How to Make Money Investing in Tequila Casks

For those who appreciate unique opportunities, investing in casks of tequila can offer an exciting blend of exclusivity and financial potential. With the tequila market set for significant annual growth of over 11% (CAGR), and projected to hit a market valuation of $42.5 billion by 2032, it’s clear this isn’t just a fleeting fad.

Let’s get into it and discuss how you can make money in this burgeoning market by investing in tequila casks.

Why tequila casks?

Tequila has been surging in popularity, but there’s a lot more to this story. Here’s what’s catching the attention of discerning investors across the globe:

Premiumization driving growth: The market’s growth is being fueled by a growing demand for premium, aged tequilas, like añejo and extra añejo varieties.

Limited availability: Premium tequila is scarce due to several factors such as limited production capacity, surging demand, and limitations on where and how it can be produced.

Tangible stability: A tequila cask is a physical asset. Unlike stocks, bonds, or cryptocurrencies, casks gain value as they age, regardless of wider economic events and price movements.

How it works

Making an investment in tequila is straightforward:

1. Find the reputable partner
   Work with a company that has a strong track record in spirit investments, especially involving cask investments like whisky, wine, or tequila. Ensure you are provided with the correct paperwork and ownership confirmation.
2. Learn about aging
   Understand how the aging process influences the value of your investments. Typically, a spirit’s quality will improve as it ages in the cask and becomes more scarce, driving up the demand for older varieties and leading to higher prices being paid.
3. Think about storage and care
   Ensure your casks are stored and secured in a government-bonded warehouse. Your casks should be stored in your own private account at the distillery’s own warehouse.
4. Plan your exit
   The company you choose to work with should provide you with clear and robust exit strategies to ensure a smooth and profitable exit.

What’s the payoff?

Investing in tequila casks offers several ways to generate returns.

Value appreciation: As tequila ages in the cask, its value increases. Industry data tracked and analyzed by Gordon PWC suggests cask investors can expect annual returns of 13-15% over the next 3-5 years.

Market growth: As the tequila market continues to expand, fueled by growing demand for premium, aged tequila, its inherent scarcity helps to drive up prices further for investors.

Resale opportunities: All casks will eventually be sold to brands for bottling through Gordon PWC. There are currently 2,800 brands in the tequila market with only 75 active producers. This creates a significant opportunity for investors to sell to the growing number of brands seeking aged tequila.

What to watch out for

All investments come with risk:

Market trends: Despite premium spirits typically holding steady in any economy, consumer preferences can shift.

Tangible asset: Robust insurance policies should be in place to cover any loss or damage to your asset during the investment term.

Liquidity: Unlike traditional assets like stocks or bonds, which have centralized markets for buying and selling, premium spirit markets can be more opaque.

Why tequila casks are worth it

Investing in premium spirits like tequila is more than just an investment. It’s about being a part of a historic and rapidly evolving story.

As the tequila market continues to grow in prominence and dominate the premium spirits market, buying your own casks enables you to own a unique piece of history and position yourself at the forefront of the fastest-growing spirit category in the world.