IN THE MEDIA:
Investing in Bourbon Barrels – Interview with CaskX CEO
By Unusual Investments Team | March 2022
UnusualInvestments.com interviewed Jeremy Kasler, founder and CEO of CaskX. CaskX is a company that enables investor to invest in barrels of bourbon.
UI: Before you became CEO of CaskX, you founded and later sold a company that allowed investors to invest in art. Do you see any similarities to investing in art and investing in whiskey casks?
While art and whiskey might seem to be worlds apart, from an investment perspective there are many parallels between the two asset classes. In a very basic sense, both art and whiskey casks offer investors the ability to diversify holdings with tangible assets that have, historically, offered a great level of resilience against inflation and economic uncertainty. Additionally, the value of both types of assets are impacted by time-driven characteristics that limit the supply that is available within the market. Whereas the supply of art is dictated by the amount of time expended by the artist, the production of whiskey is dependent on time spent aging inside the cask.
Looking beyond the similarities, one of the key advantages of barreled whiskey over art is that it is a product that continues to develop. Whereas the value of a work of art is driven exclusively by demand, the value of a barrel of whiskey is dictated by both demand and its age. Historically, the older the age of a whiskey the more valuable it becomes. For example, if you purchase a barrel of bourbon today it will not be the same product in six years’ time – at that point it will be something entirely different.
UI: Do you just purchase casks of whisky in Scotland, or do you also buy casks of bourbon whiskey in the U.S. (Kentucky), Japan, and other locations?
CaskX currently offers investment opportunities from distilleries in the United States and Scotland. The massive growth in the demand for bourbon over the past several years has led to an increased concentration on these offerings as they are, in our opinion, positioned for the most significant gains over the next 5-10 years. Scotch casks offer a well-established market that continues to see steady rises in value, while the market for barreled bourbon is still in its infancy with the potential for more substantial increases. While investments from other regions have not been offered to date, the CaskX team is monitoring market conditions in Canada, Ireland, Japan and beyond to stay abreast of offerings that might benefit investor portfolios.
UI: I am trying to understand the investment strategy behind investing in whiskey casks. When someone invests in a cask of whiskey at CaskX, can you walk me through the process of what actually happens?
The process begins by working with an advisor to build a portfolio of casks based on the investors desired objectives. By selecting barrels from specific regions, distilleries and vintages an investor can achieve the right combination that manages risk, offers the desired holding period, and is projected to achieve target returns. Upon purchasing a suitable portfolio, investors receive certificates for each of the casks which prove their ownership rights and can be used to transfer the casks in the event of a future sale. All cask investments are then stored at a government regulated warehousing facility at either the distillery or a third-party storage provider until the casks are either bottled or sold to another party. Investments are also fully insured to protect investors from any unforeseen disaster or loss. By investing in whiskey casks investors are able to help the industry grow by providing cash flow to distilleries in advance of the whiskey being of adequate age for release as bottles.
UI: Do you take delivery of the cask, then store it at a warehouse to be aged for 5-25 years and later sold? Or is it bought already aged at a wholesale price in bulk and then immediately resold as individual bottles at a higher price?
Many investment offerings are “new make spirit” – whiskey that has been recently distilled and placed into a cask. In certain instances, investors are offered the opportunity to purchase whiskey which has already been aged but given that the greatest returns typically occur during the first three years, most investors prefer to purchase new spirit. Casks are then stored in a warehouse until they reach an age in which they can be resold to a bottler for public release.
UI: Is there a targeted or optimal hold time from the time someone invests to when they sell the cask and “cash out?”
CaskX recommends that all investments are held until the spirit reaches a premium level and moves beyond commodity pricing. With the growth in demand for high-end whiskey combined with depleted stocks of well-aged liquid, investors have the opportunity to fill this void. The optimal holding period to reach this level differs based on the specifics of an investment, but it is typically 6-8 years for bourbon and 8-15 years for Scotch. Climate and mashbill have a profound impact on the amount of time it takes a spirit to reach its optimum flavor profile.
UI: When it comes to Kentucky whiskey, has foreign demand from countries in Asia and Europe increased substantially in recent years?
Quite surprisingly, the growth that bourbon has experienced over the past three years has come almost exclusively from the domestic market. The imposition of a 25% tariff by the EU in 2018 had an immediate effect in slowing the growth of exports, which up to that point had grown by more than 50% in the preceding 10 years. In the fall of 2021, the bourbon industry celebrated these tariffs being lifted completely, returning the industry to a comparable export climate as what was enjoyed prior to 2018. With tariffs removed, the Distilled Spirits Council expects global exports of bourbon to return to double digit annual growth in 2022. When combined with the rise of bourbon domestically, bourbon is entering an environment unlike anything the industry has seen before.
UI: Have you done any research about how whiskey or other spirits have performed during a hyperinflationary period, whether it was Weimar Germany, or something more recent like the hyperinflation that has occurred in South America or even Zimbabwe? What were your findings?
The CaskX team is currently in the process of collecting data points from international markets in order to assess the impact of hyperinflation on barreled whiskey.
For the original story, go to UnusualInvestments.com. All rights reserved.
Forget NFTs: CaskX Is Throwing Its Money Behind Actual Barrels of American Whiskey
By Kirk Miller, reporter, InsideHook | Feb. 22, 2022
“There is huge talk right now about crypto and NFTs, but there’s a lot of benefit to owning a barrel of whiskey.”
That’s Jeremy Kasler, CEO/founder of CaskX, throwing a bit of good-natured shade at current market trends while his company offers a much more interesting (and real-life) product: whiskey. Specifically, CaskX offers accredited investors an opportunity to invest in full barrels of Scotch and bourbon from respected distilleries across the United States and Scotland (and we should note here that we’re not officially endorsing — or critiquing — CaskX as an investment).
The idea seemingly has a lot of upside for certain people: Investors (who are most likely also bourbon fans) get to own stocks of whiskey without worrying about owning a distillery or maintaining the barrels as they age, and they’re paying everything — including taxes, insurance and storage fees — in advance. From there, it’s a hands-off, patient and (if market trends continue) potentially attractive investment, with a rare commodity that gets more valuable as it ages. And the participating distilleries themselves get an influx of income as they wait for their product to mature.
As the facilitator, CaskX is purchasing barrels in bulk and aging the stock in their associated distilleries; when the bourbon finally matures at about eight years, the company helps its clients resell, bottle and/or distribute their portfolio.
The investment firm’s stock is currently pretty much all Kentucky-based. “We started initially with Scotch casks, but it was always our intention to open up in the U.S.,” says Kasler. “We were actually due to open up in March 2020, funny enough. But already 95% of our business now is American whiskey.” While most of that whiskey is bourbon — and utilizng popular, in-demand and straight-forward mashbills — the company can and will certainly invest in off-shoots like rye or wheated whiskey based on demand.
The company works with a number of Kentucky-based distilleries, including Kentucky Artisan Distillers — home to Jefferson’s, a longtime favorite of this writer — and newcomer Jackson Purchase Distillery, which officially started last year with a non-investment plan to craft bourbon and sell it to other distilleries and brands.
“I didn’t know who CaskX was when we launched — we wanted to be a contract producer and produce the best Kentucky bourbon on the market,” says David Salmon, Jackson’s COO and a whiskey vet of 35 years, including extended stops at Maker’s Mark and Heaven Hill. To achieve the latter goal, the company hired seventh-generation distiller Craig Beam and Willett’s Terrry Ballard to oversee the distilling. “CaskX is not our only client, but I really like their business model — get everyday people access to barrels. You literally can’t get barrels of whiskey right now. Big distilleries aren’t going to sell you 5 or 10 barrels.”
Salmon estimates his distillery can produce roughly 25,000 barrels a year. But even with that that modest number, part of an estimated $2.3 billion in capital projects for whiskey completed or underway by 2022 in Kentucky, demand is far still outstripping supply. “When you start looking at what the potential is, overseas especially, we have a long way to go before we even start to think about whether we’re at any type of saturation point,” as Kentucky Distillers’ Association (KDA) President Eric Gregory recently toldKentucky Living.
So there’s probably no bourbon bubble burst anytime soon, and that international demand is an important reason why. “I’m a data guy,” says Salmon. “In 1967, the bourbon industry peaked, and every year after that until 10-12 years ago, the industry declined 2-4 percent per year. That’s aggressive. Companies here weren’t building warehouses; they were trying to figure out how to shrink their businesses. But bourbon was growing in leaps and bounds internationally during the decline here; it’s a rough number, but I’d say 40 percent of the bourbon produced in Kentucky in 2012 was going out internationally. Now it’s maybe 12 percent.”
Which means, even if bourbon were to only grow at a modest rate domestically (and far below the current market), it has a long way to go to even just get back to its initial levels overseas … which might see even further demand as tariffs go away. For now, the big distilleries seemingly can’t keep up. “Everyone’s current production is going to their own brands; they can’t make enough to supply their own growth curves, let alone sell it to third parties,” says Salmon. “Kentucky will have to add another 800,000 barrels of production to keep with demand over the next 6-8 years. The current shortages will continue.”
Interestingly, if you look overseas, CaskX isn’t a new concept; a number of firms have been trading Scotch in this same manner for many years. “We actually see bourbon where Scotch was 10-20 years ago,” says Kasler. “For a while, there were six or eight main Scotch brands, but now there are hundreds, in higher quality and offering greater choices. Right now [with] bourbon, you have decent prices but everything is going up and up due to demand.”
So, as an investor, why buy in? “There’s almost no eight-year old bourbon right now, and if there is it’s at companies that need it for themselves or don’t need to sell it,” says Kasler. “Even four-year is increasingly rare. If I have 50,000 barrels of four-year old bourbon right now, from a good distillery, I could sell that in one phone call. That demand is so great, anyone with good stock could sell.”
There’s another advantage for bourbon investors at CaskX, beyond outsized returns; having a tangible product. “We recently had one of our investors down at Kentucky Artisan Distillers, which was coincidentally mixing his mashbill at that moment,” says Kasler. “If you buy diamonds, or cars, or wine, you’re not getting to be part of that on-going process. This doesn’t even happen with Scotch, which is more about dealing with brokers; if you want, with this process, you can meet the distiller and learn about your batch.”
For the original story, go to InsideHook. All rights reserved.
The Whiskey Wash
Interview: Chatting Bourbon Investment With CaskX CEO Jeremy Kasler
By Gary Carter, reporter, The Whiskey Wash | Feb. 3, 2022
The company CaskX is turning its sights to bourbon as the next big investment subject.
Like stocks and bonds before, those collecting valuable spirits are turning to whiskey, and specifically bourbon, for investment.
As technology evolves, it’s now easier than just a year ago for investors to get their hands on shares of rare and fine spirits previously reserved for distillers and super collectors.
CaskX, a Los Angeles-based investment company, first proved this model with Scotch, and last year turned their attention to bourbon as they continue to point qualified investors to this piece of the fastest growing category in the spirits industry.
CaskX CEO Jeremy Kasler visited with The Whiskey Wash and offered insight into how high-net-worth individuals can gain access, particularly since the barrier to entry for whisk(e)y investing has been traditionally high.
Long-standing conventions in the industry dictated that casks could only be sold to private individuals in order to provide the cashflow that distilleries needed, meaning investment was really only open to insiders, large dealers, and institutional buyers.
The Whiskey Wash: What about this period of time do you find investor appetite in bourbon and whiskey to be, is it at an all time high?
Jeremy Kasler: The appetite for bourbon as an alternative investment is certainly at an all-time high due to two major factors.
The first factor is an increased desire among investors to diversify their holdings with tangible assets. With the continued uncertainty surrounding traditional financial markets and the volatility found in new asset classes, such as cryptocurrency, investors are drawn to the relative safety offered by an investment in bourbon barrels. In stark contrast to most types of investments, bourbon barrels are a physical asset that have real intrinsic value – each barrel will eventually be consumed.
The second factor is surging demand for bourbon across international markets. At the moment there are more than 10 million barrels of bourbon aging in Kentucky alone, yet distilleries still aren’t able to keep up with demand. If you take a visit along the Bourbon Trail, this growth can be seen as distilleries are investing big in expanded production and warehousing facilities. Investors who recognize the growth of the market naturally want to find a way to capitalize themselves and investing in bourbon barrels offers them this opportunity.
TWW: How does one become a private, certified investor? And how does one do that with CaskX?
JK: Due to CaskX’s commitment to offering bourbon barrel investments in an SEC-compliant manner, investors must meet the accredited investor requirements as defined by the SEC. Investors who meet these requirements can open a CaskX account and gain access to current investment offerings.
TWW: In the investing world of stocks, bonds, classic cars and real estate, where does bourbon fit in as far as desirability?
JK: Barreled bourbon and Scotch whisky casks have grown to become more than just a niche offering. Today, barreled spirits are considered a mainstream investment product that offer a powerful alternative to other tangible assets such as wine, art, diamonds and cars.
The most intriguing aspect of bourbon barrels as an investment product is the fact that the liquid contained within continues to get better with time. Whereas most tangible assets remain the same, or even depreciate, barrels of bourbon naturally get better with time.
Historically, a bourbon that has matured for 6, 8 or even 10 years has commanded a significantly higher price point than bourbon which has only been aged a brief period. Investors can purchase newly-distilled spirit for a fraction of the price of well-matured bourbon, and stand to reap the profit as that distillate is transformed over a period of years.
TWW: How did the lifting of the EU tariffs help the world of bourbon investing?
JK: Fortunately for bourbon producers, the short-term impact of the EU tariffs were offset by strong continued growth domestically over the past three years. However, removing the tariffs is likely to result in a 30-50% increase in exports to the EU in 2022, adding further demand to the already constrained supply of bourbon. As distilleries seek to increase output, investors can serve an important role in providing the financial resources needed to expand production capabilities and stand to be rewarded for their investment as the barreled bourbon becomes increasingly scarce.
TWW: How does your average investor start the process?
JK: Investors start by opening an account with CaskX. After an account is opened, clients speak with an advisor about their individual investment objectives, desired holding period, risk tolerance and overall budget in order to make recommendations accordingly. When a suitable investment offering is identified and acquired, the investor is provided with full documentation of their purchase along with being able to access their portfolio from a web-based portal.
TWW: How has CaskX done with the earlier run at Scotch investment?
JK: Scotch whisky casks remain a solid alternative asset for many investors and CaskX remains bullish on the industry. To date, every investor who has purchased Scotch whisky casks from CaskX has observed an increase in the value of their holdings. CaskX’s entry into barreled bourbon offerings was a result of careful analysis of the bourbon market and the desire among investors to access these investments. While the Scotch whisky industry has already observed a period of mass expansion and growth, the bourbon industry is only just now entering a period of rapid growth that is projected to parallel or even exceed that of Scotch whisky.
For the original story, go to The Whiskey Wash. All rights reserved.
This Bourbon Bible Takes You Inside the Golden Age of America’s Signature Spirit
By Jared Paul Stern, reporter, Maxim | Jan. 20, 2022
According to industry authority the Distilled Spirits Council of the United States (DISCUS), since 2015, the luxury American whiskey category has grown at an astonishing annual rate of 41 percent.
Super-premium whiskies have experienced an even more staggering increase. It’s one of the drinks business’s most toast-worthy success stories, yet it’s hard to attribute the surge to just one source.
“Everyone has a pet theory for why whiskey has come back in such a big way,” as seasoned spirits writer Clay Risen puts it in his beautiful new brown-elixir bible, Bourbon: The Story of Kentucky Whiskey, recently published by the always tasteful Ten Speed Press.
One explanation, he notes, “relies on the logic of generations. Like the ebb and flow of baby names, the love of whiskey skips generations. While that seems too simplistic on its own, it does make a certain sense when paired with another theory.”
He continues, “The tastes of Americans in the early 21st century, from clothes to food to home décor, are the result of a long-term, wholesale rejection of the processed and prepackaged culture of the postwar era that crested in the 1980s.” Bourbon in particular “speaks to that revolt, promising an honest, tried-and-true American drink.”
And a “hallmark of today’s drinker, and a possible explanation for bourbon’s return,” Risen writes, “is the search for connoisseurship without pretension. People want to know about what they’re drinking, but they’re afraid of looking like snobs. Bourbon threads that particular needle. With its historical roots and technical nuances of production, it is tailor-made for nerding out. But it’s hard to get fancy about something with such a blue-collar pedigree. People’s curiosity about bourbon is honest and refreshing.”
This sounds like the most logical explanation to us; distilled to its essence, bourbon is simply, authentically, the good stuff, and people were bound to abandon their flavored vodkas and other claptrap and return to bourbon in droves. This dovetailed nicely with the increase in craft distilling, putting ever-more-improved product on bars and shelves.
Take, for example, the Kentucky Peerless Distilling Company. In 2015, the brand, whose history dates back to the 1880s, filled its first bottle of whiskey since Prohibition; and in 2019 they officially launched their first bourbon in 102 years.
Corky and Carson Taylor, fourth and fifth-generation of the brand’s founding family, resurrected it with a new distillery in a historic building in downtown Louisville, where select Kentucky Peerless grains are milled, cooked, fermented, double-distilled and barreled (at cask strength) all under one roof.
Awards followed soon after its first whiskies became publicly available, having aged the requisite number of years, including a Global Craft Producer of the Year award from Whisky Magazine, and a Best Kentucky Bourbon nod from the World Whiskies Awards, among other honors.
“The original Peerless Distilling Company was renowned for creating a whiskey worthy of its name,” Caleb Kilburn, the brand’s young Master Distiller, points out.
“This same mission drives us today and has led us to focus on practices that make the best whiskey, ignoring the costs in doing so. We push the envelope by coupling innovations like sweet mashing and computer-aided distillation with expensive, old-school techniques like low barrel entry-proof and bottling at barrel strength. We are at the crossroads of cutting-edge technology and historic artisanry, allowing us to be the best of both worlds.”
The dedication to craft and expertise demonstrated by Peerless and a handful of other brands, including the impeccable Blade and Bow, Castle & Key, Knob Creek, Russell’s Reserve, Woodford Reserve, and Little Book, the cult classic produced by the Jim Beam distillery, ensures that the bourbon boom is in no danger of a downturn anytime soon.
More than a decade in, “some folks still ask if we’re in a bubble, worrying that it is liable to pop as soon as young drinkers move on to something else,” Risen notes.
“They’ve been asking for a while, every time another liquor becomes trendy: tequila, mezcal, sake. And maybe some folks will move on; tastes have changed before. But it’s more likely that bourbon, and bourbon drinkers, are simply returning to a long history that was briefly interrupted. America is making better whiskey than ever, and America’s whiskey drinkers know it. It’s not about a bubble popping. It’s about the brown water finding its level.”
You can see it at places as varied as the members-only Multnomah Whiskey Library in Portland, Oregon, one of the most beautiful bars devoted to brown spirits anywhere in the world, and other similar temples of tippling where an allocation of Pappy Van Winkle is looked upon as an act of god; and Somerset, Kentucky, where the award-winning Horse Soldier Bourbon recently broke ground on a new $250 million “whiskey tourism destination.”
That comes on the heels of Jim Beam’s unveiling of its new Fred B. Noe Distillery in Clermont, Kentucky, named in honor of its legendary seventh-generation Master Distiller. As his son Freddie Noe, Beam’s eighth-generation Master Distiller, puts it, the new distillery “represents my family’s bourbon legacy—both where we’ve been and where we’re headed.”
Nor is this fresh infusion of cash limited to big-bucks brands. For the first time, CaskX, an investment company headquartered in Los Angeles, is now offering individuals the opportunity to invest in shares of bourbon from independent distilleries across the U.S.
“After having success in the Scotch world, bourbon was the next natural step [for us],” says CaskX CEO Jeremy Kasler. His company purchases bourbon barrels in bulk from the industry’s “rising stars” whose products are still gaining traction. The bourbon is then aged in a licensed Kentucky warehouse, “increasing in value as it matures.” When it has come of age, CaskX helps its clients resell, bottle, or distribute their whiskey portfolio as they see fit.
“This process is really a win-win for the distilleries and the investors,” Kasler says. “By selling barrels into our system, it keeps the lights on for some distilleries while allowing investors to gain entry to a category that historically has done well even in economic uncertainty. Not to mention this process allows the whiskey to mature to its full potential in a market where distillers are often forced to bottle early in order to turn profits.”
While it might be tempting to realize a quick return—bourbon’s numbers show no signs of slowing down, and a recent live auction of rare bourbons, including the very first bottle of Peerless’ new Double Oak expression, at a recent charity event in Louisville brought in big money—we’re willing to bet quite a few of CaskX’s clients will opt to savor some of their liquid assets themselves. For, as Risen makes plain, that is the real reward.
This article originally appeared in the Jan/Feb 2022 issue of Maxim magazine.
For the original story, go to Maxim. All rights reserved.
The Whiskey Wash
Interview: Why CaskX Thinks Bourbon Is The Next Big Investment
By Gary Carter, reporter, The Whiskey Wash | Oct. 27, 2021
Not unlike stocks and bonds, people across the globe are turning to whiskey for investments. And as technology evolves, it’s increasingly easier for the masses to get their hands on shares of rare and fine spirits previously reserved for distillers and the uber wealthy.
CaskX, an investment company based in Los Angeles, took to the call to offer individuals opportunities to invest in shares of bourbon from leading distilleries across the United States.
The company, which has already proven this model with Scotch whisky, recently began qualifying investors to grab a piece of one of the fastest growing categories in the spirits industry … bourbon.
“After having success in the scotch world, bourbon was the next natural step,” said Jeremy Kasler, CEO of CaskX. “This unique investment opportunity allows qualified investors the opportunity to bet on bourbon, a category that has appreciated on average 13.85 percent per year since 2010.”
CaskX purchases bourbon barrels in bulk from some of the rising stars in the bourbon industry in order to secure the best deals at the best prices for its clients. The bourbon is aged in a licensed Kentucky warehouse, increasing its value as it matures. When the bourbon comes to age, CaskX helps its clients resell, bottle, or distribute their whiskey portfolio.
“This process is really a win-win for the distilleries and the investors,” Kasler said. “By selling barrels into our system, it keeps the lights on for some distilleries while allowing investors to gain entry to a category that historically has done well, even in economic uncertainty. Not to mention this process allows the whiskey to mature to its full potential in a market where distillers are often forced to bottle early in order to turn profits.”
CaskX pours over data from the past two decades in the whiskey industry, current trends, and the global economy and creates growth estimations to help clients understand the profit potential of each barrel they buy. Its online platform allows investors to browse, organize, and examine their portfolio, helping to make informed decisions.
Kasler recently answered some of The Whiskey Wash’s burning questions about CaskX and bourbon and whiskey investing.
TWW: Is this the perfect time to begin investing in bourbon in this way, are we at the beginning of this explosion in bourbon investing?
Kasler: In our opinion, this is the perfect time to invest in bourbon. We are seeing all the indicators that quality-aged bourbon will fetch great prices for many years to come. We are seeing increased demand for quality bourbon not just in the U.S. but globally. Markets like China, India and Asia can’t get enough of it.
If you look at where Scotch was 10 or 15 years ago, prices for new-make barrels were similar to bourbon prices now, and Scotch prices have gone through the roof as demand has increased. We see bourbon taking a very similar trajectory.
TWW: Why unaged bourbon versus aged bourbon?
Kasler: Two reasons. First, there is very little aged bourbon in the market. Everything is being snapped up by new brands, the distilleries themselves or brokers. Second, if you can find it, it’s probably too expensive and wouldn’t make sense investment-wise. New-make bourbon or whiskey, on the other hand, is affordable for investors and will only increase in value as it ages. You just have to be patient.
TWW: How would you explain the average bourbon collector’s way into CaskX investing?
Kasler: The average bourbon collector is someone who has some experience in investing (due to current SEC rules, all of our investors have to be an accredited investor). They tend to have an appreciation for bourbon, they’ve heard the buzz about opportunities in investing in bourbon and, after doing their due diligence, they will take the plunge.
TWW: Tell us how CaskX did with the investment platform in Scotch whiskey.
Kasler: Anyone who has invested in scotch in the last 10 to 15 years has made money. It should be noted that spirits investing is not a short-term trade. You need to allow at least 4 to 10 years to see excellent returns. The longer the better.
TWW: Could you compare investing in bourbon to something like sports cards or classic car collecting?
Kasler: Of course there are similarities, but the unique aspect to bourbon and scotch as a tradable commodity is that it increases in value as it ages regardless of market conditions. No other commodity can make this claim.
TWW: Will people be able to trade bourbon shares like stocks, in a way?
Kasler: As the market and public awareness expands, no doubt there will be opportunities to invest in bourbon funds that will allow investors to trade paper as they do on the stock market. We prefer the feeling of owning actual barrels, which holds intrinsic value.
TWW: Is there a potential for side income, similar to that of NFTs or cryptocurrency?
Kasler: No doubt that many tech-based investment companies are looking at whiskey as a great way to underwrite trading in NFTs or crypto.
TWW: What does the future hold for CaskX in five, 10 years?
Kasler: As the world’s leading bourbon investment brokerage, we intend to spread the message far and wide. We currently have offices in Los Angeles, Louisville, Sydney and Hong Kong. We are excited to help people invest in and profit from a product they know and love. Of course there’s also a huge benefit for the distilleries, as we help them monetize their production from Day 1 rather than having to wait four to eight years.
We hope to expand our portfolio to encompass many types of whiskey, and we intend to partner with some of the best distilleries in the U.S. and around the globe.
For the original story, go to The Whiskey Wash. All rights reserved.
Why an investment company is buying up unaged barrels of Kentucky bourbon
By Erin Kelly, reporter, Spectrum News | Sept. 3, 2021
OLDHAM COUNTY, Ky. — An investment company is buying up Kentucky bourbon before it even reaches the barrel, amid a bourbon boom.
Ian White is a distiller at Kentucky Artisan Distillery in Oldham County, where some of the bourbon is made.
He showed Spectrum News 1 the process.
“From the wagon, we load the corn into the hopper, from the hopper, the corn is carried up through this auger into the mill,” he said.
The ground grain is mixed with water, cooked, then fermented.
“As it heats, we’re just taking measurements, we’re adding whatever enzymes, other malts, whatever the customer needs in that particular batch,” he said. “That’ll all happen here. We’ll get that up to a certain temperature, start cooling it, add our yeast, and from there, load it in to fermenters.”
The bourbon is made, start to finish, in just four days, but it takes several years to age it.
The distillery, which has made bourbon for more than 30 clients, says it has doubled its production every year for the last five years.
A warehouse holding 12,000 barrels is the fourth the business has built in four years.
Now they’re able to pay for an expansion, thanks in part to a new client called CASKX, which the distillery says has already purchased more than 1100 barrels of unaged bourbon to sell to investors.
Chris Miller is the founder and distillery director of Kentucky Artisan Distillery.
“We use their mash bill,” he said. “We produce the bourbons that they want. We produce it here, then we take it, we put it in our warehouse, we age it for five years.”
CASKX is an investment company with offices in Sydney, Hong Kong, L.A., and soon — Louisville.
“CASKX helps to manage the investments so that we store them over a period of time, up to eight years and at the end of the eight years, you can either, if you wish to, bottle the bourbon yourself or normally, trade the barrels for a profit,” said CEO Jeremy Kasler.
Due to regulations, the company sells only to accredited investors, he said.
The minimum purchase is 12 barrels, costing around $2,000 each.
Not only do the distilleries they work with get the benefit of being paid in full years before the bourbon is ready, it is more cost effective for the investor,” he said.
“Generally speaking, when our clients place the order, the corn’s still in the field, the barley’s still being processed, the water’s still being shipped over, so you’re right at the beginning of the process and the entry level is a fraction of what it would be if you had to wait four years for it to be aged,” said Kasler.
CASKX is opening an office in Louisville in the next few weeks and Kasler said the company is speaking with lots of distilleries.
For the full version, go to Spectrum News 1 Kentucky. All rights reserved.
How One Investment Company is Banking on Bourbon:
CaskX offers investors a chance to get involved with the American spirit industry by buying into shares of unaged whiskey
By Gabrielle Nicole Pharms, reporter, Adweek | July 14, 2021
Aficionados of the whiskey world have long appreciated the value—and flavor—of bourbon. However, in recent years, investment companies, such as CaskX, have also acquired a penchant for “America’s Native Spirit.”
The acceptance of whiskey as an “alternative asset” appeals to the affluent on several fronts. For one thing, it offers greater stability and diversity amid increasingly volatile capital markets. As a marketing segment, the last decade has seen American whiskey go from passé to premium. Rare bourbon and rye are considered as fine as European scotch and brandy. For spirits marketers, the introduction of investment companies like CaskX is a further vote of confidence in the enduring value of whiskey, even as global challenges emerge.
Combined U.S. sales for bourbon, Tennessee whiskey and rye whiskey rose 8.2%, or $327 million, to $4.3 billion in 2020, according to the Distilled Spirits Council of the United States.
“There’s more and more interest in high quality American bourbon,” said CaskX CEO Jeremy Kasler. “People are now drinking bourbon as a single drink, not as a mixer, as they may have 10 or 15 years ago. There’s a lot of attention on bourbon in the U.S., of course. But there’s huge interest in Asia, Europe, South America and everywhere.”
The company first opened offices in Sydney and Hong Kong before setting sail to the U.S., specifically Los Angeles. “The feedback we were getting was like, ‘Look, this is great. We want to invest in scotch, but even more we’d love to invest in bourbon,’” stated Kasler. He and his team quickly realized there were whiskey consumers keen to invest in bourbon more so than scotch.
Though Kasler began trading scotch whisky about 10 years ago, CaskX debuted to the world in 2017. “The bourbon industry forecast investment is probably where scotch was about 10 to 12 years ago, where the entry level is fairly low, but the upside is very high. So, of course, this is something that we’re trying to achieve with trading in the States,” said Kasler.
‘Fear of the unknown’
Prior to becoming CEO of CaskX, Kasler was involved with a variety of alternative investments, such as property, wine, art and whiskey. Outside of the world of stocks and bonds, the more people acquire wealth, the more they want to invest into lifestyle opportunities as well.
“People enjoy investing into things that they can enjoy themselves, whether it’s a picture on the wall, a violin that people love to play or a car that people drive,” Kasler stated. “So, it’s that marriage of enjoying the products [and] enjoying making money—somewhere in the middle. That’s the inspiration.”
Kasler cited the “fear of the unknown” as their biggest challenge as a company.
“Although the bourbon industry is hugely advanced—it’s been around for years—the general public or your normal investor previously has never been able to invest into bourbon casks,” he said.
To counter that notion, Kasler and his team show investors that it’s the “same product, just in a different country.” He added, “This is what’s happened in Scotland when people have had the foresight to invest into this product at an early stage. So, then the people have more confidence.”
One of the differences between trading scotch and trading in bourbon is that scotch is owned by conglomerates such as the Diageos and Brown-Formans of the industry.
“You can source a cask of scotch, but the entry level is a lot higher because the huge corporations sell it to a supplier, the supplier then sells it to somebody else,” Kasler said.
“The difference with trading bourbon, we’re dealing directly with the distillery, we are putting money straight into the pockets of the distillers or the distilling companies. It allows them to monetize their products from day one rather than wait four years or six years further down the line.”
An exclusive appeal for investors
Currently, CaskX offers casks from Kentucky Artisan Distillery. The company is also in discussion with other distilleries to bring two additional ones onboard for investors. Since Kentucky Artisan Distillery began working with CaskX, it has had more inquiries from potential customers about starting their own brand.
“We have gone from orders for new fill production from 2,500 last year to an expected 6,500 next year,” said Chris Miller, Kentucky Artisan Distillery’s director of operations. “Because of the increased demand we have invested more in the distillery and bottling expansion this year than we have spent on the distillery since it started in 2012.”
“There’s so many different types of bourbon and whisky,” Kasler added. “Interestingly, quite a few of our clients who are buying bourbon for investment are from Scotland, which sounds surprising, but they know the entry level for a barrel of scotch is about $6,000-$8,000, whereas the entry level for bourbon is around about $2,000.”
The marketing of whiskey as an asset
CaskX tends to do most of its marketing via social media with a focus on Facebook and Instagram. Kasler stated, “This approach may not have worked even five or 10 years ago, but today the majority of our target market is engaging in one way or another on one of those platforms every day.” As the world starts to reopen, CaskX will return to some more traditional approaches such as whiskey events and investment shows.
One advantage bourbon holds over scotch is that the American spirit’s maturation process is much quicker. If you want to age a barrel of scotch, you have to wait at least 10 years or longer until you get the quality you’re looking for. In contrast, you can have a brilliant bourbon matured in four years and trade it out for a healthy profit, rather than wait a decade.
CaskX places orders before the barrels are filled. So, distilleries are getting paid, even prior to filling the barrel.
“Without preselling, that couldn’t happen,” Kasler said. “They’d be forced to sell everything they’ve got. So, on an economic scale, it’s a win-win. It’s good for us. We’re getting lots of sales, it’s good for our clients, because they’re able to invest at the ground floor, and then make really good money; and of course, it’s great for the distillery.”
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Louisville Business First
It’s a new way to sell bourbon — and it could be a lifeline for young distilleries
By David A. Mann, Digital Editor, Louisville Business First | July 1, 2021
The bourbon industry is one of Kentucky’s oldest, dating back to at least the early 1800s.
But now, 200 or so years later, an investments company has found a new way to sell it — and it could become a lifeline to some of the younger distilleries in the industry.
The company is called CaskX, with offices in Los Angeles and Sydney, Australia. It’s led by CEO Jeremy Kasler, who deals in alternative investments: art, wine, alternative businesses and more. It started trading in Scotch whiskey about eight years ago and bourbon became the next logical step, Kasler told me in a recent interview.
“We were going great guns, lots of people making lots of money” on Scotch, he said. When the firm opened an office in Los Angeles, investors started asking if they could buy bourbon and it became a huge opportunity.
CaskX went out and bought 50 barrels of bourbon, which still needed to age, and sold them all to investors in about half an hour. Since then, it has purchased hundreds more — up to about 1,000, Kasler said.
It’s buying from Kentucky Artisan Distillery in Crestwood, Kentucky, specifically right now, but there’s more demand out there than there is supply, he said. CaskX is looking to buy 5,000 to 10,000 barrels of un-aged bourbon in the next 12 months.
This could solve a big problem
This type of business could be a lifeline for the industry, as there are plenty of young distilleries out there that have sprung up in the last few years amid an ongoing bourbon boom. These young distilleries have started making bourbon but have been unable to sell much of it yet because it takes bourbon years to age.
CaskX is looking to buy un-aged bourbon, meaning it’s a way for young distilleries to generate revenue in their early years. It’s also looking to pay the distiller to age that bourbon at its facility. And the investors are looking to buy something unique here — not something from a large distiller — meaning small distilleries could benefit.
“It’s nice to have repeat customers,” said Stephen Thompson, founder of Kentucky Artisan Distillery.
He said the sale of barrels to CaskX has been meaningful for the small operation, though there has been plenty of demand for bourbon, of late.
“I think it’s a good opportunity for some of the smaller distilleries,” Thompson said.
Kasler noted that the firm has even been using Kentucky Artisan Distillery as a setting to film materials used in investor pitches. (By the way, CaskX is only looking for accredited investors under the Securities and Exchange Commission’s definition.)
Thompson notes that there were some legalities to work out for these sales. There are legal limits on who can actually own and age bourbon in the state of Kentucky. However, he said, the distillery’s attorneys and CaskX’s attorneys were able to hammer out a legal workaround for this issue.
Kasler said an investment in bourbon may actually be more lucrative than an investment in Scotch for two reasons.
First, bourbon ages quicker than Scotch: It’s stored in new oak barrels, where Scotch is stored in used bourbon barrels. Generally speaking, in a new barrel there’s going to be much more wood flavor that can soak into the liquid than there is in a used one.
Secondly, bourbon is cheaper to purchase than Scotch and has a better rate of return.
There are small, independent bourbon distilleries dotted around Kentucky.
But Scotch distilleries are often scooped up by large international alcoholic beverage conglomerates. With that much competition, Kasler said, a barrel of Scotch can cost upward of $6,000 to $8,000. Meantime, a barrel of bourbon can cost much less — in the $1,850 range.
Kasler said the company expects a barrel to double in value every four years. Most investors buy between 40 and 60 barrels and he expects that many will sell them four, six or eight years later. A few might keep a barrel or two to bottle themselves.
CaskX makes money by charging a markup on the front end when selling to investors and a 5% commission if it helps the client to trade out.
Couple the lower price tag with the quicker aging process and the investment looks better.
“The investment horizon is much quicker,” said Kasler.
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WDRB News Louisville (Kentucky)
Bourbon barrel investment company bringing unique opportunities to Kentucky
By Katrina Helmer | June 22, 2021
CRESTWOOD. Ky. (WDRB) — An international investment firm is busting into bourbon territory by offering unique opportunities for individuals to bank on Kentucky’s spirit.
“CaskX is a bourbon barrel investment company,” CEO Jeremy Kasler said. “We allow our clients to invest directly into barrels of bourbon.”
It’s the same concept as with some investment firms allowing individuals to buy into race horse ownership — but with bourbon. CaskX promises smooth flavors and stable returns. The company leader said it’s a way for people to diversify their investments and for distillers to build more upfront profit.
“It’s a win-win,” Kasler said. “It’s a win for the distiller, and it’s a win for the investor, because they have access to a top commodity that didn’t exist to them previously.”
Stacked six barrels high in some spots, the Kentucky Artisan Distillery warehouses are bursting with the smell of good bourbon and infinite potential. Kasler, based in Australia, toured the distillery for the first time Tuesday with distillery manager Chris Miller.
CaskX originally reached out to KAD about a year ago to discuss the possibility of allowing investors, and already, the firm is claiming about 1,000 barrels.
The company started with the same connect several years ago for scotch, and Kasler said the market is finally right to do the same with bourbon.
“The scotch barrel market has been booming over the last 10-15 years,” he said. “People have made lots and lots of money. And we’ve seen the same dynamics in the bourbon industry. So it’s an exciting situation where we can get in on the ground floor before the prices really start to increase.”
Kentucky bourbon has appreciated on average nearly 14% per year since 2010, Kasler said.
Interested investors will work directly with a CaskX employee, who will help identify mash bills or distilleries that would best suit the investor. The person will then purchase a minimum of 12 casks, but 48-60 is a typical purchase, Kasler said. CaskX will then be responsible for storing the bourbon for eight years.
Once the bourbon is finished aging, the CaskX representative will help clients resell, bottle or distribute their portfolio to make a profit.
The minimum investment is around $20,000, and that can be done as an individual or with a group. Everyone must be an “accredited investor,” meaning they must have some experience with investing in different products, Kasler said. CaskX will handle all the legally-compliant paperwork necessary for the investor.
The distilleries involved also benefit from the partnership. Instead of waiting years to make a profit once the bourbon is bottled, distilleries can make money upfront.
“We’re buying the barrels even before it’s been filled,” Kasler said. “So what we help to do is monetize the product pretty much from day one.”
For Kentucky Artisan Distillery, that means it is able to expand to meet the growing demand much sooner than expected.
“We’re going to spend more money on this distillery in the next year than we have in the entire time we’ve been open,” Miller said.
KAD launched in 2012 and has been steadily growing ever since. Now, it plans to double production from 3,000 to 6,000 barrels next year. The bottling facility will be able to expand from 140,000 cases to 400,000 cases in a year. The distillery is also investing in new technology and building a brand new warehouse.
So far, KAD has worked on three different mash bills for CaskX, and the most recent one is a clear favorite at the distillery.
“If I say so myself, we make some of the best bourbon,” Miller said. “And we did a mash bill for CaskX that myself and the master distiller agree is the best bourbon that we’ve ever produced here.”
The master distiller, Jade Peterson, said the partnership with the investment firm allow the distillery to experiment while also getting new products to market.
“I’m really proud of this newest mash bill,” he said. “CaskX came along at the perfect time for it.”
So far, CaskX has around 100 investors from the U.S. to Europe and Hong Kong.
“It’s a great opportunity for people to get into the door in a really intimidating industry,” Peterson said. “So this gives you options to get into the business from the ground up and see what it’s like from start to finish.”
Click here if you would like to learn more about CaskX.
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Drams Worth Collecting
Investing in rare bottles and casks is on the up, particularly among young investors.
By Helen Dalley, Jetsetter Magazine | April 2021