[MZ Tech]② Open Runs and Overseas Direct Purchases... Whiskey 'Boom' Continues This Year

Rare Whiskey Market Value Soars Over 4 Times in 10 Years
Domestic Supply Scarce... Overseas Direct Purchases Surge 7 Times

Editor's NoteFinancial technology for the MZ generation (Millennials + Generation Z) is both an investment and a culture. While the goal is to make money, increased attention among peers leads everyone to seek 'verification.' This explains the rise of resell tech (securing scarce items and reselling them at a premium) and fractional investment (multiple people investing together in one asset and sharing the profits). We explored the investment methods of the MZ generation, who engage in financial technology with ingenious approaches unimaginable to older generations.

[Asia Economy Reporter Jeong Hyunjin] "I started in 2020. I saw many people around me collecting."

Lee (35), an 'MZ generation' member, collects whiskey. At first, he started buying whiskey out of simple curiosity. The reason was "just because I wanted to drink it." Then he witnessed acquaintances investing in whiskey. Lee said, "I thought I had to start buying now." He bought a large whiskey-specific shelf taller than a key at home and purchased two bottles of 1989 Glenallachie, a 'saengbin (saengnyeon vintage, meaning made in the year of one's birth)' whiskey, each costing about 2 million KRW. Lee said, "I never thought I would buy alcohol through direct overseas purchase, but I found myself doing it."

[Image source=Yonhap News]

The whiskey investment boom among the MZ generation continues this year. Since COVID-19, whiskey investment, which had gained significant attention domestically, surged explosively last year. Once considered a luxury exclusive to the wealthy, now 'open run' incidents (lining up before store opening) occur even at large supermarkets and convenience stores to obtain premium whiskey. Due to the sharp rise in domestic whiskey prices, it is common to ask acquaintances traveling abroad to purchase whiskey. Collecting whiskey has become not only an investment for the MZ generation but also a part of their culture.

The core of MZ generation whiskey investment is acquiring rare whiskey. As supply shortages persist in the market, the market value has surged recently just by holding them. According to RareWhiskey101, a whiskey investment consulting firm, the Vintage 50 Index, which indexes 50 vintage single malt Scotch whiskies, recorded 400.84 on the 30th of last month (base 100 as of December 31, 2012).

Especially, the price index of Balvenie, popular domestically, rose more than 19% in one year to 475.04. Another popular whiskey, Macallan, peaked at a price index of 513 in September last year but dropped to 450.8 by the end of January this year. The Japanese single malt whiskey Yamazaki surpassed 1000 at the end of last month, rising tenfold in price over about eight years since the base date of December 2014 (100).

[Image source=Yonhap News]

Rare whiskies with such price increases are traded in the resell market. The rarer the item, the greater the profit. Mainly, peer-to-peer transactions occur through online communities or social networking services (SNS) such as cafes or Telegram groups where people interested in alcoholic beverages gather. It is also reported that self-employed whiskey store operators purchase and resell these whiskies.

Last year, as it became difficult to obtain whiskey domestically, overseas direct purchases increased significantly. Even after paying taxes exceeding 70%, buying overseas was cheaper than purchasing domestically. According to customs statistics, the number of whiskey purchases by domestic consumers through overseas direct purchase exceeded 70,000 last year, increasing more than sevenfold compared to the previous year.

However, since individuals without a liquor sales license selling alcohol is illegal, whiskey reselling cannot be considered a legal investment method. Nevertheless, as active trading occurs in the resell market, the number of 20s and 30s buying rare whiskey overseas has greatly increased.

This whiskey investment boom is not limited to Korea. The New York Times (NYT) reported in December last year in an article titled "Where Did All the Cheap Bourbon Go? Blame the Whiskey Enthusiasts" that the price of Buffalo Trace, one of the 'three entry-level bourbons' originally sold at about $35 (approximately 44,000 KRW), has doubled. NYT conveyed the atmosphere that some whiskey collectors camp outside stores overnight to purchase limited editions like Buffalo Trace or Four Roses due to this enthusiasm.

Whiskey investment is expected to continue steadily both domestically and internationally for the time being. According to the 'Wealth Report 2022' released by real estate consulting firm Knight Frank in January last year, the market value of rare whiskey has increased by 428% since 2012, surpassing cars (164%), wine (137%), and watches (108%). Hong Kong's South China Morning Post (SCMP) reported, "Due to the COVID-19 pandemic and grain supply restrictions caused by the Russia-Ukraine war, whiskey prices have risen, expanding the whiskey market size."

According to global market research firm Statista, the global whiskey market, which was valued at $79.6 billion in 2021, is expected to expand to $106 billion by 2025.