Nant Distillery SMSF 9.55% GUARANTEED compounded annually (min. 4 years). Thoughts? Risks? Too good to be true?

grovesy15 on 18/05/2014 - 11:02
Last edited 18/05/2014 - 11:54

Hey everyone,

Not sure how heavy some investors get on OzBargain, but thought I'd ask around.

Looking into this self-managed super fund investment opportunity offered by the famous Nant whiskey distillery.

"For a $30,000 investment, you will become the owner of two 225-litre barrels of Nant Single Malt Whisky, in return for a guaranteed buy-back upon maturation (after a minimum of four years) at 9.5 per cent compounded annually."

It apparently includes insurance…so it leaves me to ask the question, is this too good to be true?

Check out the websites below:

http://nant.com.au/barrel-offers/

http://www.afrsmartinvestor.com.au/p/specialist-investments/…

Does anyone have any experience with this?

Does anyone with experience in this field of investments have any advice about questions that need to be asked to access the true risk/reward?

Thanks all!

EDIT: Terms and Conditions can be found here…

https://drive.google.com/file/d/0B1e8jGQIeXjxV2h5dldjTVVZaHc…

Financial

Related Stores

nant.com.au
nant.com.au

Comments

  • No on 18/05/2014 - 11:20
    +2

    Even if Nant had really bad credit couldn't they get a cheaper loan from a bank without the admin and expense of having tons of investors whom own 2 barrels each?

    • grovesy15 on 18/05/2014 - 11:21

      Ya valid point….maybe this increases the profile of the company more?

    • grovesy15 on 19/05/2014 - 13:45
      +4

      Thought about it, and from their end, what they are doing is very smart. If they borrowed from a bank, they would get a better rate, but they would have to pay interest yearly, as well as monthly payments. With this investment, they only pay the interest at the end after the whiskey cures. So they basically get free money.

    • mohan76 on 19/05/2014 - 20:03

      if bank loan are enough to run business then why we having financial market ?

      1. if they (manage to)get loan it's goes in there balance sheet which is not healthy.
      2. business loan not like our personal/mortgage loan , if bank feel collateral net value going down (could be temporary) they force business to repay .

      3. This model is risk free ,if not enough demand for whiskey after 4 yeas ,can be re-negotiate with investors, or appoint administrator. most investor agree for new price than administrator.

      4. t&c 4.1
        4.1 The buyer acknowledges that during the Maturation Period the volume of the Whisky held in the barrel will decrease due to evaporation of Alcoholic Vapour (the “Angel’s Share”).

  • gevidian on 18/05/2014 - 11:48
    +1

    I would suggest you contact them and get a copy of the PDS - the largest risk is that if the company went bust, you would probably get nothing back. Higher returns normally equate to higher risk.

  • blackguard on 18/05/2014 - 12:18
    -2

    After quickly flicking through the lovely glossy brochure (PDS) with lovely photos to try and find any information on the investment itself I finally found out some info right near the bottom.

    I did some rough and ready maths to work out the return.

    Basically it went like this.

    The $30,000 investment (including GST) with guaranteed buyback of $43,208 (does this include GST as well)? if so you're losing even more money.

    The present value of getting $43,208 back after 4 years in todays dollar is $36,232, so after 4 years you are really earning approximately a return of 20.8% (over a 4 year period, not annually) not bad, but then compare that to having $30,000 in a bank account earning 4.5% interest (roughly), at the end of 4 years you will receive $35,904, a return of about 19.7% over 4 years, so for a hell of a lot of risk you are gaining about 1% return.

    Keep in mind that tax ins't taken into consideration in the above, also there is a risk insured option, but this includes an insurance premium! of $350! for the $30,000.

    It seems like a risky investment that does no better than a bank account return wise, plus if you need your money sooner who knows how you go about that.

    I would recommend speaking to a financial advisor before investing in things like this.

    • grovesy15 on 18/05/2014 - 12:21

      The present value of getting $43,208 back after 4 years in todays dollar is $36,232

      May I ask how you got to the $36k for this?

      • blackguard on 18/05/2014 - 12:26
        +2

        36k =(43208/((1+0.045)^4)) with an discount rate of 4.5% annually.

        • grovesy15 on 18/05/2014 - 12:32

          I guess I'm lost on the "concept" of estimating today's dollar.

        • grovesy15 on 18/05/2014 - 17:57

          Do you think you could explain this a little more, Blackguard? I'm confused with your reasoning and use of "todays dollar". Thanks!

        • juventino on 18/05/2014 - 23:35
          +19

          Correct me if I am wrong. But the comparison is not justified at all.

          You bring the guaranteed buyback of $43,208 to its present value of $36,232

          yet, you compare it to bank investment of $35,904. That $35,904 is the future value of your investment after 4 years. You need to bring it back to its net present value as you did with the other investment to allow a fairer comparison.

    • Boshait on 19/05/2014 - 09:56
      +7

      Your calculations are rubbish. Dollars in four years from Nants are not worth less than dollars in four years from a bank.

    • cpho on 19/05/2014 - 11:10

      Wrong!

      Way too much calculations for such a simple thing.
      Basically, NPV is taking into account inflation over the period of the investment.
      Since Nant already gave you the average return of 9.5% p.a, you just chuck inflation in there, and get your grand total of ~7%.

      Also, your calculations for the banks was unfair because you didn't take into inflation for them. A 4.5% interest rate bank account is only yielding a REAL value of ~2%.

      Personally, I think it's an interesting form of investment with nice returns (on paper), but I'm not confident enough, nor do I have a spare $30k lying around to give it a try.
      Also, there is insurance available for purchase which covers fire/theft, but not insolvency… Make what you want of that.

    • demiurge on 26/05/2014 - 12:30

      Massive maths fail.

  • mskeggs on 18/05/2014 - 12:32
    +10

    Colour me skeptical. Most investments specifically targeted at SMSFs are done so because it doesn't otherwise stack up for a regular investor.
    9.55% compound stacks up great, so I would want to know about the risk.
    Number 1 appears to be the business going broke.
    You are paying $60+ per liter for wholesale whiskey with no excise paid. Even though I acknowledge Nant is a super premium product, that is way over the odds. If they don't buy it back at the guaranteed price you have a bunch of overpriced liquor on your hands.
    You are dealing with "Nant Barrel Holdings Pty Ltd". It could go bust tomorrow with no assets, rendering the buyback guarantee worthless. I would also suggest that if it did, it would have no impact on the ongoing operations of the Nant distillery business. I can imagine their press release now:
    - "Well, it was an innovative financial arrangement, and our partner company in the barrel holdings business was a bit optimistic about what they could buy the whiskey back for. Unfortunately, they have gone into receivership, but as an act of good faith we are offering to take any investors whiskey back at our wholesale rate plus 10%, currently $26 a liter."

    Obviously, this is just my speculation, but I can't see why they would pay so much interest. All the stuff about a free gift and the option to keep the whiskey for personal consumption adds to my "caution will robinson" alarm.
    Thanks for posting though. It is an interesting investment.

    • affable on 18/05/2014 - 16:41
      +2

      "the option to keep the whiskey for personal consumption"

      From your SMSF, I don't think so!

      • cannedhams on 19/05/2014 - 11:28
        +4

        Fat chance of the ATO getting it off me if I drink it. I'm going to raid the factory and head to the hills with my 2 barrels.

    • Blockey on 19/05/2014 - 08:44
      +2

      This says it all.

      There a lot of investments aimed at SMSF's that are far too risky for you to gamble your future on and this looks like one of them.

      As said above it's only guaranteed by Nant Barrel Holdings Pty Ltd, who knows what their financials look like and whether they will actually have the money to buy it all back?

    • mskeggs on 19/05/2014 - 09:21
      +3

      Having had a look at the whiskey, which I haven't tried and I know only about from breathless press articles, it seems to sell for over $300 a liter. So perhaps a $60l price is not absurd.
      If I was considering investing I would ask:
      - does Nant Barrel Holdings Pty Ltd have a cross guarantee with the Nant Distillery. That is, is the main business prepared to stand behind their debts.
      - who are the directors of Nant Barrel Holdings Pty Ltd? Are they reputable?
      - are any of the directors prepared to offer a personal guarantee on the business?
      - does Nant Barrel Holdings Pty Ltd have any assets?

      All these questions are designed to flesh out whether this is a genuine financing arrangement that the distillery is going into for cash flow reasons, or whether it is a 'get rich quick' scheme run by a $2 shelf company with opaque backing.

  • Aceboy884 on 18/05/2014 - 16:57
    -2

    Will you ever spend $30k on whisky?

    If not, move along.

    • grovesy15 on 18/05/2014 - 17:56

      What do you mean? You "sell" the whiskey back to Nant after it matures for your return. You don't keep it (unless you want to).

      • Aceboy884 on 18/05/2014 - 22:45

        my point is, if they can't "buy" it back off you and you end up keeping the "stock"

        • JohnHowardsEyebrows on 19/05/2014 - 16:01

          If they go bust, the whisky is a collector's item. It's a good whisky. Maybe the company will succeed, but if it doesn't, no problem.

          As for the reason they'd be using this sort of finance, I'm sure it's to generate a profit on sale of white spirit now, so they have cash flow immediately, allowing them to ramp up production, enabling higher sales sooner. A bank loan would have meant they were constantly rolling over the finance until they reach the point in a few years' time. A very good strategy IMO - the extra few % wouldn't perturb them given they've already locked in a considerable profit.

        • [Deactivated] on 19/05/2014 - 19:45

          It's not a collectors item if everyone has 2 barrels.

        • dan76n on 09/02/2016 - 23:19

          @voolish:
          I'm sure if we got TA to post a great price per barrel it would sell.

  • fruit on 18/05/2014 - 17:15

    Please remove the word "guaranteed", it is grossly misleading.

    • grovesy15 on 18/05/2014 - 17:55

      Sorry mate, are you saying this to me or Nant? You know this is the forum and not the "deals" page, right?

      Just posted it here for discussion and advice, as "guaranteed" is what Nant says.

      With that being said, why do you think it is grossly misleading? I'm interested in other's thoughts.

      • Aceboy884 on 18/05/2014 - 22:46

        we like to believe what we are want to be believe,

        there is no one to convince you it is a good deal, only you can make that call

        but if you are after affirmation, then the straight answer is no.

        you might as well buy CFD's and trade forex for a better "return"

        • grovesy15 on 18/05/2014 - 22:59
          +1

          There is always going to be risk involved with investments…I just opened the forum up to discussion. Of course if you said jump, I wouldn't say how high…I just wanted opinions from people who have more experience in investing…which I'm still not sure you do as you haven't explained you reason for being against it. I accept that, but reasons help! Cheers!

        • Baysew on 19/05/2014 - 10:07
          +1

          I think you have bought up a great topic !

          It's great to "window shop" and toss some thoughts around- good, bad and ugly.

  • Peck on 19/05/2014 - 09:40
    +1

    It reminds me of buying into pine plantations etc. I would stay away from it.

    • tohara on 19/05/2014 - 10:44

      forestation isn't that bad. The tax commissioner has made a ruling that you can deduct relevant expenses until maturation meaning the costs aren't that high. But the risk remains

      • mskeggs on 19/05/2014 - 11:22

        It wouldn't be that bad except all the schemes were effectively Ponzis. Did any of them not go bust? Maybe one of the Gunnns affiliated ones is still hanging on?

  • Boshait on 19/05/2014 - 10:32
    +3

    Nants Distillery is currently executing an aggressive expansion plan[1]. This makes them high risk, hence the relatively high return. They are currently paying 10% on convertible notes issued to finance the same plan so the return offered on the barrels is not extraordinary. This is a fairly high risk investment I would not consider unless I had good reason to believe Nants expansion plan will pay off.

    [1] http://www.theshout.com.au/2013/05/17/article/Former-XXXX-bo…

    • mskeggs on 19/05/2014 - 11:26

      Good info. Is it reasonable to conclude they can still charge a super premium if the product is 10 times more common? I think that is the fundamental question for the Nant distillery.
      If yes, they might be fine with buying back the whiskey.

      • Boshait on 19/05/2014 - 12:11
        +1

        AFAIK if they are still solvent in four years then they have to buy the whiskey back at the agreed price regardless of what happens in the whiskey market. If not, you are the proud owner of two large barrels of whiskey. Good luck getting anything like $30k for them.

  • cannedhams on 19/05/2014 - 11:34

    For comparison's sake, Qantas just issued some 8-year unsecured notes that paid 7.75%. Personally I'd have a fair bit more faith in Qantas not going bust than this mob.

    • Boshait on 19/05/2014 - 12:07

      Agree. That's why Qantas is paying less. Nants is a gnat compared to the flying kangaroo.

      • cannedhams on 19/05/2014 - 13:14

        Yes, but I don't know if an extra 1.75% in returns is enough to compensate for the difference in risk. Then there's the GST to consider. To be honest, it starts to sound like a pretty marginal proposition.

        Apparently the offer is limited to "80 packages only". Sounds a bit like buying cricket memorabilia off channel nine.

        • Boshait on 20/05/2014 - 12:53

          (GST should be almost a wash because you claim it back if you are registered.)

          Well it is endorsed by Haydos…

          (Endorsement by a celebrity not known for his financial nous is actually not a good sign, in case anyone thought so.)

  • redraoh on 19/05/2014 - 13:46
    +1

    Banks won't loan to them. Why should you?

    • grovesy15 on 19/05/2014 - 13:46

      How do you know banks won't loan to them?

      • redraoh on 19/05/2014 - 14:31

        Well they might. But you have to question why Nant would instead go to this much effort for money at a more expensive rate of 9.55%.

        What's in it for them? Marketing? High risk and not wanting to upset banks when it goes belly up?

        • grovesy15 on 19/05/2014 - 16:31
          +1

          If they borrowed from a bank, they would get a better rate, but they would have to pay interest yearly, as well as monthly payments. With this investment, they only pay the interest at the end after the whiskey cures.

      • Aceboy884 on 19/05/2014 - 16:30

        Do you think the bank will consider the whiskey as collateral. I think not

  • Tnetennba on 19/05/2014 - 16:32
    +1

    To ensure clarity, if the buyer wishes to sell all of the Whisky to Nant, this election must be made and a written notice given to Nant of this decision within 10 days of being notified by Nant in writing that the Whisky has reached maturity. If notice of redemption is not received by Nant within 10 days, Nant at its election can waive or accept the buyback offer.

    So if, in 4-5 years time, you get a letter and don't reply within 10 days, you might have to keep 450L of whisky for personal consumption

    The buyer acknowledges that no item contained in or forming part of the Offer is transferable or available for resale and agrees not to on sell any item in or part of the Offer other than to Nant and otherwise agrees that the Whisky is for private consumption only if it is retained.

    That's a lot of whisky to keep if, for whatever reason, you don't notify them in time.

    • Aceboy884 on 19/05/2014 - 18:01

      You actually spent time reading their t&c

      Good wo/man

    • Cluster on 19/05/2014 - 18:19

      You would also have to go and get it yourself, or no doubt pay a hefty premium to have it delivered. 450L of whisky plus the barrels and packing delivered to a private address wouldn't be cheap.

      • Tnetennba on 19/05/2014 - 21:13
        +1

        Evidently the barrels remain the property of Nant Distillery, you just "lease" them, and if you choose (ie. don't respond within 10 days), you must either keep the whiskey in the barrels at their distillery, or pay bottling/labelling charges and then delivery charges.

    • cpho on 19/05/2014 - 19:53
      +1

      On the bright side, if there's another prohibition in the next few years, that $30k for 450L just because the best investment you ever made!

  • Cluster on 19/05/2014 - 18:18
    +1

    The rule is simple: anyone paying more than a percent or two above the equivalent length deposit rate from a bank is introducing risk. The investment is not guaranteed, you risk ending up with less than you started or even nothing at all. In the current environment of RBA 2.5% cash rates and maybe getting 4.5% from a term deposit, anyone offering 9.5% with a guarantee is simply not being honest.

    • mohan76 on 19/05/2014 - 20:11

      guaranteed as long as business exist.even term deposit can be vanished. correct me if i wrong we don't have deposit guarantee :(

  • ramshead on 19/05/2014 - 21:22

    If you end with 450 litres of whiskey in your cupboard , the company will command a premium for on selling your contact details.

  • Kevan2 on 20/05/2014 - 00:25

    Bullet points on this.

    Look at the meaning of futures and risks associated with that style of investments.

    General rule, don't buy in any direct investments that grow things - refer Peck above , sheep etc.

    How many barrells of grog is produced and how many times is one barrell could be sold.

    What is the selling/buying price of grog now and if stored will it not spoil.

    And why SMSF, if your fund then the money is not yours till you retire and are older than 60, or you die, or total and permantly disabled. That's when the whiskey would be use full.

    What is tax guide lines given in P D F, remember these are guidelines and only become proved when challenged in court.

    It has been suggest to see a financial planner, good, but you will need to talk to an accountant who knows your situation, and can and will find out how the investment will playout tax wise for you.

    Good luck, not my cup of tea. Cheers.

  • danyool on 20/05/2014 - 00:49
    +2

    ABC's Landline had a story including these guys last year. I had a little look into it then "ooh whisky". Note you don't have to get the "super" pack, you could get 1 x 100L barrel which is $6,600, so not as much coin to drop. (Although, when i saw it, they were $5,500 i think so it's gone up now but had a similar rate of return)

    Also, the barrels are kept in a "bond store" but not sure exactly what that means, ie your barrel is registered or something, so if they go bust you've still got some backing? Not sure.

    News article - http://www.abc.net.au/news/2013-07-06/tas-whiskey-given-high…

    Landline Video - if you've got 20mins, interesting insight into how it's processed, industry, etc http://www.abc.net.au/landline/content/2013/s3797624.htm

    Whether it's got more to run, or it's Emu meat territory i couldn't decide, so didn't go further.

    Also, see this - http://forums.whirlpool.net.au/archive/2196592
    and also - http://forums.silverstackers.com/topic-39986-premium-whiskey…

    • Kevan2 on 20/05/2014 - 05:46

      Wikey no! Whisky no! Whiskey Good!

      still not sold on investment though: every one should do own due diligence.

      [don't forget the "e" or you will have a man in a kilt after you.

      Thanks for the update.

      • JohnHowardsEyebrows on 20/05/2014 - 10:02

        A tedious myth. Whiskey is the Irish name, also used in America.

        As Nant - like all established Tasmanian single malts - is a Scotch style, whisky is a more appropriate name.

    • mskeggs on 20/05/2014 - 07:49

      A bond store is a secure warehouse where goods are located prior to paying tax/excise.
      Whiskey attracts liquor excise and GST, so if you choose to recieve the liquor after 4 years, you would have to pay a hefty slug to the government.

  • [Deactivated] on 20/05/2014 - 14:40

    Why does this state Guaranteed? It's not guaranteed at all.

    Furthermore, it's a Pty Ltd company.

  • Crownanchor on 20/05/2014 - 20:25

    This deal does not look very attractive at all, lock up $30,000 for 4 years and the return is not that great. 4 years is enough time for a company to go bust, and its possible that fighting for $30,000 in court if anything went wrong, may not be worthwhile pursuing. The world is changing so much that more liquid investments are far more attractive.

    Always manage your own money rather than let some one else manage it, its smarter and there is an incentive for you to do well. I made this mistake a few times, and will not make this mistake again, it has been very costly.

    EDIT: Ok, researched a little more about Tasmania and the Whiskey industry, it looks interesting and not as risky as my fist thought, still $30,000 sounds like a large investment.

    • powerhammer on 20/05/2014 - 21:43
      +1

      more liquid investments

      I see what you did there!

  • JepunK on 20/05/2014 - 20:40

    Moonshine…woohooo

  • machej on 20/05/2014 - 22:41

    Their website is down at the moment.

  • Grent on 21/05/2014 - 00:30

    And how do the returns look if the whiskey is not ready for 5 or 6 years rather than the 'minimum' 4 years?

    • Grent on 21/05/2014 - 07:43

      Just got the full t&cs through. Despite the brochure, the 9.55% is paid for the length of time it takes to mature - the buy back value is not fixed at all.

      • lplau on 21/05/2014 - 15:56

        So basically they can say it matured after 10 yrs and still just pay you 9.55%

        What stops them from doing the following after 4yrs "Oh your barrel went bad, it is not matured, therefore we will have to start again and please wait another 4yrs for this barrel to mature".

  • patinadiary on 21/05/2014 - 10:19
    +1

    As there is an aging process involved, they are simply trying to manage their cash flow by pre-selling a portion in advance with a 'promise' to deliver the 'goods' in 4 years, very similar similar to a futures market. For a relatively new distillery they seem to have good reviews for their whiskys, which is bit of a worry for me, considering there is no mention on their website as to how many years is the ageing process for. How do they plan to sustain their over $100 per 500ml price tag?

  • mousie on 21/05/2014 - 22:03

    In 4 years time I'm expecting some solid whisky deals :-)

  • grovesy15 on 23/05/2014 - 08:07

    Amazing replies everyone. I've decided to stay away, just based on the amount of risk and lack of information provided by Nant upfront…just doesn't feel right.

    Still keep the discussion up! It has been awesome to follow all the replies over the past week.

    Thanks!

    • Baysew on 23/05/2014 - 10:14
      +2

      Just remember that -

      If anyone does buy and for what ever reason, ends up with 450 litres of whiskey in four years time, your OZ Bargain mates would only be to happy to come around and help you drink it while they tell you, "I told you so."

      Or it turns out a winner, you owe us a drink also with the "I told you so".

      • danyool on 25/05/2014 - 00:29

        Don't forget about the Angels Share - your 450 litres at the start won't be 450 litres after 4 years. Not sure of exact losses, but something to consider.

        • Dumpling Destroyer on 03/02/2016 - 15:05

          Angels Share is approximately 2%-3% (higher in younger whiskeys), conservatively you will have (2%,3%) x 4 years = (8%,12%) less whiskey in the barrel. ~396 to ~414 left in the barrel after 4 years.

    • Crownanchor on 06/02/2016 - 13:57

      Oh, that's shocking.

      Investors are likely to not be able to do anything until after the 4 years (2018+) after which the money could have traveled several times around the world, gone to space and vanished without a trace.

      Edit: My above post was interesting, hindsightful and had a few of the problems highlighted https://www.ozbargain.com.au/node/144695#comment-1998969

    • [Deactivated] on 06/02/2016 - 14:54

      I hope people get their $$$ back from this. My unqualified opinion is: A lot of bottom feeders, living the highlife at the top, directly off investors money. The helicopter may be useful for a quick getaway.
      Bluechip stocks will probably yield 5% p/a or better, and are sensible.

      Thanks for posting this Baysew.

  • kev98 on 09/03/2016 - 19:07
    +2

    Cash cow, or risky whisky?

    https://barefootinvestor.com/cash-cow-or-risky-whisky/

  • meku on 10/03/2017 - 15:25

    The details emerging from an audit were not pretty: Nant whisky investors told audit revealed 700 barrels sold to them 'never filled'

    • affable on 10/03/2017 - 15:37

      Thanks for posting this update. The thread title says it all - "GUARANTEED .. Risks? Too good to be true?"

    • danyool on 11/03/2017 - 00:40

      Yikes! 700 barrells never filled! 😮

      PS, that's a big store room.

      Although on Facebook Nant are trying to blame AWH for messing stuff up and trying to run the business down to buy it at firesale price.

      There is an amusing letter to ABC from a barrel "investor" that Nant posted on FB talking about AWH and their prior business operations and annual losses (from their annual reports from Asx.) "In fine loosing form in 2014 AWH lost 500k, and in 2015 they did really well and only lost $234k" or something to that effect! Haha. Don't know how true any of that is.

  • Guybrush57 on 10/03/2017 - 20:07
    +1

    Logged in to post the latest articles but it had already been done. It is very interesting to see the results. It doesn't even seem that long ago that this deal was posted. Where have those three years gone?

  • ggrant on 28/07/2017 - 19:39

    700 barrells never filled!
    = $10500000 of investor funds scammed?
    -> Receivership.

    Wonder how the 'minimum of four years' will come out. Drum roll…

  • Samsungnote10 on 08/09/2017 - 13:33
    +1

    http://www.abc.net.au/news/2017-09-08/nant-whisky-investors-…

    another article,

    I hope no one here invested

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