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Singapore dangles digital whisky trade to lure Asia's wealthy

Private exchange HGX moves in on Hong Kong trader with blockchain-backed tokens

Rare whiskies have proved to be one of the most lucrative investments, according to U.K.-based consultancy Knight Frank. (Photo courtesy of PrimePartners)

SINGAPORE -- Singapore is fast becoming a hotbed of activity for the trading of whisky assets, with private exchange HGX the latest to get in on the action, announcing the launch of a blockchain-based service for buying and selling high-end bottles of the liquor.

With low interest rates prevailing around the world, huge sums of cash are chasing high returns, and some of the money is finding its way into precious whiskies.

HGX, known as an exchange for high-value luxury items, including works of art, is now allowing professional investors, including wealthy individuals with net worths of at least 2 million Singapore dollars ($1.5 million), to trade digital tokens pegged to bottles of rare single malt Scotch whiskies from prestigious distilleries like Port Ellen, Mortlach and Talisker.

Each token represents one bottle of rare liquor, currently valued from around 700 pounds to 11,000 pounds ($950 to $15,000), depending on rarity. Investors cash out after the whisky matures in casks and is bottled; they will have the choice of taking delivery of a bottle or receiving cash for however much the tipple is then worth.

Singapore-based HGX and PrimePartners allow investors to trade digital tokens pegged to bottles of rare single malt Scotch whiskies from distilleries like Talisker. (Photo courtesy of PrimePartners)

"Real estate, whisky, art, collectible cars ... all these are products that are not easily accessible in any one venue," HGX COO Willie Chang said during a news briefing on Monday. "As we grow and scale I really want to position HGX to have access to ... kind of any exciting financial security products."

Rare Cask Holdings, a subsidiary of Singapore-based PrimePartners Corporate Finance Holdings, will provide the whisky that will back the digital tokens traded on HGX. This blockchain-based whisky asset is being billed as a first for Southeast Asia.

Rare Cask also acts as a broker in support of its trading.

The globe's low interest rates are stoking hunger for higher-yielding assets, Gerald Ong, PrimePartners' deputy chairman, said at the news briefing.

"Within the spectrum of alternative assets, whisky has proven itself to be the most liquid," he said, noting that among other nontraditional investment options like wine and art, the liquor has provided the highest returns, of more than 560%, over the past decade.

In its 2020 Wealth Report, U.K.-based consultancy Knight Frank also highlighted rare whiskies as one of the most lucrative investments over a 10-year period, with a 582% increase in value, outperforming other collectibles like rare coins, cars and stamps.

Prices have been sharply rising because supplies of rare whiskies are limited.

At the end of January, a bottle of Gordon and MacPhail 72-Year-Old, Glen Grant 1948 Single Malt Whisky from Scotland -- one of the oldest and most prestigious whisky casks in existence, will make its world debut at the upcoming Bonhams auction in Hong Kong with a book estimate of HK$300,000 to HK$380,000 ($38,000 to $49,000).

Ong says that with strong demand in India, China, Japan and Taiwan, the time is right to launch digital whisky asset trading.

Investors have already snapped up two-thirds of the initial batch of available digital whisky tokens, despite a paucity of marketing, Ong said. "(We are) currently talking to investors in China, Japan and some investors in New Zealand," he added.

PrimePartners is not the only player getting in on the action. Hong Kong-based Rare Finds manages a digital whisky brokerage that courts wealthy investors.

Similar to PrimePartners, it offers well-heeled collectors the chance to buy into bottles and casks of rare single malt Scotch from top-tier Scottish distilleries like Macallan, Dalmore and Bowmore.

Rare Finds is made up of investment banking professionals and alternative investment specialists who advise Hong Kong's wealthy on whisky as an asset. The company's largest stakeholder is Platinum Rise Capital Partners, an investment and development finance firm based in the city.

A Rare Finds representative last year told Nikkei Asia that after Hong Kong, Singapore, another big Asian financial hub, was the company's next target market and that it had plans to explore the potential for setting up an office in the city-state in the first half of this year.

Rare Finds had observed that Singapore in 2019 was one of Asia's top Scotch markets, hitting a value of 300 million pounds. The company targets high net worth individuals, family offices and boutique institutional investors as core whisky investors.

As with other assets that promise handsome returns, risks are present. There is a chance the market for maturing whiskies could sour. Also, imitation bottles being passed off as the real deal have surfaced before, duping the less discerning.

PrimePartners' Ong acknowledged the difficulty of ascertaining the authenticity of the liquid in bottles put up at auction.

To mitigate the risks, he said his outfit only offers tradable whisky assets that are secured against casks of liquor that are still physically stored and aged on-site at Scottish distilleries and warehouses.

"For us, it is a very clear investment opportunity," Ong said. "Being in the service provider business, we thought that this would fit very well with quite a few of our friends, family and clients."

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