Are whisky and handbags still a wise investment?
Whisky and handbags are the two newest additions to the Knight Frank Luxury Investment Index (KFLII). We ask the experts how these assets have been performing.
5 minutes to read
We speak with Meg Randell, the European and UK Head of Designer Handbags & Fashion at Bonhams and Andy Simpson, Rare Whisky 101 co-founder, now running boutique private client/rare whisky business Simpson Reserved Ltd.
This update comes from the Luxury Investments report from The Wealth Report Series, giving high-net-worth-individuals a guide to investments of passion.
Whisky topped KFLII on its debut in 2019 while handbags have performed strongly since they joined the index a year later. What is their current situation?
Meg
Like all markets, the handbag market has fluctuated slightly mover the past year but overall continues to grow. Global registrants for Bonhams handbag auctions have increased on average 120% year-on-year, and the average hammer price achieved has increased by 154% indicating that there is still a huge demand for pre-loved designer handbags.
Andy
Bottles of rare whisky have had a far more sedate time from a performance perspective over the past three years. Bottles valued over £5,000 have recently undergone a price modification due to a range of geopolitical, societal, and financial influences.
Certain brands have still performed well, while the market leader (from a sheer volume of market perspective), Macallan, has seen particularly punishing losses with its index re-tracing 11.7% over the past twelve months.
The broader market (according to the Rare Whisky 101 Apex 1000 Index) is down just 1.5% over the last twelve months, so while certain brands and higher value bottles are having a harder time, the market as a whole is relatively resilient, albeit currently underperforming traditional bank savings rates.
Are there any brands or makers doing particularly well or enjoying strong demand?
Andy
Clynelish is performing well (its index is up 3.9% in the past twelve months), but Balvenie has been the standout brand recently with its index increasing a mighty 22% over the past twelve months.
Meg
Hermès remains the most popular brand at auction, with smaller examples (such as the Kelly 25 and Birkin 25) proving particularly popular with buyers over larger designs.
Chanel, too, remains popular, particularly as Chanel has in place a handbag quota, meaning that they are limiting the supply of handbags available on the primary market, so people are looking to auction for luxury purchases.
Have there been any sales that have stood out so far this year?
Meg
In April, we held a single owner auction in London that featured 30 Hermès handbags in excellent condition and which created huge demand. In particular the smaller bags, such as the Kelly Pochette (pictured below) sold well.
Hermès Kelly Pochette bag
As well as sales in London, Bonhams has achieved excellent results in Paris. In May, our team there held a dedicated Hermès sale consisting of over 300 lots. The star of the auction was an incredibly rare mini Kelly.
Andy
It’s been a far quieter year from a standout bottle perspective as would be expected while the high-value segment undergoes a downward re-alignment of values.
That said, northern Scotland-based auctioneer Whisky Hammer set a new record for an exceptionally rare bottle of Glenfiddich ‘Special’ Pure Malt earlier this year when the e-hammer fell at £3,650. So, record prices are still being paid, just not in the vast hundreds of thousands of pounds price bracket we saw in 2018 and 2019.
Are you seeing any new trends in terms of how the market is evolving?
Andy
From my perspective, the same rules for investing in whisky still apply now as they did twenty years ago. Globally recognised brands, exceptional quality liquid, rare/commemorative limited editions and single cask releases will always be in high demand no matter what the short-term market outlook is.
I’ve always said Scotch whisky is a medium to long-term investment; so while short-term gains are possible, people should look at a five to 20-year term. I’ve been collecting/investing for almost 35 years now and still continue to try to buy the right bottles at the right prices.
Meg
As more and more people collect handbags, the market is becoming very specific with Bonhams customers increasingly looking for rare Hermès pieces that are in excellent condition. Bags created in the last couple of years are still fetching a premium at auction against more vintage models.
What would be your one piece of advice to anybody thinking of starting a whisky or bag collection, especially if they are hoping it will be an investment?
Andy
I’m personally starting to see an increase in fakes appearing on the market again. New collectors and investors simply need to ensure they undertake rigorous due diligence on any high-value bottles. Never be afraid to walk away, no matter how rare a bottle apparently is.
Meg
Buy from reputable dealers or auction houses, ask lots of questions, walk away from deals that feel too good as the market is sadly awash with fakes. Think about condition – some issues can be repaired by Hermès and Chanel whereas others can’t, which will affect the long-term value. Most importantly buy what you like, the benefit of collecting handbags is that they are usable objects that can be enjoyed if they are well looked after.
What is the one bag or bottle you would most like to own?
Meg
I have always loved Chanel handbags, in particular the Chanel 2.55 Classic Flap which was designed by Gabrielle Chanel in 1955. The flap bag was one of the world’s first ‘hands-free’ handbags as Chanel popularised the shoulder chain which is now so commonly used. There must be some examples of the Classic Flap bag from 1955 and I would love to own one.
Andy
I’ve been blessed over the years as I actually own it. It’s what is understood to be the first privately bottled single-cask of Glendronach. It’s also believed to be one of just four bottles left in existence. It’s an amazing thing, of which I feel more like a ‘custodian’ than outright owner. People often talk of liquid history, but this really is! Other than that, there’s a specific cask of Brora 1972 (my personal birth-vintage!) lying, maturing, waiting to be bottled. I was lucky enough to try a sample and it was spectacular; so a bottle of that, when it’s been bottled, would be incredible.
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