for consumers and investors

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Speaker 3: who value quality, transparency and real fundamentals, there's still plenty

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Speaker 3: to raise a glass to.

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Speaker 1: Oh well played from my faux part at the start

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Speaker 1: of referring to trouble brewing in the industry, Are you

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Speaker 1: raising a glass at the end? I feel like we

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Speaker 1: really improved throughout the course of this episode. Now to

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Speaker 1: find out more, head to altz dot co, sign up

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Speaker 1: to the newsletter. This episode is actually based on an

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Speaker 1: edition of that newsletter, and start learning about the future

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Speaker 1: of alternative investing.

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Speaker 2: Thanks very much to fun.

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Speaker 3: Thank you.

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Speaker 2: I'm Michael Thompson

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Speaker 1: From Fear and Greed business news you can use Thanks

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Speaker 1: for your company