ASA Issues EnforcemEnt Notice
In recent years, investing in whisky has been touted as a lucrative venture, and the trend continues today. Yet, it’s tempting to fall into the belief that the risks are minimal and substantial returns are virtually guaranteed—a narrative often perpetuated by numerous advertisements.
You may have come across ads promise significant returns on whisky investments, some even claiming guaranteed profits. However, many of these purported returns lack credible evidence, leading the Advertising Standards Authority to take corrective action. In the past few months, two companies faced reprimands for promoting returns that couldn’t be substantiated.
Interestingly, some companies have gone as far as using other companies’ data, creating a misleading image of their success to attract new customers. Despite the increased scrutiny from the ASA on cask trading advertisements, companies operating outside the UK remain beyond the same level of scrutiny as their UK-based counterparts.
While some companies showcase examples of customers who achieved substantial returns, these instances are often exceptions, with customers benefiting from a market very different from the current one.
Advertised returns vary, with Whisky Partners Limited (Blackford Casks Ltd) claiming a 12% return. However, when pressed by the Advertising Standards Authority, the company couldn’t provide evidence, revealing that many investors had sold their casks back for the same price they purchased them.
Alarmingly, these ads typically lack warnings about the non-guaranteed nature of returns, the unregulated status of investments, or potential additional costs like storage and insurance. Despite the risks and regulatory gaps, ads persist, especially on social media, offering even greater returns. Indeed, the ASA has issued an an Enforcement Notice to prevent misleading advertising and ensuing fees and risks are appropriately communicated.
The ASA states that whisky cask investments are financial products, and thus must abide by the relevant advertising rules contained within Section 14 of the CAP Code. Advertisers must highlight that whisky cask investments are unregulated in the UK, and as with any investment, the value of a cask can go down as well as up.
While not all cask investment companies engage in illegal practices, many employ hyperbolic language and dubious assurances to drive sales. This creates a risk of tarnishing the entire industry, as one unscrupulous company can spoil the reputation of others. The CWA has taken a proactive stance by establishing its own standards, emphasizing responsible behaviour within the industry.
In conclusion, scepticism is advised when encountering online whisky ads promising high returns. It’s advisable to avoid dealing with companies that make such claims, as reputable ones typically refrain from advertising specific returns altogether. If you are concerned by any of the advertising you see you can contact the Cask Whisky Association or raise a complaint with the ASA here.
If you are a cask whisky company reading this then please do make sure your advertising and marketing materials, including your website and social media are compliant with the Enforcement Notice.
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CASK WHISKY ASSOCIATION 