The cask sector is integral to the whisky trade – and the Scottish economy. A group of industry figures met to discuss how it can be protected and bolstered.
Standing, from left:
Alexander Knight, chief executive officer of Whisky Cask Club, based in Singapore.
Anthony Constable, Whisky Cask Club cask owner and recent graduate in sustainability from Edinburgh Business School.
Elaine Fee, senior account director, Morrison Media.
Cameron Imrie, cask operational manager with Decant Group.
Martin Purvis, co-owner and author of Commercial Spirits Intelligence newsletter, and whisky barrel expert.
Ian McKerrow, one of the founders and owners of Edinburgh Whisky Academy, accredited by the SQA.
Alan Powell, excise duty consultant, former HM Customs and Excise policy official and founder of the British Distillers Alliance, Chartered Tax Adviser and Fellow of the Institute of Indirect Taxation
Seated from left:
Dr David Feller, whisky cask owner and university professor, founder of Facebook group Braeburn Cask 88, and WMG cask owners.
Niall Brown, managing director of Whisky Asset, based in Glasgow.
Kenny Kemp, chair, editor of The Business.
The pleasure of owning a cask of fine Scotch whisky has become increasingly popular. Whisky-lovers who want to celebrate special occasions with their own whisky or investors keen to see an increase in their cask’s value have ensured this has become an integral part of our national Scotch industry – and our economy.
Furthermore, this investment market has attracted global interest from high-net-worth connoisseurs, particularly in the United States, France and Asia, who are willing to pay handsomely for premium casks of fine Scotch. As a result, the industry is a multi-billion pound one.
However, in the wake of an annus horribilis, the Scotch whisky industry – worth £5.3bn a year directly to the Scottish economy – has been shaken and stirred into action to ensure investment in whisky casks is transparent and existing rules about cask ownership in excise warehouses are made clearer by HMRC.
In March, the reform of the Warehousekeepers and Owners of Warehoused Goods Regulations 1999 (WOWGR) means owners of cask whisky, defined as ‘revenue traders’, are no longer required to be registered with HMRC, or have a duty representative if not established in the UK.
However, an emerging group of industry activists and cask investors are demanding that much more be done. A roundtable in Glasgow, convened by The Business, and supported by Whisky Asset, a Glasgow premium cask services company specialising in ownership, from purchase to warehousing and bottling, gathered some of these voices.
The group discussed how the industry could exert its authority and provide solutions to ensure the future of cask investments; this includes the use of block chain technology or digital ownership tokens for secure ownership verification. The group is keen to create a new whisky organisation which develops a ‘kite mark’ assurance for investors. At stake, they say, is the trust and provenance of the whole Scotch whisky industry.
Safeguarding the future
In March BBC Scotland’s programme, Whisky Bandits, exposed how investors – hoping to make healthy returns on holding maturing barrels in warehouses in Scotland – had fallen prey to unscrupulous providers ‘selling’ single casks to multiple owners.
Furthermore, in May, Braeburn Whisky and Cask 88 – big players in the cask market – fell into administration. This came at a time when gin and whisky distilleries were still opening, often with public sector funding. Yet there is a glut of alcoholic spirit in hundreds of bonded warehouses. Campaigners say there is no accurate data on the number of casks in Scotland, which casts further doubt on the overall value of the industry.
The existing legislation for both excise duty under HMRC and the protection of Scotch whisky operated by DEFRA, the Department for Environment, Food and Rural Affairs, has often been misunderstood or not applied correctly. This has allowed ownership to be exploited by criminals, including the likes of those exposed by the BBC.
Alan Powell has helped many emerging Scottish distilleries and rectifiers to be authorised and approved by HMRC as well as advising established distillers and warehousekeepers.
He has been an excise specialist since 1988, firstly in HM Customs & Excise and then working in private practice. He also sits on the Chartered Institute of Taxation committee as an excise duty specialist and the Joint Excise Consulting Group (JECG) comprising HMRC senior staff and industry bodies.
Powell said: “The definition of Scotch whisky is peripheral to my work but interacts with excise law. DEFRA ‘owns’ the law on the Spirits Drinks Verification Scheme (SDVS) and the Scotch Whisky GI. Under the SDVS, production of Scotch whisky, including maturation, is subject to verification by HMRC as the legal agency.”
This verification depends on the auditing of bonded warehouse accounts, including records for all whisky deposited in such warehouses, the ownership of that product and any changes of ownership, including within the technical file. This traces the history of each cask, many of which are over 25 years old, during the maturation process until it is bottled for sale to the public or exported.
“The requirement of the technical file implies a counsel of perfection regarding the ‘history’ of each cask. But it is known that warehousekeepers’ records are not always totally accurate and HMRC may not be able to give assurance of such traceability,” Powell said.
This lack of accurate record- keeping has damaging repercussions for the wider Scotch industry as it potentially compromises the integrity of all kinds of whisky. “If one ‘non-compliant’ cask of spirits finds its way into the composition of a blend, the entire blend would not be eligible to be ‘produced’ in the blending in the first place and the product would not be Scotch whisky,” he said.
“The problem is that DEFRA relies upon HMRC, but HMRC has told us that it does not have the resources to carry out such detailed level of verification,” he explained.
It is therefore unsurprising that organised criminals have found a lucrative loophole.
“The law is in place for producers, warehousekeepers and owners to operate within set parameters about accuracy of records and ownership, or be subject to sanctions for failure to comply. But it requires commitment from the supervising agencies to do their part.”
Niall Brown, managing director of Whisky Asset, said there have been hundreds of thousands of casks sold in the private sector, totalling hundreds of millions of pounds.
“We are at risk of devaluing what’s already been sold if we continue to talk down this sector. There are fantastic companies in this space, but the recent revelations have damaged the legitimate operators. We need to be positive and find solutions to the serious issues that have come to light. It’s important that we have a voice,” he said.
“That’s the big challenge. I think cask owners at this point are economically an essential part of the 21st-century distillery landscape. The whisky industry needs individual cask money. How you make sure this keeps coming is the big issue.”
The cask industry today
The Scotch Whisky Association represents the interests of the major whisky companies but has been reluctant to become too heavily involved in the cask whisky sector.
With this in mind, one attendee said it would be “eminently sensible” to set up a new trade association which can then engage HMRC, HM Treasury and DEFRA – the latter being responsible for consumer protection.
“We need critical mass to get to government,” he said. “This would need to be on a clearer and more open basis than that of the Cask Whisky Association, which was a positive step towards regulation of the industry but was not properly organised.”
Brown welcomed this suggestion. “There are the private cask investment companies, the small and large investment businesses, all in the same space and there is a very strong argument for a new and different association which can set out best practice for the cask sector by complying with regulatory imperatives and requiring the same of government agencies.”
The round table heard that, at present, there is no individual UK or Scottish government agency which can solve all the issues that are impacting the cask whisky industry, in terms of consumer protection and the verification of investment ownership and cask provenance.
A new unified, focused organisation would improve industry compliance regarding existing law, prescribing proof of ownership and transfer of ownership of casks within excise warehouses.
“In principle, it’s a powerful idea because effectively what you do is get all of the reputable operators together, and allow a greater understanding of the size and scale of the sector. My view is there is nothing to be feared from transparent information. Then we are able to give a figure that there is ‘x’ thousands casks in private hands and this is what it’s worth, duty-paid, to the economy,” said Martin Purvis, co-owner and author of Commercial Spirits Intelligence newsletter.
The thorny question of ownership
The roundtable heard that, in terms of sales and purchases of goods in warehouse, HMRC’s requirements are simple. Central to this is paragraph 9.1 of Notice 197, which states: “Before making any sale you, as the current owner of the goods, should inform the warehousekeeper that the goods are to be sold and give details of who the new owner will be. Inform the warehousekeeper that the goods are to be purchased and provide your business details to the warehousekeeper.”
Powell said: “This information can be entered into the warehouse records in any form. There is no requirement for a ‘Delivery Order’, which had been a requirement under the Alcoholic Liquor Duties Act 1979 (ALDA), but repealed by the Finance Act 2006.
“The owner is the person having legal title to the goods and it is why Notice 197 (not the ‘Delivery Order’) must be observed, although further guidance is required for buyers or owners.”
Cameron Imrie, of the Decant Group, says: “I come from a very operational perspective. I joined the industry first as a consumer and I love whisky. I was lucky enough to become a distillery manager, it was my first role in the industry. Moving into the cask management sector, I’ve been involved in setting up accounts for private clients, making sure they can get ownership agreed and sorted, but also creating a proper cask management strategy with the stock that we look after. It’s about creating a transparent environment and creating more routes for exit. We want to contribute to the industry, rather than be a problem child.”
However, he admitted there is still an issue with the Delivery Order.
“I’ve absolutely witnessed casks being sold to multiple clients in my previous roles. I’ve operated a bonded warehouse as well, so I know that. Part of the problem is even the policies of bonded warehouses today, they still only transfer ownership through a Delivery Order. So owners couldn’t take ownership of their own stock. It was still under WOWGR and they weren’t able to touch and feel their own stock.”
Powell said: “The Delivery Order nonsense is just part of the mystique. We really need to get to grips with the fundamental law and procedures that seem misunderstood or neglected by all parties, including HMRC.”
The cask owner’s view
Dr David Feller, an academic and a whisky cask owner, spoke about his experience after the collapse of Braeburn Whisky, which went into administration in April and May 2025.
“Braeburn was not holding up its end of the business. I wasn’t getting reports back and I didn’t have a manager. Then in April all that changed because Whisky Merchant Trading went into receivership, then they closed the offices for Braeburn and Cask 88, which were affiliates.
“I threw out a feeler on Facebook and we started an owner support group. We have over 1,000 members now, and every day I get emails from people who want to join.
“In the first month that we functioned, we took exactly the legal position that Alan [Powell] has outlined because I was quite sure that we owned our casks. Our initial concern was that cask owners and casks themselves would be declared company assets in the administration, rather than our possession.”
Memos were written to Griffins, the administrator, which accepted the legal position of the cask ownership. The Facebook group represents about 20 per cent of the Braeburn and Cask 88 sold to the investors. “But we cover investors in 47 countries.” The group has managed to identify and repossess about 90 per cent of the casks.
“We know where they are, we know how they can be relocated and most of them have been relocated and are under individual ownership. In this process, because we took a perfectly reasonable position, I don’t think the mechanics of ownership bother us.”
However, he says the levels of sophistication among investors in the cask industry is all over the board.
We want an environment where all cask owners are safe in the knowledge that their single malt is stored in a secure facility
Purvis agrees. He said: “I’ve been in the trade for 20 years at the front end, working for the distillery sector. I don’t own any casks. The point being made that the individual cask owner doesn’t have a clue and isn’t part of the chain, is absolutely right.
“We wrote a piece recently about the stages of distress of Scotch whisky distilleries. Sell bulk, if you can’t sell branded goods. If you can’t do that, then you move to selling casks to individuals.” He says cask sales to individuals should not simply be “an indirect funding model for distilleries”.
Alexander Knight, who owns Singapore’s Whisky Cask Club, has been an avid investor in the global whisky cask market for many years but admitted it has been tarnished.
“Ultimately, the BBC report was positive for the market, as there’s been an industry shake-up, as far as we can tell. I’m a member of David’s Facebook group because I bought casks from Braeburn too. They haven’t been located. But they are being replaced by Edinburgh Cask Management.”
“Since the need for WOWGR has ended, the whole idea of ownership has been much more straightforward. The setting up of individual client accounts which do give the cask owners the ownership of the whisky works well, and they can contact the warehouses directly. They don’t have to go through us, as a broker, to be able to extract their whisky cask.”
Brown said: “We are buyers and not brokers. We want to nurture an environment where all cask owners are safe in the knowledge that their single malt is stored in a secure facility that meets all HMRC’s customs warehousing regulations.”
Need for Education
Ian McKerrow, a co-founder of the Edinburgh Whisky Academy, explained there is a lack of public education and understanding about whisky and a need for greater transparency for anyone involved in the cask space.
“I agree it’s a key part of the Scotch industry, but at the same time there are obvious risks that are not highlighted. It’s a liquid, it is a long-term investment, often up to 25 years. You’re not going to make easy money: if investment marketeers are saying you can make a 10 per cent a year return, you have to question this. There are no guaranteed returns.
The whisky industry needs individual cask money. How you make sure that this keeps coming is the big issue
“I think the whole episode earlier this year is unfortunate for the specific cask owners, but is incredibly positive in terms of making people ensure they understand what they are buying. It’s not happening yet, but I’m sure it will lead to greater regulation. That’s the key to come out of this.”
Purvis said: “We’ve had a great run over the last 25 years, built loads of production capacity that’s currently not required. Now there is an excess of liquid and the question arises about who is going to consume that whisky.
“It would be useful to understand how many barrels are maturing in Scotland. It’s a simple thing, but nobody really knows.
“People are operating in a dark pool with no information. You wouldn’t buy stocks and shares in a market like this because you’ve no idea what they are worth and there is restricted liquidity. The only people who do this well are professional experts who do this every day as a job. Unless the consumer is very clued up, has a lot of money, or just wants to do it [own a cask] for fun, you shouldn’t be operating in this market place.”
Brown pointed out the Scotch Whisky Association estimates there are five casks for every person in Scotland. “So is that 22 million or 30 million?” he asks.
“It’s more important in my world to concentrate on how many casks there are in private hands. In my opinion, distilleries own their casks, and my business owns around 2,000 casks. There are a number of businesses and independent bottlers, there are big independent bottlers who own casks, so for me, it is important to dwell on how many casks are in private hands.”
He argued there needs to be a positive onus on the casks that have already been sold. That means transparent steps for selling casks, with viable companies who can bottle the whisky in these casks.
“The clients who have bought casks have to be protected in a way that they are getting good warehousing and good ownership.
“If we don’t sell another cask again, we can’t change what’s happened. We need to do a little guestimation that there are at least 500,000 casks in private hands. It’s probably more like a million.”
Brown added that it was important to create a viable and cohesive group to represent the legitimate interests of cask owners and the cask industry.
“There’s room for a unified voice to raise these issues. With an election coming up in Scotland, it is something the political parties should be considering in their manifestos.
“After all, there are hundreds of millions of pounds of vital taxation at stake.”
EDITOR’S NOTE: Since the publication of this report, Dr David Feller has stepped back and is not longer involved with the Facebook group mentioned above. The Facebook group have asked that his comments are not taken as the views of the group. The Business is happy to clarify that the stated views are Dr Feller’s and not those of the Facebook group.
