Jeremy Kasler launched Art Futures Group in 2010 in Hong Kong, becoming the first in Asia to offer an end-to-end art investment service. He expanded the art investment market beyond high-net-worth individuals to include middle class professionals and Gen-Y investors. He did so by connecting artists directly with buyers through a commercial platform, enabling buyers to bypass the traditional avenues of galleries, museums, and exhibition halls.
AFG became the go-to investment broker for Chinese contemporary art. After 20+ years in specialty finance, alternative asset investment, and corporate strategy, Kasler transformed the company and sold it in an all-cash buyout to auctioneers Macey & Sons in 2019.
His experiences with AFG set him up for his next big thing. Back in 2010, sophisticated art investors asked him about how they could invest in scotch.
“Hong Kong is the capital of alternative — alternative investing in art and diamonds and much more,” Kasler told California Business Journal. That individuals could purchase, and own entire casks of whiskey was news to him. That set him off down a path of research that led to the discovery that whiskey casks had been sold to individuals for hundreds of years to stoke the cashflow distilleries needed.
The playing field of investors was primarily elite buyers, large dealers, and institutions. Again, much like he democratized the Chinese contemporary art market, he saw the opportunity to broaden a lucrative market.
In 2019, the whiskey aficionado founded CaskX, a firm based in Beverly Hills with offices in Hong Kong and Sydney, specializing in building investment portfolios of barreled bourbon and scotch for investors around the world.
“I loved the idea of creating this new investment opportunity in the biggest investment market in the world, and to offer a U.S. product too. This was great on many levels, especially for Kentucky and Tennessee,” Kasler says.
The creation of CaskX was not only welcome news for investors looking to capitalize on whiskey investing but distilleries who benefit from the cash infusion it brings their businesses.
The underserved niche market of investing in barreled spirits was ripe for the picking. CaskX works with distilleries to purchase and store their barrels and connects those offerings with accredited investors who can purchase barrels to hold for future resale or bottling.
CaskX buys thousands of barrels and breaks them into smaller lots to sell to investors. Investments include eight years of storage, insurance, and taxes.
“They don’t have more that they have to pay after that initial investment.”
Normally after 4 to 7 years, investors can sell the barrels or choose to bottle their whiskey, and wealth managers help investors manage their portfolio at each step.
Pros and cons of investing in whiskey
Sipping whiskey is ever trendy worldwide. In the U.S. alone, in 2022, according to the Distilled Spirits Council of the U.S., sales for American whiskey were up 10.5%, or $483 million, to reach $5.1 billion.
With numbers like that, there are pluses for investors putting money behind what they like drinking. Whiskey casks are an investment that gets better with time. The longer whiskey ages, the better it tastes and the more valuable it becomes.
Whiskey casks have shown stability in performance over the last few years, as measured by the Knight Frank Luxury Investment Index and WhiskyStats.net.
With inflation, tangible assets like whiskey casks are seen as a wise hedge against inflation.
But all investments carry risk. Kasler jokes that there are 15 pages of risks with investing in whiskey.
“Whiskey is currently booming. There’s an undersupply, and prices are going up, but market conditions could change, and prices could go down.”
However, even if market conditions change, if your bourbon has been in the barrel for six years, it’s more treasured.
“You hope that the demand is still high when you decide to sell.”
The potential is huge: one 30-year-old barrel of scotch sold for $20 million.
“With super rich Asian investors, demand is through the roof, and it’s not just Asia. There are many countries where there is a lot of demand for high end bourbon,” he says.
An emerging industry
Kasler looks through the rearview mirror and feels that major hurdles, like having its first sale in March of 2020 as the world was shutting down with COVID, have been overcome.
Then there were all the stringent rules from the SEC and other regulators.
“I had no idea what would be involved. I’ve launched businesses around the world, and the U.S. was the most difficult, especially being in California, where there is so much bureaucracy. Let’s just say we gave lots of money to lawyers and spent many hours in meetings with lawyers navigating all the legalities.”
But now that the company, which has 16 employees in the U.S., is going full throttle, the payoff is apparent. CaskX had $10 million in revenues in 2022, and Kasler expects to double that this year.
“We are talking to some 1,000 people daily about how to invest in bourbon and whiskey. Some people we talked to two years ago are coming on board.”
There’s a vast pool to tap, as there are some 18 million accredited investors in the U.S. Accredited investors, as defined by the SEC, must meet the financial criteria of having a net worth of over $1 million, excluding primary residence (individually or with spouse or partner), income over $200,000 individually or $300,000 with a spouse or partner in each of the prior two years and reasonably expects the same for the current year.
CaskX’s challenge is education, letting people know what whiskey investment is, that it’s available, and how it works. The company does significant marketing on Facebook, Google, and LinkedIn.
“People need to understand the process before they invest. We can now do more tastings and meet with people face to face. We offer private VIP tours at distilleries that people really love. They get to meet the people involved in the process.”
The company is developing an online trading platform where retail investors can buy and sell barrels of whiskey. This will be significant as anyone 21 and over, not only accredited investors, will be able to participate. However, these are two separate businesses.
“Investors will buy into a fund versus buying a barrel directly. We will manage the fund on behalf of investors,” explains Kasler.
While CaskX has no competition in the U.S., Kasler says he expects that in five years the industry will be cemented in the U.S. as whiskey investing gets more mainstream, and he will have competitors.
“We will be on the top of the pyramid, though,” he says confidently.
That confidence comes from experience. He’s long had the entrepreneurial spirit, whether it was selling hot dogs as a teenager from a hot dog stand from 9 p.m. to 4 a.m. in London or selling Spanish holiday apartments in Russia.
“It’s not about how good you are at selling; much depends on your market. We have a huge market. People drink whiskey in good times and bad.”