Prices of rare whiskies are soaring, and top Japanese whiskies have emerged to become the crème de la crème of whisky collection. Driven by scarce supply, rave reviews, Japan’s renowned craftsmanship and feverish demand in Asia, Japanese whisky sales are glugging away at a pace far higher than expected just within the past five or six years.
The blistering demand for Japanese whisky was so strong that according to Paul Wong, Asia Director and Senior Specialist of Sotheby’s Wine, it “caught distilleries off guard.”
It prompted whisky brokerage firm Rare Whisky 101 to release four indices specially to track Japanese dram’s performance, namely Japanese 100 Index, and three other indices named after three of the country’s most famous whisky brands, Karuizawa, Hanyu Cards, and Yamazaki.
To put it in perspective, in the past six years, gold price increased for about 60%, while rare Japanese whisky’s price surged for over 300%, based on the Japanese 100 Index from 2014 to 2020, which tracks the top 100 iconic Japanese whiskies’ performance. This means the liquid dram is far more valuable than gold.
Karuizawa 1960 52 Year Old, for instance, the oldest Karuizawa expression ever made with only 41 bottles released in total, was sold in 2015 in Hong Kong by auction house Bonhams for HK$ 918,000. Five years later, the same bottle with a Zodiac Rat Netsuke was sold by Sotheby’s in London for about HK$ 3.4 million (US$ 435,273), setting a new world record for a single bottle of Japanese whisky.
“The price tripled in less than five years. That’s the reason why it attracted a lot of newcomers,” Daniel Lam, Bonhams‘ Director of Wine & Spirits in Asia, said unequivocally when referring to the bottle to underscore the high returns of Japanese whisky collection.
In 2012, Bonhams became the first auction house in Hong Kong to offer Japanese drams. What followed as Lam describes is a “Japanese whisky boom” particularly in 2014 and 2015, when overwhelmed by demand, some of the country’s leading distilleries suspended a few age-statement bottles including Karuizawa, Hanyu, Suntory and Nikka.
When blistering demand is met with imminent rarity, it turned into a perfect storm. “We see a sudden surge in price in 2014 and 2015,” say Lam, primarily and chiefly driven by collectors in Asia from Hong Kong, Taiwan and mainland China. Citing an example of the steep price climb, Lam recalled that a bottle of Hanyu used to sell around HK$ 300 a bottle in early 2000s, now a bottle of the early Hanyu releases can fetch between HK$ 6,000 and 9,000 in Hong Kong.
The surging demand for Japanese whisky did not go unnoticed. Taking cues from Bonhams’ success, major auction houses soon joined the game. By the end of 2014, Sotheby’s for the first time added whisky into its auction catalogue, and in 2016 it introduced Japanese whisky, according to Paul Wong of Sotheby’s.
“In the short span of five years, Japanese whisky has shown exponential growth in our sales,” Wong exclaims. Sotheby’s currently holds the world record for most expensive Japanese whisky sold ever at auction, which is the aforementioned Karuizawa 52 Year Old.
“One major factor that fueled the growth is the expanding palate of Asian buyers, who are eyeing the best spirits in the market. Japanese whisky offers the quality and beauty that increased their collectability. The craft of many Japanese distilleries is undeniable, as proven by numerous awards they received, while the impeccable bottle design and packaging makes it perfect for one to host on their shelves before the time comes to sell or drink,” Wong expands on its popularity.
Additionally, it all boils down to rarity. “Japanese whisky, primarily produced to be sold domestically, is very low in supply, so the rapid rise in demand for top Japanese whisky has caught the distilleries off guard. Aged Japanese whisky is incredibly scarce, particularly from closed distilleries such as Karuizawa,” he continued, adding that Yoichi, Taketsuru, Yamazaki and Hibiki are also hot items on every collector’s list.
All the way up
One of the crown jewels in Japanese whisky collection is the rarefied Hanyu Card series, consisting of 54 labels each with its unique design.
Founded by Isouji Akuto in 1941, the Hanyu distillery closed its doors in 2000. But before it shut down for good, Akuto’s grandson Ichiro stepped in to make sure that 400 casks of premium whisky from the distillery were preserved. He then personally selected which whisky would be bottled for each “card” released between 2005 and 2014.
Today it’s understood there are less than four sets of the full card series. Bonhams so far sold two sets, the second full card series sold last year to an Asian female collector for over HK$7.1 million, almost doubling the first set sold by the auction house in 2015 (HK$3.7 million), according to Lam.
Still, prices are expected to climb even amid recession and uncertainties with coronavirus pandemic. “Because Karuizawa and Hanyu stopped production [in 2000], so every year whatever is sold, it gets rarer,” Lam explained, adding that for Bonhams’ upcoming August auction, he’s bullish that rare Japanese whisky will outperform their peers. He predicts the lots to exceed 20-40% of their estimates.
The Tokyo Olympics in 2021 is also expected to boost Asian and international collectors’ interest in Japanese whisky, he adds.
Wine v.s. whisky
Kaigai Fine Wine Asia (KFWA), the first Japanese wine auction company founded in 1967, had its pulse on the Japanese whisky market too. Leveraging its local contacts and market expertise in the source country of Japan, the auction house prides itself in its Japanese whisky portfolio.
Echoing Lam and Wong, Kevin Cheng, Senior Managing Director of Kaigai, expanded that the fast rise of Japanese whisky among collectors is also due to the returns compared with blue chip wines.
Using Bordeaux first growth Chateau Lafite Rothschild as an example, which produces around 20,000 cases of its prized grand vin, Cheng elaborated,”If you think how much they are making every year [at Lafite] as opposed to 200 or 300 bottles made from a single cask, so the numbers are staggering. It’s not unexpected that whisky is in greater demand compared to wine, and people have realized that over the years. That’s when the price of whisky really goes crazy.”
He estimated that among the 364 Karuizawa casks that were left when the distillery closed, there are only 20-30 casks are still yet to be bottled as of last year. This quite literally means we are scrapping the bottom of the barrel.
Compared with scotch, returns in Japanese whisky, according to him, are higher as well. “For instance, if we look at Macallan whisky, and the price of Macallan in 2012 and two years after that, the value would double. And more rare items like Karuizawa, five years later you would see triple or quadruple of its value,” he details.
Additionally, the expanding wealth in Asia particularly in China with more high net wealth individuals that there will be more millionaires fighting for increasingly scare Japanese bottles, and the price will unlikely to plateau.
“The number of millionaires and billionaires in China is growing so fast at double digit, even in Indonesia and Singapore you will see an increases of high net wealth individuals and a lot of them are driving investment-grade whisky,” he said confidently.
The auction house started expanding globally three years ago, and it is seeing a growing number of collectors from Hong Kong, mainland China and other southeast Asian countries, which is looking to make up 30% of its bidders by next year.
Source and provenance
Aside from the big names, special editions and rare age statements are also fetching top prices at auctions, Cheng notes. One of the top lots to be offered at Kaigai’s upcoming online auction on August 3-10 is the Kiyosato Field Ballet Anniversary Series. Made by Chichibu distillery, these whiskies were blended from a 1990 Hanyu original cask, along with a 1982 Kawasaki original cask. Both now closed.
Special editions would also include releases that distilleries produced specifically for restaurants and hotels, since most are sold domestically, Bonhams’ Daniel Lam added.
For new collectors looking to build a Japanese whisky collection, aside from doing their own research, collectors need to also be careful with provenance, hence checking where the whisky is sourced is key, Cheng cautions.
“Most of our historical clients are Japan-based, and especially in ’70s and ’80s when lots made money and they started collecting wines and whiskies and built a lot of storage to store them. We are able to work with them and being able to source these is quite unique for us. And the supply of available product we can get through the collectors are limitless and we barely scrapped the surface,” enthused Cheng. Almost all of the Japanese auction house’s consigners are Japanese collectors, he adds.
Paul Wong of Sotheby’s agrees that source is key. Admittedly looking at age statement is important for collection, but he advises that not all “old” things are “good” when it comes to Japanese whisky collection.
“From an investment perspective, well-aged Japanese whisky are more valuable due to their rarity, but ‘old’ is not necessarily synonymous with ‘good’ – after all, taste is a very personal thing,” he says.
Lam of Bonhams resonated with Wong. Contrary to Scotch, particularly with Japanese whisky, age doesn’t necessarily guarantee price either, Lam notes.
“Some people have this perception older the better, but not necessarily true for Japanese whisky. Chichibu started producing age statements in 2006 and releasing in 2009, so their whisky is very young,” he says. The distillery is founded in 2004 by Ichiro Akuto, the grandson of Hanyu distillery founder, and its release is normally around 24-200 bottles depending on the cask size, he adds.
“They have special editions, and when they release it first it was HK$ 1000-2000 HKD, but once in secondary market, the price goes up to HK$ 5000-6000 within a week,” he says amazed at the price hike.
Like anything that’s commanding top prices, counterfeits will surely follow. Lam warned that collectors need to be wary of fakes given their popularity adding that it’s not uncommon to see empty Yamazaki bottles sold on Japan’s yahoo site.
Luckily, “Counterfeit for Japanese whisky is not as bad as wine yet,” Lam relieves, citing Burgundy’s Henri Jayer as a frequent victim of fake wines.
Cheng of Kaigai believes most of the fake Japanese whiskies in the market emerged in the past 10 years or so. “Back then in ’70s and ’80s they were not popular, and it was not worth anyone’s time to fake a 3 dollar and 5 dollar whisky,” he says.
Today, when a rare bottle of Japanese whisky can fetch millions, it’s however a different story.