There’s an increasing industry trend towards high-end, premium liquor. Not just top shelf, but limited editions aimed at connoisseurs and collectors willing to spend top dollar. Louis XIII Cognac is a prime example, and if you have a spare $22,000, you can take home a bottle (just one) of their “Rare Cask 42.6” in a Baccarat crystal decanter adorned in 22 carat gold. The rarity is determined by their experts’ determination that the cognac has reached its ideal cask maturation. Or perhaps spend a mere $3,000 on 750 ml of Remy Martin Cognac Louis XIII. In 2012 Hennessy released a limited edition bottle designed by Graffiti artist Futura. Originally sold for a reasonable $32, a similar set by Jonone Limited Urban Art on a popular auction site is listed at $449. If you’re considering investing in a distillery, especially a smaller one, consider recent trends before making a decision. Shares may command a premium and the trend may be a fad despite recent activity suggesting otherwise. Remy stock received an overweight rating by JP Morgan Chase. Also consider Bacardi’s recent purchase of premium tequila brand Patron. With full control in their hands, Bacardi aims to distribute Patron more widely to meet the demand for top-shelf tequila. The brand is valued at $5.1 billion.
CHINA'S APPETITE FOR LUXURY
Look also to China’s growth, and an increasing demand for luxury goods. In 2016, the Louis XIII Boutique opened in Beijing’s SKP—one of Asia’s largest, most upscale shopping areas. With a salon and boutique, it claims to take shoppers “far beyond cognac to offer you a wave of sensations, emotions and experiences.” China already provides 12% of Remy’s revenue, with growth forecasted. While premium offerings could always be found in scotch, wine and champagne markets, buyers can now acquire a drink traditionally associated with parties and mixed with other ingredients in luxury editions, like Cuervo tequila 250th Anniversary edition at $2500 a bottle. With the Asian luxury market, and the millennial generation’s interest in niche, specialty products, this trend looks to be growing at least publicly. Still, investment in the alcohol industry, be it in the premium brands market or growing craft industry, shouldn’t rely on just industry trends. The alcohol industry is innovative and ever changing for good and sometimes not so good.