- Site: Financial Times - By: Mark Ellwood - Date published: 2024-09-13 - Date read: [[2024-09-16]] - [Read Original](https://www.ft.com/content/d7bae1d8-272b-46f8-91d9-81b2472e89c6) - [Read on Omnivore](https://omnivore.app/me/is-investing-in-rum-a-sober-choice-191f189b194) - Tags: #Alcohol #Investing #Rum #Whisky - Notes: **Note:** Below is the text from the article, with any ==highlights== done by me. None of the writing below is by me. # Article text <DIV id="readability-content"><DIV data-omnivore-anchor-idx="1" class="page" id="readability-page-1"><div data-omnivore-anchor-idx="2" id="o-topper"><p data-omnivore-anchor-idx="3">Some investors think whisky’s history, and are turning to a new tipple — but stumbling blocks abound. We follow in the footsteps of one renowned collector</p></div><article data-omnivore-anchor-idx="4" id="site-content" role="main" data-content-id="d7bae1d8-272b-46f8-91d9-81b2472e89c6" data-access-level="subscribed" data-syndicatable="withContributorPayment" data-article-type="full-width-graphics" data-cp-content-pipeline="true" data-feature-ads-pg="off"><div data-omnivore-anchor-idx="5"><figure data-omnivore-anchor-idx="6" data-component="image-set"><picture data-omnivore-anchor-idx="7"><source data-omnivore-anchor-idx="8" media="(min-width: 700px)" srcset="https://proxy-prod.omnivore-image-cache.app/0x0,s6lm-iu3Jj6mthXJDb5gg7A3OjElDNAfdO9aj6TDGWcg/https://www.ft.com/__origami/service/image/v2/images/raw/ftcms%3A79ba087a-25e9-4bb2-a9f1-eb76ce7b7e07?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1 1x,https://proxy-prod.omnivore-image-cache.app/0x0,syjDWL2TOTorhrShpu7Do5tvgXSnCzuPS4cj88CRv17U/https://www.ft.com/__origami/service/image/v2/images/raw/ftcms%3A79ba087a-25e9-4bb2-a9f1-eb76ce7b7e07?source=next-article&fit=scale-down&quality=highest&width=700&dpr=2 2x,https://proxy-prod.omnivore-image-cache.app/0x0,sTx4J-7JZ-zaBEF9_iF8tsjEbNOnCWpf5wIldTrphEh0/https://www.ft.com/__origami/service/image/v2/images/raw/ftcms%3A79ba087a-25e9-4bb2-a9f1-eb76ce7b7e07?source=next-article&fit=scale-down&quality=highest&width=700&dpr=3 3x," width="2266" height="1275"><img data-omnivore-anchor-idx="9" data-omnivore-original-src="https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net%2Fproduction%2F79ba087a-25e9-4bb2-a9f1-eb76ce7b7e07.jpg?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1" src="https://proxy-prod.omnivore-image-cache.app/2266x1275,s4l133wTzfdSA2m_iR_mdK3ORdBJtxvnunUSZezyKZ6M/https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net%2Fproduction%2F79ba087a-25e9-4bb2-a9f1-eb76ce7b7e07.jpg?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1" alt="" data-image-type="image" width="2266" height="1275" loading="eager"></picture><figcaption data-omnivore-anchor-idx="10"><span data-omnivore-anchor-idx="11">In demand: an employee empties a barrel of Foursquare rum in the distillery warehouse in Barbados</span><span data-omnivore-anchor-idx="12"> </span></figcaption></figure></div><div data-omnivore-anchor-idx="13" data-trackable="article-body" data-component="article-body"><article data-omnivore-anchor-idx="14" id="article-body" data-attribute="article-content-body" data-component="article-content-body"><p data-omnivore-anchor-idx="15">Trinidad was the last island Luca Gargano visited after spending several years criss-crossing the Caribbean to document every rum distillery he could find, taking pictures and notes wherever he went. </p><p data-omnivore-anchor-idx="16">The grass was knee-high when the Italian entrepreneur arrived at the Caroni distillery there in December 2004. One guard sat, bored, behind the gates. The government had closed the factory the previous year, putting thousands out of work, he says, as it had been a state-run producer, mostly supplying the British Navy, but was shut down when the local authorities could no longer afford to subsidise operations. Gargano was curious, though, whether any of the mass market bulk rum for which the distillery was synonymous still lingered in the warehouses. </p><p data-omnivore-anchor-idx="17">“[The guard] said to come with him, and I waded through the grass to warehouse #1,” Gargano recalls. “He opened it and I was like a cat in front of a mouse. I was salivating.”</p><p data-omnivore-anchor-idx="18">There were complete casks dating back to the 1980s, which he quickly asked to buy from the liquidator appointed by the government. “The price? It was nothing.” Gargano then set about bottling the liquid, punchy in flavor thanks to the accelerated evaporation of the Caribbean climate; he eventually bought a total of 1,388 casks over a six-year period. </p><p data-omnivore-anchor-idx="19">“There were cask strength whiskies already, but no rums,” he says, of the tradition where whiskies are bottled at whatever ABV they reach in barrel rather than diluted to the blender’s tastes with water. “Could I sell one at 62 per cent ABV? My brother said I was crazy.” Still, he went ahead, and managed to sell a few bottles, priced around €32, mostly via the allure of tasting spirits from a distillery that many aficionados had admired. </p><p data-omnivore-anchor-idx="20">Two decades later, that same liquid is changing hands for €2,000 or more a bottle, and widely recognised as a world-class cask strength rum.&nbsp;</p><p data-omnivore-anchor-idx="21">In the interim, Gargano bought up the rest of the defunct distillery’s archives, and has since slow-released different editions each year, sparingly bottling a barrel or so each time. He has sixteen barrels left to sell that way. Now, he’s making much healthier margins than on that first batch two decades ago, with the&nbsp;retail price of his latest Caroni classics starting at around €3,000 a bottle.&nbsp;“Now as it finishes, I have to think of what’s next.”</p><p data-omnivore-anchor-idx="22"><strong data-omnivore-anchor-idx="23">As the rum has matured, so too has the market for it.</strong> Of course, cask buying and trading, asset class-style, has become widespread in whisky thanks to a simple recipe: buying a barrel and then leaving it for 30 years allows whatever’s inside to accrue as much value as it does taste. With investors looking for alternative, non-correlated assets to help diversify their portfolios, it has proved a tempting tipple. </p><p data-omnivore-anchor-idx="24">But, as prices on whisky barrels now regularly hit six figures — a mature Macallan cask could easily cost £300,000 — some have spotted what they consider an opportunity in a much less saturated market. That’s certainly one of the drivers behind Gargano’s globetrotting.</p><p data-omnivore-anchor-idx="25">Now in his late sixties, Gargano is a restlessly energetic eccentric — he has no mobile phone, so when we speak he uses his girlfriend’s iPad for a video call. Sweltering from the heat, Gargano is tousle-haired in a rumpled grey T-shirt as he’s midway through a research trip to Grenada. It’s on behalf of the company he runs, Genoa-based Velier, a family-owned importer of wines and spirits that Gargano started in the early 1980s when he was just 27. It’s the vehicle via which he satisfies his insatiable curiosity for unusual wines and spirits.&nbsp;</p><p data-omnivore-anchor-idx="26">He’s had other, unrelated successes, too — Gargano, for example, was an early champion of New World wine, helping to introduce it to fusty Italian palates — but increasingly has zeroed in on that singular passion for, and expertise in, rum.</p><p data-omnivore-anchor-idx="27">Gargano also offers consulting services to projects that pique his interest (money isn’t his main driver, he insists). Perhaps an individual who wishes to dabble in buying single casks can tap his connections and expertise, and he’ll help manage that process from start to finish. “You can bottle when you want, after two or three years. Maybe you receive a sample every six months of your babies, to see if it is something really special yet.”&nbsp;</p><p data-omnivore-anchor-idx="28">Philip Culazzo is a client. He runs the Distillerie de Monaco, the only one in the tiny principality. Culazzo turned to Gargano when he wanted to expand beyond the liqueurs and gins on which he established his business. The building block of a high-end rum, he reasoned, was the best sugar cane, which led him to Gargano. “He’s a purist, and when he gets behind something, he’s passionate about it and goes the extra mile,” he says.</p><p data-omnivore-anchor-idx="29">Gargano duly drove to the north of Haiti, to Saint Michel de L’Atalaye, to find sugar cane good enough for the high-end rum that Culazzo is making. “Luca got stuck on a mud path in a 4x4 during a storm, and waited for it to pass because he could smell rum somewhere nearby,” Culazzo says. “He got out of the car — no shoes or socks — and ran across the fields, and found a distillery hidden behind a hill.”</p><figure data-omnivore-anchor-idx="30" data-component="image-set"><picture data-omnivore-anchor-idx="31"><source data-omnivore-anchor-idx="32" media="(min-width: 700px)" srcset="https://proxy-prod.omnivore-image-cache.app/0x0,siqmAzKDZY5pTf49tybU7A9btjPHk8K5u7VBVbslN_Rg/https://www.ft.com/__origami/service/image/v2/images/raw/ftcms%3A89acb38d-2e10-47c3-89dc-ca6bb4cced76?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1 1x,https://proxy-prod.omnivore-image-cache.app/0x0,sv0FqmKcqHRJ2QqphyOYS11xYfIDb-AW6rrbiq32k0zw/https://www.ft.com/__origami/service/image/v2/images/raw/ftcms%3A89acb38d-2e10-47c3-89dc-ca6bb4cced76?source=next-article&fit=scale-down&quality=highest&width=700&dpr=2 2x," width="2094" height="1396"><img data-omnivore-anchor-idx="33" data-omnivore-original-src="https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net%2Fproduction%2F89acb38d-2e10-47c3-89dc-ca6bb4cced76.jpg?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1" src="https://proxy-prod.omnivore-image-cache.app/2094x1396,sAEAtFVTRx40q7zT-UbIe00gt1eESE6Lckl_vnPdzo3Q/https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net%2Fproduction%2F89acb38d-2e10-47c3-89dc-ca6bb4cced76.jpg?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1" alt="" data-image-type="image" width="2094" height="1396" loading="lazy"></picture><figcaption data-omnivore-anchor-idx="34"><span data-omnivore-anchor-idx="35">On the hunt: Luca Gargano in Trelawny, Jamaica, at Hampden Distillery</span><span data-omnivore-anchor-idx="36"> </span></figcaption></figure><p data-omnivore-anchor-idx="37">“People are jumping on the bandwagon of investing in whisky casks, but I think there’s a lot of potential for long-term value in good quality rums,” says Culazzo.</p><p data-omnivore-anchor-idx="38">Simon Aron cautiously agrees. He runs Cask Trade, a firm that offers everyone from enthusiasts to investors or independent bottlers the chance to buy barrels. Its initial focus was on whisky before he introduced rum as an option three years ago. Since then, Aron’s team has sold £1.5mn worth of casks, from more than two dozen distilleries.&nbsp;</p><p data-omnivore-anchor-idx="39">According to data from IWSR, which tracks the alcohol industry, the value of the premium and above rum market has grown 12 per cent annually over the past 20 years; between 2023 and 2028, it expects 3 per cent. (For whisky, the figures are 8 and 4 per cent, respectively). It expects volumes of both liquors to increase by the same amount before 2028; the UK and US are the top markets in both sectors, but while whisky sells well in Brazil, Japan and Australia, rum’s key other territories are France, Germany and Canada.</p><p data-omnivore-anchor-idx="40">Note, though, that the sugarcane-derived liquour is a far riskier asset class than whisky, says Aron: while the Scottish distillers police production aggressively, rum is an ad hoc industry with few rules. The only investment-grade rum, Aron says, is one where provenance is clear: in other words, where, when and how was it produced? </p><p data-omnivore-anchor-idx="41">Barrel-buyers should also remember that casks age fast in the sweltering Caribbean warehouses, evaporating liquid at a pace; it’s important to consider that they will need to move them at some point if planning a long-term maturation, and such shipments are mired in red tape. “It’s logistically challenging moving casks with high ABV, because you’ve got to take it out and put it into a drum for transport then re-cask it,” he says, “And if people are looking to trade rum as a bulk commodity, personally, I think they should think of something else.”</p><p data-omnivore-anchor-idx="42">Aron does endorse a few producers full-throatedly, however, including Bajan distillery Four Square and Port Mourant in Guyana — both combine painstaking production with well-established heritage. </p><p data-omnivore-anchor-idx="43">Gargano himself is looking to get back into production with high-end Caribbean rum, acquiring a distillery he declines to name citing confidentiality agreements, with hopes to use its facilities to&nbsp;produce his own riff on Caroni, a trademark he now owns. </p><p data-omnivore-anchor-idx="44">“We’ll produce rums that [are] more marketable there,” he says, of the just-signed deal. “And perhaps in twenty years it will be worth the same as the original Caroni.”&nbsp;</p></article></div></article></DIV></DIV>