Whisky...as an Investment?

The Lord moves in mysterious ways.

An interview I’d hoped to bring you this week fell over at the very last minute - leaving me staring at a blank screen. Yet in the darkness of my deadline, he reached out to me and sent a message from above. (Okay, it came via Gmail). It read:

Dear Scott,

I thought I would share something my husband and I are looking into: Nant Whisky from Tasmania. They’re offering a 9.5 per cent compounded return on a 4-year investment of $25,000. Seems better rates than any term deposit or savings accounts. We thought this could pay for a new car or holiday every 4 years ($11,000 profit).

Thoughts?

Nicole

My first thought was ‘thank you Nicole for saving my bacon!’

My second thought after reading the Nant Whisky investment pitch was that I needed a very stiff drink.

By all accounts Nant produces a damn fine drop -- it’s been referred to as ‘liquid gold’ by a liquor buff -- and they’ve won awards at the World Spirit Awards. They’re also expanding rapidly into whisky bars across the Australia and Asia.

Yet it was Nant’s ‘investment opportunity’ that was giving me a hangover.

Nant offers investors the opportunity to buy two barrels of their single-malt whisky for $25,000.

Then Nant ‘guarantees’ that, in four years’ time, they’ll buy back the barrels for $36,007 (precisely). That works out to be a cracking 9.55 per cent per annum compounded return.

As Nicole wrote, that’s an $11,000 profit in four years.

Sniff! Sniff! Something smelled off. So I called up the company and spoke to Nant’s founder, entrepreneur Keith Batt in Brisbane.

Barefoot: “So who is behind the guarantee to buy back the whisky?”

Batt: “We are.”

Barefoot: “But you’re a bankrupt. You owe $16 million. And the company behind your last venture is in the process of being liquidated owing $20 million!”

Batt: “I’m the General Manager. I’m not the Director.”

Barefoot: “How much money have you taken from investors?”

Batt: “We don’t give out those figures … we’re a private company.”

Barefoot: “Yes, but you’re taking the public’s money. Specifically from mums’ and dads’ SMSFs. You run national newspaper ads using Aussie cricket legend Matt Hayden to spruik your investment and your ‘guaranteed’ returns.”

Sniff! Sniff! Something smelled off. So I called up Matty Hayden, who was in Bangladesh.

Barefoot: “Mate! What gives?”

Hayden: “Look, I love their whisky but I’m not involved in the strategy of the business. I’m seeking clarification on my current contract … as I haven’t been paid for a few months.”

(Fair enough. I hope he really likes their whisky. Maybe they’ll pay him in booze?)

Anyway, as my day wore on, the more people I spoke to about the business, the more concerned I got.

Sniff! Sniff! Something smelled off -- and then I found it -- it was cow dung.

Nant’s latest ‘investment opportunity’ is for investors to “buy 10 purebred Black Angus breeding cows, for $30,000”. And just like with the whisky barrels, investors are being lured by a guarantee: Nant guarantees they’ll purchase the cows back in five years’ time for $47,335.

Guess what the annual return works out to be?

The same as the whisky barrel investment: 9.55% per annum, payable in five years’ time.

So I called Nant and spoke to their PR person, in Brisbane.

Barefoot: “I may be a little stupid, but shouldn’t there be a difference between the returns an investor would get on whisky and what they’d get on cows? Why are you offering EXACTLY the same returns?”

Nant spokesperson: “We’re a vertically integrated company and we have opportunities to be retailers.”

Barefoot: “Uh-huh.”

The truth is you should never invest in anything you don’t understand -- even cattle.

That rules me out.

I have two cows. They’re named ‘Cash’ and ‘Frank’, and they were a wedding gift from a mate.

After years of having them knock over our fences, eat my wife's roses, and crapping all over the place,  I finally announced at the dinner table (over beef casserole, I believe) that it was time to sell them.

My toddler Louie’s top lip began to quiver: “No! Don’t take my Cash Cow Daddy!”

(They’re both still here.)

Anyway, let’s get back to our tale of investment beef jerky.

By now the smell was overwhelming, so I called up one of Australia’s leading cattle farmers, David Blackmore in Melbourne. His award-winning wagyu beef is served in posh restaurants like Rockpool and Nobu, and he exports to over 20 countries.

Barefoot: “What do you think of the returns Nant are offering?”

Blackmore: “Well, I’d struggle to achieve that return on our wagyu cows. And to pay that return to investors and still make a buck! Well that would be very … difficult.”

Barefoot: “You’re being kind.”

Blackmore: “I’ve been in agriculture for over 50 years and I’ve never seen one investor make money out of any of these schemes.”

Throughout my frustrating conversations with Nant, they kept on reiterating that they weren’t offering a financial product. There’s a reason for that. If they were, they’d have to issue a Product Disclosure Statement (PDS), and be regulated like any other investment company by the Australian Securities and Investments Commission (ASIC).

“The investors, they own the cattle. At the end of the lease they’re free to take them ... and put them in their backyard if they wish.” said Nant.

Trust me on this -- you don’t want to do that. They’ll knock down your fences, eat your roses, and crap all over you. They’re not cash cows.So now let me get back to Nicole -- my gift from above -- and the woman whose innocent investment question kicked this all off.

Nicole, since I got your email I’ve worked my way around the world (well, Tassie, Queensland, and Bangladesh) and my advice for you is this:Grab your $25,000.Invest it in a simple online savings account -- which really is guaranteed (by the Government).

In a year’s time you’ll have earned roughly $875 (less taxes).

Not much? Sure.

But it’ll buy you a dirty big rib eye steak, and four bottles of Nant whisky.

It’s apparently a great drop.

Sniff, sniff!

Tread Your Own Path!