Due Diligence
A key activity in investments is doing due diligence - meaning the process of conducting research and trying to understand what one is buying into.
As you can imagine, that process is one of the great benefits of investing in a physical good that you can also experience! Here are a couple of lessons and outlooks I am taking into it:
暗い Black Box Due Diligence?
Are you going to drink that Yamazaki 55-year old to understand if it has investment value? Unlikely. But should you drink a Yamazaki before you invest in a good expression? Definitely. As investors, it makes sense to have an understanding of a brand / company / distillery core range from a flavour perspective - for multiple reasons.
First, what is it you’re really buying? The story, the flavour, blending experience, etc. comes with a bit of a history. Imagine if you think peated Japanese whisky will skyrocket - will your bet be on the Hakushu expressions, or on the Yoichi equivalents? If you know that any random bottle of Yoichi tends to be more peated, that could be a more interesting play simply by having others flock to this flavour profile.
Second, it gives you a better understanding of special editions and higher age statements, should you find a bottle of a distillery you are really looking for.
挿話 Anecdote:
I have a really interesting bottle which I will never drink. Hence opening it and testing is out of the question. But I found the same distillery presenting an expression with the same kind of barrel at a much younger age when I passed by a well stocked restaurant lately. And I absolutely loved it. But that’s beside the point.
They also had a similar whisky from the same distillery, with about the only difference being the barrel - the first one was barreled in American first-fill oak, and the second one in American ex-bourbon cask. Same ABV. Same distillery. Different barrel. Different whisky. Yes there could be different parts extracted in the cut of the whisky, but the bottles look almost identical unless you look carefully.
Now, this doesn’t mean that any expression from that distillery in ex-bourbon casks will be exactly like the one I had. However, given that it was outside the core range, it means that special blending effort had gone in. Hence they thought that this was the profile they wanted for the ex-bourbon casks. Now I have a good basis of comparison for my own investment! I can now ask questions like: Do I think that one of them is better or more suitable for investment? Is there possibly a trend here? Where does what I’m drinking fit within their range, especially compared to the core range? What are other people likely to get exposed to? What are they more likely to appreciate in an investment?
直感 Insights:
To make that a bit easier, here’s my take on how to do a due diligence session:
Have a couple of distilleries you know well or have notes on. Classic barrels, age ranges, flavour profiles. If you get presented with anything from them, you can then try the dram out and really make use of the experience.
Have comparisons. Having the ability to contrast a few different special editions, or one special edition and one core range expression is really helpful.
Spending money drinking a lower-range expression than what you would normally invest in, or trying more from a distillery already on your radar / shelf has value as well. Some people might be introduced at some level and then look to buy bottles at a higher range for their shelf; whether it be for drinking, displaying or divesting later. Knowing this lower range is therefore powerful. Don’t necessarily scoff at the lower range, or try and focus on drinking a different distillery than you invest in, just for the exploration. Yes, a wide understanding of what you can invest in is good, as long as you know enough about each to truly make informed investment decisions.