What are the risks of investing in Japanese whisky?

Friend, you've hit on a crucial point. Japanese whisky has indeed been incredibly popular these past few years, and many people think they can just buy a bottle and make money. But there's a lot more to it than meets the eye. I've been involved for a few years and have seen quite a few pitfalls, so let me share my thoughts with you, in plain language.

1. Price Bubble, Risk of Buying at the Peak

This is probably the biggest risk. Think about it, what was the price of a Yamazaki 12-year-old ten years ago, and what is it now? It's multiplied many times over. It's like stock trading; when everyone believes it can only go up, that's often the most dangerous time.

Many popular whiskies, such as Yamazaki, Hakushu, and Yoichi, have had their prices inflated significantly. If you buy them at a high price now, frankly, you're "buying at the peak." If the market cools down one day, or if there's any slight disturbance, and prices turn downwards, your "assets" could significantly depreciate. Don't always think you can buy at the lowest point and sell at the highest; most people end up supporting those who bought earlier.

2. Rampant Counterfeits, Risk of Paying for Nothing

This is a very real problem. The higher the price, the more counterfeits there are – that's a rule. Japanese whisky counterfeiting has now formed an industry chain, and the methods are becoming increasingly sophisticated.

Genuine bottles with fake liquor: This is the most common. Scammers collect genuine bottles of high-end Japanese whisky, then fill them with inferior or cheaper whisky, and reseal them. For beginners, it's impossible to tell the difference just by looking at the bottle and label.
Fake labels and fake bottles: Even worse, everything from the bottle to the label is counterfeited. For some rare editions, like Karuizawa, many people haven't even seen a genuine one, making them easier targets for deception.

Once you buy a counterfeit, your investment instantly becomes worthless; you can't even drink it. Therefore, the purchasing channel is extremely important. Never be tempted by small bargains.

3. Changing Supply and Demand, Scarcity Might Not Be So "Scarce"

Why was Japanese whisky so popular in previous years? A major reason was "scarcity." Because the Japanese whisky industry experienced a downturn in the 1980s-90s, many distilleries closed (like Karuizawa) or significantly reduced production, leading to a severe shortage of aged spirit inventory.

But the situation has changed now:

Increased production by old distilleries: Major distilleries like Suntory (Yamazaki, Hakushu) and Nikka (Yoichi, Miyagikyo), seeing the booming market, have long since ramped up production. In ten or eight years, the whisky distilled now will become aged, and the market supply will be much larger than it is today.
Emergence of new distilleries: In recent years, a large number of new, smaller distilleries have emerged in Japan, such as Shizuoka, Akkeshi, Chichibu, and so on. While their current production and reputation can't compare to the established giants, who can guarantee that another star won't emerge in ten years?

As supply gradually increases, the current "rarity drives value" situation may be broken, and prices will naturally be affected.

4. Changes in Taste and Trends

Investing in collectibles is largely a gamble on future trends. Japanese whisky dominates now, but what about ten or twenty years from now?

The tastes of the younger generation might change. Perhaps they'll no longer chase Japanese whisky, but instead fall in love with American single barrel bourbon, or Irish whiskey, or even Chinese whisky? Just like in the fashion world, trends come and go. Putting all your eggs in the Japanese whisky basket means bearing the risk of such trend shifts.

5. Storage and Transportation Hassles

This isn't like buying stocks, where a click of the mouse is all it takes. You're buying a tangible glass bottle.

Storage environment: You need to find a dark, temperature-controlled, and humidity-controlled place to store it. If it's too hot, the whisky will evaporate (commonly known as "the angel's share," but not friendly to your wallet); if it's too humid, the label can get moldy or damaged, both severely affecting its appearance and value.
Accidental risks: Earthquakes (common in Japan), fires, theft, or a clumsy child at home... these are all potential risks.
Cork issues: The corks of old whiskies can dry out and break over time. For long-term storage, professional re-corking services might be needed, which adds another cost and risk.

6. Difficulty in Cashing Out, Poor Liquidity

This last point is also often overlooked by many. Once your whisky reaches your target price, how do you sell it?

It's not like stocks, where you can place a sell order anytime. You need to find a buyer willing to pay a high price. The channels are typically:

Auction houses: Professional and reliable, but commission fees are not low (usually 15%-25%), and the consignment process can be quite troublesome.
Selling to liquor merchants: Merchants will definitely buy back at a much lower price, as they also need to make a profit.
Private transactions among collectors: This requires you to have your own network, and there are trust risks involved in the transaction process.

In summary, you can't just sell your whisky at your desired price whenever you want. The "cashing out" process itself is full of uncertainties.

To summarize my advice:

If you genuinely enjoy drinking whisky, treat it as a hobby, and make a small investment on the side, then there's no problem. Buy some bottles you like to drink; drink one, save one. This way, even if the market drops, you won't feel bad because you can still open it and enjoy it. If it goes up, that's a pleasant surprise.

But if you're just treating it as a pure money-making tool and want to "go all in," then I strongly advise you to think twice. The risks involved are much greater than you might imagine.