In 2014, we purchased empty warehouses. I sought to fill these warehouses with as many casks as possible to get the new premises earning money as quickly as possible. In doing so, I bought and sold casks, and encouraged people who purchased my casks to move casks they owned in other warehouses to store with me as well. It didn’t matter whether we’d originally sold them the whisky or not.
In doing this, we set up useful relationships which were beneficial to both parties. Businesses smaller than us or similar in size were able to use our space in order to help themselves grow, and we were also able to grow and invest.
Now that the warehouses are (more or less) full, we have started to re-focus on the initial goal. Building our own distillery and selling casks. This is leading us to the difficult decisions which must be made – which customers do we wish to retain as customers of our storage and which customers are we no longer able to accommodate?
Our growth has coincided with rapid inflation in the price of whisky casks. When valuing a cask, you can take a reasoned, logical approach or you can pluck a number out of the air that you’d like to achieve for the bottle and work backwards. This means that a cask that I may view as being worth £2000 can easily be valued at £4000 by somebody else who wants to sell it for £10 more per bottle. This presents a real problem within a warehouse environment where the owner wishes to insure their goods and it risks potential conflict between us and our customers.
For example, one of our storage customers sells a cask for £12,000 which we didn’t sell them. We know, however, that we were selling comparable casks a month prior to this for £2000. The third party who purchases this cask contacts us and asks to be added to our “Goods in Trust” insurance policy. They ask for our advice about what to insure their cask for. What should we tell that customer? Should we say “you’ve been ripped off”, or “we don’t believe that at this time an insurance company would pay out the amount you paid for the cask”, or should we fob them off and say “unfortunately we cannot help you with valuations”. This is the reality we’re now dealing with. I’ve always attempted to tell the truth in these matters while avoiding accusations about the person or company who has sold the product. It isn’t possible to stop holding this information in your head and feeling aggrieved on the third party’s behalf, however.
If somebody is willing to pay a certain price, does that make it ok to sell the product for that price? Or does this build up a bubble where each person is trying to make the most out of it and not be there when the bubble bursts?
On this basis, we’re moving much more towards a system of storing casks for our cask customers and one link down the chain to their customers, but no further (unless the further links in the chain already have an account with us). We will not hold casks for somebody who has never purchased off us if they are then transferring the whisky to hundreds of new people who require HMRC checks.
Please remember that an investment is only a good one if you don’t pay too much for it in the first place. I worry that this is going to catch a lot of people out in the near future and lead to negative press for the entire industry. The “investment” companies will move on and those of us who actually like the product will be left to pick up the pieces.
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