An ongoing City of London Police investigation into Cask Whisky Ltd follows concerns about potential investment fraud after the company claimed to trade in whisky casks. Meanwhile, recent reports have raised questions about Hackstons, a whisky investment firm co-founded by an individual previously linked to Bordeaux Fine Wines (BFW) - a Ponzi scheme that misled investors out of millions. While there is no suggestion that Hackstons operates in the same way, its founder’s past highlights how unregulated whisky cask investments remain vulnerable to bad actors re-entering the market.
Lack of regulation in cask trading has opened the door to this widespread deception.
For decades, the Whisky sector has operated on trust and tradition, but this model is now failing. Unlike regulated financial products, Whisky casks are sold through a fragmented system with no centralised oversight. This has created glaring loopholes that fraudulent sellers are exploiting, marketing casks as "low-risk, high-return" investments with little scrutiny of ownership records or pricing accuracy.
Scandals have surfaced time and time again, from Cavendish and Hamilton Spirit in the 1970s to Vintage Whisky more recently, where inflated promises of 30% annual returns have left investors nursing heavy losses. Now, with cases of multiple owners purchasing the same cask, non-existent assets being sold and aggressive marketing of "guaranteed" returns, the Whisky investment industry is at risk of a credibility crisis.
If we dig a bit deeper into how this crisis is forming, a lack of verifiable ownership records is at the heart of the issue. Unlike traditional financial assets, Whisky casks are not subject to centralised tracking or formal legal protections. Many buyers receive nothing more than a paper certificate, with no independent verification from bonded warehouses or distilleries.
However, the responsibility to fix this issue does not rest solely with regulators. Regulatory changes take time, and with fraud already widespread, further delays would leave investors vulnerable and risk irreparable damage to market confidence. The immediate burden falls on reputable businesses in the whisky industry - distilleries, bonded warehouses and brokers - who must take charge in setting higher standards before trust in whisky cask investment is permanently undermined.
At the most basic level, this means verifiable ownership registration at the bonded warehouse, clearer contractual protections and tighter industry-wide vetting of brokers. Some businesses are already working to increase transparency, but too many are benefiting from the current lack of oversight, allowing fraudsters to operate unchecked.
Meanwhile, investors cannot afford to take these deals at face value. The simplest way to protect themselves is through verification - ensuring the cask is registered directly in their name at the warehouse and that the broker is a recognised reputable firm. Any company offering fixed high returns should raise an immediate red flag, as whisky appreciation does not follow a predictable trajectory.
Investors must also watch out for hidden costs - warehousing fees, duty payments and bottling expenses - which many fraudsters conveniently fail to disclose.
Whisky remains one of Scotland’s most valuable exports with a reputation built over centuries. However, without decisive action from the industry, investment scams will continue to erode trust, destabilise the market and leave investors with worthless assets.
The reality is clear - without greater transparency and accountability, confidence in whisky as an investment will collapse. While formal regulation may be slow to materialise, the industry must take responsibility now to safeguard its reputation.
For investors, they must exercise caution or risk being left with nothing more than an expensive piece of paper.
This article was first published in Food Manufacturer—read more here.
