How To Spot A Business Opportunity
Rickesh Kishnani, CEO, Whiskey Investment Fund, shows how first-hand knowledge of the industry is crucial
It is no secret that whisky has been gaining popularity in the last five to seven years – so why not capitalise on this trend? While many would have entertained the thought, and discarded it, Rickesh Kishnani decided to do otherwise.
In 2014, he launched the Whisky Investment Fund, the first of its kind in the world that focuses on single malts. As of 30 June 2017, it had raised a total of US$12 million in commitments, US$2 million more than its initial target.
For those who did not act on their instinct, reading this would probably invite a moment of regret. Kishnani though, is reaping the benefits of acting on this opportunity.
“The original performance target was 15-17% net return per year,” he says. “Through the first three years, the Fund has performed at a cumulative 65%. We hope to be able to match or exceed our early success over the next four years.”
He shares that he first identified this opportunity in 2013, when it was clear that demand for single malt whisky was growing across the UK, the US and in Asia, while supply was limited. It certainly helped that he is a leading expert in the fine wine and spirits industry.
Among the other factors that helped him make the decision included personal interest, having whisky expert David Robertson as a business partner, the opening of the Hong Kong wine market – where he is from – following the abolishing of import duty in 2009, and his personal experience running a small fine wine distribution company.
As he delved deeper into the research, Kishnani realised there was a strong case for investment. Aged single malt whisky takes decades to produce – a process that cannot be accelerated.
Because it is a distilled product, once in the bottle, the ageing stops completely, which means it has no shelf life and never goes bad. Also, the storage of whisky does not require temperature or humidity control, making it cheaper to store and easier to transport, compared, for example, to wine.
As he tapped his network to pitch the idea of the Fund, he realised the investors were aligned with him, “They want to diversify (whisky has no correlation to any other known asset class) and a physical asset, something they enjoy continuing to learn more about personally.”
Today, consumers, collectors, and investors across Asia are getting access to old and rare bottles of single malt whisky that have never appeared in these markets. US$9 million has
been invested into a collection of over 14,000 bottles, which are being stored in an independent bonded storage facility in Scotland.
“From silent stills (closed distilleries) such as Glensk or Littlemill to single cask bottlings of Laphroaig and Ardbeg from the 1970s, the Fund has purchased thousands of bottles of whiskies from private European collectors and for the first time we are making them available in Asia,” reveals Kishnani.
“Every time I have the opportunity to share a special dram of a rare whisky with a whisky enthusiast for the first time, it is truly magical.”
There are plans to invest the remaining US$3 million in old and rare single malt whisky. Says Kishnani, “Specifically, we are looking to continue acquiring more bottles of Karuizawa, a Japanese distillery which closed in 2000.
“It is one of the top cult whiskies in demand in the world, known for its strong sherry flavour and high alcohol content (usually 60% ABV at cask strength).”
Kishnani shares his main takeaways from setting up the Fund:
Build A Strong Support Team
Having David Robertson as a business partner was the key to accessing the rare whisky, but a team of lawyers, media consultants, fund administrators, auditors etc. and all the advice they gave to setting up the Fund correctly is what really made it a success.
Tell The Story To Anyone Willing To Listen
in the first year after establishing the Fund, I was sharing the idea with as many people as I possibly could. Events and road shows are great to reach a broader audience but my key takeaway was to focus on the one-on-one meetings. The in-depth conversations with potential investors was key to building strong investor relationships.
It’s early to always push for the largest possible gain or wonder about the potential upside missed when a sale is made. The key is to set key target metrics early and then follow them.