What makes a whiskey cask worth $1 million?

Last week, two casks of single malt whiskey sold at auction for a combined $2.14 million. For many, that is a tough number to swallow, but the breakdown of their value is actually rather neat.

Single malt whiskey has been a hot commodity in the last few years. In the first half of 2021 alone, 85,000 bottles of fine whiskey were traded on the secondary market with an estimated worth of more than about $44 million. (As a note, the casks in question are estimated to yield 105–145 bottles of whiskey each.)

When it comes to whiskey, rarity is a big determinant in value. Each of these casks is from a distillery (one from Port Ellen and the other Broro) that is no longer in business, which all but ensures there is a limited supply available. It also earns them the enticing moniker of “ghost cask.”

Age, of course, also plays a role. At a minimum, scotch is required to be aged three years before it can be sold. These batches far surpass that threshold, as the younger of the two is about to turn 40 years old.

As an added bonus, each cask also comes with the opportunity to collaborate with an internationally acclaimed artist on custom pieces that reflect the distilleries and whiskey. While some old school Scotch drinkers might scoff at such a bundle, this add-on says everything about today’s environment of collectors and resellers.

While expensive spirits have long been a status symbol, the culture around high-end liquors has evolved of late. The internet has created a worldwide network for collectors to connect, educate, and purchase bottles they may never have heard of otherwise–let alone purchase. But, like in any market, this kind of increase in demand yields scarcity and higher prices. But, for whiskey lovers, it also contributes to the allure.

Take, for example, the cult following that has emerged around Pappy Van Winkle bourbon. Every fall, Pappy Van Winkle releases small quantities of its six bourbon varieties (with MSRPs ranging from $80-$330) that immediately sell out at every distributor lucky enough to stock it. Along with being a popular auction item in its own right, bottles of Pappy are often purchased on secondary markets for up to $5,000. This is a stiff jump from the retail price, but finding a bottle is so rare that the ability to buy it is almost priceless.

So, do all of these factors make a cask worth $1 million? I think it depends on who you ask. But I am willing to bet that the auction winners–as well as the bidders they beat out–would say that they are worth every penny.

Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.