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Forbes
19-05-2025
- Business
- Forbes
Dekanta's Links To Scotch Whisky Cask Investments Raise Ugly Questions
The Scotch whisky cask investment sector has seen its fair share of significant negative press recently, and not without reason. BBC investigative reporting and a story from the New York Times, among other coverage and warnings from industry figures, have illustrated how many firms advertising the healthy profits to be amassed from investing in Scotch whisky casks rely on using lies and misinformation to do business and lure new clients while also hiding or misrepresenting the truth about the financial risks involved. More recently, the collapse of UK-based Whisky Merchants Trading Ltd, a Scotch whisky cask investment company intertwined with a web of businesses around the world usually operating under the names of Braeburn Whisky or Cask 88, further casts doubt about whether the general public can safely invest in Scotch whisky casks at all. Though Whisky Merchants Trading Ltd is now 'in administration' - the U.K. version of Chapter 11 - almost all Braeburn Whisky and Cask 88 entities are currently still in operation, although many of them have laid off most staff and/or have severely reduced trading activities. At least several hundreds of investors burned by the collapse of significant components of this cask investment network have been frantically trying to find and take ownership of their casks that were under Braeburn Whisky/Cask 88/WMT control. This network of businesses involved in Scotch whisky cask investment was founded and controlled by British national Edward Davidson, while New Zealander Patrick Costello and Davidson's wife, Chinese national Ma Xianmei, are also often listed as shareholders or either hold or previously held director positions across the firms alongside a few other individuals. However, aside from cask investment, Davidson and Ma also each control half the shares of a Singapore-based Japanese whisky retailer, Dekanta Alcohol Trading International PTE Ltd. Ma is also a director of the company. Perhaps because of the issues at Braeburn/Cask 88/WMT, Dekanta – one of the largest mail order Japanese whisky retailers - has now come under increased scrutiny. Sources now suggest that Dekanta may not have been fully transparent in its communications about its co-founder, a number of its products, and its partnership with a new Japanese distillery. In an article published in Asian whisky website 88 Bamboo, Dr. Andrew Lui asks the question whether Ma, as a prominent face of the company, has been consistently presented publicly and to the wider whisky industry as a 'fictitious persona' - Makiyo Masa, a Japanese whisky expert with Japanese nationality. (In a 2016 Spirits Business article she includes herself in a reference to 'we Japanese' and a Dekanta press release from 2017 refers to her as a "Japanese entrepreneur.") Familial ties to Japanese whisky history have also been implied. However, Lui writes that the Dekanta director never has been interviewed by Japanese media nor has the company ever hosted a Japanese media event. He also points out how her use of basic Japanese phrases are 'painfully strained', and sound as if they are spoken and pronounced by a native Mandarin speaker. In an internal document I obtained written in 2022 by Davidson to a senior executive who worked across the Braeburn/Cask 88/WMT companies he confirms her Chinese name as her legal one but refers to her as 'Makiyo', describing her as 'part Chinese, Japanese and Vietnamese a beautiful blend that gives you a hangover sometimes lol'. Lui also refers to her personal Instagram page where she uses the display name 'Maki Torii', perhaps implying a connection to the Torii family that founded Yamazaki with the help of Japanese whisky pioneer Masataka Taketsuru (who, interestingly, was affectionately called 'Masa' by his Scottish wife, Rita Cowan). Furthermore, Lui also questions her status as a whisky 'expert' – asserting in the article that Ma memorized notes and scripts about the whiskies she was talking about and the wider whisky industry before every media event she attended. When I interviewed former employees involved in the Braeburn/Cask 88/WMT network of businesses - all of whom requested to remain anonymous to avoid legal repercussions or individual reputational harm within the industry - they confirmed this claim to me: 'They had a copywriter who would prepare all these scripts for Makiyo, so she could be wheeled out and presented as some sort of Japanese whisky expert", said one. Another emphasized that she while she was extremely familiar with Dekanta's products and their margins ("she had an excellent head for numbers" said the former employee), Ma frequently needed an extra hand, though this did include help with English: 'Maybe if you asked her about whisky regulations she'd need a bit of coaching…to be fair she needed her hand held for a lot of [interviews]. However, a lot of it also was to support her with the English language as that was a potential barrier to [consumer education].' Dekanta also has been criticized recently over its communications regarding the legacy of legendary Japanese distillery Karuizawa, which ceased production in 2000. Among aficionados and collectors Karuizawa's whisky is universally praised and highly sought, with bottles of its whisky fetching astronomic prices at auction. Recently, though, a new Karuizawa Distillery, built by a company called Karuizawa Whisky Co (not to be confused with the Komoro Distillery built by a different unrelated company, Karuizawa Distillers Inc.) began producing spirit, claiming in an official press release that 'after more than 20 years Japan's most legendary whisky distillery is back." A partner in the project, Dekanta is helping build the distillery's brand with the plan of eventually offering official distillery releases and independent bottlings. It also is selling casks of its spirit, proclaiming proudly on its website that 'after 22 years of silence, the world-renowned Karuizawa Whisky has made a triumphant return." However, as pointed out by a variety of experts and industry figures, these claims are simply untrue. 'The new distillery will be called Karuizawa, and its whisky will also be labelled as such," wrote whisky writer and author Dave Broom about the project when it was first announced in 2023. "Nothing has been resurrected, or revived, or reopened. But why let the truth get in the way of the story?' The new distillery's construction and production does involve former individual Karuizawa distillery staffers, with production features similar to the original distillery. However, it's certainly a wholly different facility, based in a different (though nearby) geographical location from the original Karuizawa and, obviously, will eventually produce a different whisky once it is bottled. Dekanta seems to have made both the new and old Karuizawa distilleries difficult to distinguish from each other on its website and promotional materials. At the time of writing, on one page a block of text briefly describing the original Karuizawa's history is immediately followed by another stating that 'as Karuizawa Whisky's exclusive global partner, we [Dekanta] are thrilled to present to you an extremely limited amount of casks available for private ownership.' Yet, the company doesn't explain that the second Karuizawa entity is a completely different project. Another page advertising sales of Japanese whisky casks also seems to make little effort to distinguish these two very different Karuizawas to prospective purchasers. As Broom explains: 'The issue isn't the opening of a new distillery in Karuizawa – after all Komoro is already up and running there. It lies in the name, and the easy way that this fact can be blurred so that people are led to believe that this is the old place reopening.' In a 2020 article in The Scotsman, Ma (as Makiyo Masa) claimed: 'We believe we have a duty to our clients to be as transparent as possible.' While in that interview she was specifically discussing the issue of the Japanese whisky industry blending Scotch whisky into their products, it might be fair to conclude that Dekanta and Ma haven't quite lived up to that wider promise of transparency when it comes to their work with Karuizawa. It's especially relevant as Ma's and Davidson's Scotch whisky cask investment firms appeared to also rely on misinformation and vague promises to attract investors, who have now been abandoned by these companies and are having to deal with the resulting mess themselves. Whoever purchases Japanese whisky casks from Dekanta must now hope a similar fate doesn't befall them.
Forbes
08-05-2025
- Business
- Forbes
3 Reasons India's Scotch Tariff Cut Is No Cause For Celebration
Is a 75% tariff really a win for scotch? Mark Littler LTD The reduction in scotch whisky tariffs as part of the new UK–India trade deal has been widely reported, and understandably so. A cut from 150% to 75% looks like meaningful progress, but the reality is more complex. Already, cask investment companies are using the headlines to promote whisky casks as a safe investment, suggesting the tariff cut marks the start of a new export boom into India. One sales email, sent just two hours after the agreement was signed exclaimed 'This isn't just a win for distilleries and whisky drinkers, it's a game changer for the whisky cask industry [...] cask values are set to rise [...] as India opens its doors to Scotch like never before, the future of the whisky cask market looks brighter than ever.' This comes just days after the collapse of Whisky Merchants Trading, which went into administration leaving thousands of customers potentially without casks. Many had only been issued certificates rather than delivery orders, exposing a long-standing cask investment company tactic: reducing a nuanced and complex area into a simple sales pitch. So while it's easy to get swept up in a good news story, trade deals are rarely black and white, and this one is no exception. Here are three reasons why this tariff cut is unlikely to result in meaningful change for scotch whisky, especially at the premium end of the market. The headline reduction from 150% to 75% might sound dramatic, but it's hardly cause for celebration. Even if you consider the long term plan to drop to 40% after ten years, Scotch whisky entering India still faces the highest import duty in the world. Halving an excessive tariff doesn't make it fair, it just makes it easier to spin or manipulate. By comparison, other markets have taken more meaningful steps to reduce trade barriers. Until October 2024, Hong Kong imposed a 100% import duty on scotch. It has since cut that rate to 10%, a viable and workable level that is comparable with mainland China and the US (at present). Many countries, including Japan and those in the European Union, impose no import tariffs on scotch at all. So while the headline reduction is, indeed, attention-grabbing, a 75% tariff is still a significant barrier, no matter how you look at it. The 75% import duty is only the first of several layers of taxation once a bottle is imported into India. Imports are also subject to a range of state-level charges, many of which exceed the import duty itself. While the UK has a single, consistent system, based on VAT and alcohol duty, applied across England, Wales, and Scotland. Even the American three-tier system appears almost straightforward compared to India. Each of India's 28 states and eight union territories sets its own tax regime, and many impose duties of 100% or more. Maharashtra, for instance, only recently reduced its rate from 300% to 150%. States such as Karnataka and Delhi typically impose duties of 80% to 100%. In addition to these excise duties, many states apply further sales taxes. What these layers of taxes mean is that a bottle that sells for £100 in the UK can easily reach over £300 on an Indian shelf, due largely to tax. In reality, the 75% tariff is only the start of a system that makes meaningful market access all but impossible. Domestic consumption of Indian whisky is vast. Indians consume more than 2.4 billion bottles of whisky each year. McDowell's No.1 sold 31.4 million cases in 2023, around 50 percent more than Johnnie Walker's total global sales. In fact each of India's top four whisky brands outsells Johnnie Walker. Johnnie Walker is the world's biggest selling scotch whisky, selling around eight bottles per second, every second of the day. To put India's total consumption in perspective, if Diageo redirected every bottle of Johnnie Walker sold globally (which is around 265 million bottles) exclusively to India, it would still only account for about 10 percent of India's annual whisky consumption. Scotland just just doesn't produce enough scotch to even make a dint in the Indian whisky market. It's also important to realise that the Indian whisky market is dominated by high-volume, low-priced sales of spirit made from molasses rather than barley or other grain traditionally associated with whisky elsewhere in the world. The four best-selling Indian whisky brands are made with molasses. Currently Johnnie Walker sales in India represent just 0.5 percent of total whisky volume in the country. Yes, this may in part be down to the higher price point, but I'd also argue that a premium scotch whisky, even a blend that is renowned to be softer, is going to be as different from Indian whisky as single malt scotch is to bourbon! As such success in the market for premium single malt scotch brands is far from a given. You can see why scotch producers might be caught up in the figures and the potential. However a tax cut from very high to still high is still a significant barrier if you're a high value product like scotch. Halving tariffs from 150% to 75% signals intent, but I maintain that it does not make India a viable market for premium scotch. Even the additional drop to 40% after ten years, will still be high by global standards. Currently scotch does not even have the volume to compete meaningfulling in India. What's more, the Indian whisky products that dominate currently may have the same name, but are meaningfully different in terms of taste and price! There is also likely little pressure for further reform from major producers. The two largest scotch whisky producers, Diageo and Pernod Ricard, already sell some of the best-selling whisky brands in India. So removing barriers to allow more scotch brands into the market would mean more competition. So let's be clear, yes it is an exciting step forward but I would caution against the current narrative that this is industry re-defining for scotch. The blanket celebration without context is providing fuel for indiscriminate cask investment companies to mislead whisky fans. We owe consumers, whisky lovers and those just looking at potential cask investments as an alternative, a clear and unbiased assessment of what the tariffs do and do not mean. For now, the tariff cut is more symbolic than practical, and meaningful access to the Indian market for premium scotch remains out of reach.
