A Hong Kong-based investment firm specializing in whisky is seeking to raise up to US$50 million for its second private equity-style fund, positioning whisky as a potential hedge against market volatility despite a recent downturn in prices across the sector.

Rickesh Kishnani, co-founder and chairman of Rare Whisky Holdings, emphasized the appeal of whisky as an alternative asset for affluent investors increasingly looking beyond traditional safe havens like gold. “Whisky is a physical asset that is consumable, so supply naturally declines over time, and it gains value as it ages,” he said. Kishnani suggested the spirit offers diversification benefits, particularly amid uncertain economic conditions.

The new fund was launched on April 20, 2026, amid a notable decline in collectible whisky prices, which have dropped by nearly 40% in the past two years. This decline follows nearly two decades of growth driven by rising demand, especially from Asia. However, expanded production by distilleries to meet demand led to a surplus that has contributed to the current market correction. Major producers such as Diageo have responded by cutting output, while the Scotch Whisky Association reported a decrease in both export value and volume in 2025, citing weaker demand, tariffs, and rising costs as contributing factors.

Kishnani described the current market environment as an “oversupply situation,” creating lower prices and thus a potential entry point for investors. Unlike traditional securities, whisky investments typically involve physical assets — either bottled whisky or casks containing spirit still aging in barrels. The firm highlights that whisky’s value is closely linked to its aging process, with older products generally commanding higher prices.

Rare Whisky Holdings’ first fund, launched in 2014, mainly focused on trading bottles and capitalized on increasing Asian demand. That fund raised US$26 million and delivered an annualized return of around 13% over seven years. For the new fund, the company is targeting higher returns with a planned five-year exit horizon, expressing optimism that prices will stabilize or bottom out within the next 12 to 18 months.

Unlike bottled whisky, casks continue to mature and can be actively managed through techniques such as re-racking, which involves transferring whisky between barrels to enhance flavor and quality. Kishnani noted that as casks age—moving from 12 to 15 or 18 years—they often appreciate significantly in value, marking key milestones in the maturation process.

Despite growing interest from investors, whisky as an asset class remains relatively opaque, with pricing often fragmented and transactions conducted in private deals. To address this, Rare Whisky Holdings is employing artificial intelligence to analyze transaction data and market trends, aiming to identify pricing inefficiencies and sourcing opportunities in the secondary market.