"In Scotch We Trust"
The biggest winner in this year's market massacre? Alcohol makers. Particularly producers of rare scotch. Scotch Whiskeys have returned, on average, 20% this year as investors pile cash into alternative assets while markets continue getting wrecked.
Meme stonks and DeFi were once all the rage for younger investors, but equity markets remain volatile, and crypto token values have literally vanished out of thin air, prompting those investors to seek more tangible assets.
Scotch Whiskey's comeback is partly driven by a crucial decision to step away from their ancient (I mean "traditional") methods and experiment with more fashionable, health-conscious drinks catered to Millennials.
This comes after a 2019 ruling by the Scotch Whiskey Association, which gave producers more leeway to experiment with different techniques. Scotch makers Pernod Ricard and Diageo Plc are two examples of companies offering lighter options with less alcohol to appease the masses.
Producers are also looking into adding brand extensions and testing different types of flavors, attempting to extend their reach beyond their core demographic: old men. Only about a third of whiskey drinkers are female, and the majority are well over 40.
Historically speaking, there are a number of reasons for this. Alcoholic drinks targeted to younger demographics tend to be lighter, more fruity, and meant to be mixed. Scotch purists would never entertain such a thing.
While whiskey purists are likely having a conniption at the idea of moving away from tradition and embracing these flavor enhancements, the strategy is clearly working. According to Pernod Ricard's latest investor presentation, Scotch now contributes to ~30% of sales.
Now, as investors look for safe-haven assets to park their cash, scotch is outperforming equities, crypto, and even other alternative assets such as art. Maybe the purists are upset about the strategy, but they can't be mad at the results. After all, Machiavelli taught us that the ends justify the means.