Background
Summary of Council decision:
Four issues were investigated, all of which were Upheld.
Ad description
Two national newspaper ads, a website and a paid-for Google ad for London Cask Company, a whisky cask investment company:
a. The first national newspaper ad, seen on 30 July 2022 in The Guardian, included large text that stated, “EARN AN AVERAGE OF 13%* PER ANNUM INVESTING IN WHISKEY**”. Underneath, further text stated, “You’ve heard the phrase ‘ages like a fine wine’ – but what about a fine whiskey? Rare whiskey is an alternative investment fast growing in popularity. Holding the appeal of being tax-free and providing potentially steady growth alongside being relative [sic] low risk and a complete lack of correlation with the stock market, whiskey makes for a fantastic addition to a balanced investment portfolio. Over the past ten years, rare whiskey prices have increased by an impressive 586%***. London Cask Company offers investors the chance to buy into the world of high-grade whiskey cask ownership and start their journey toward these alternative investments”.
Underneath was a list with tick marks which stated, “Access to Ireland and Scotland’s most prestigious breweries”, “Access to London Cask Co’s own, award-winning, distillery, The Boann”, “Assets are securely stored and fully insured”, “The only UK whiskey sellers that uses a regulated custodian”, “Easily realizable asset should there be a change of circumstances”, “Offers potential for rapid growth, which is tax-free, as well as steady returns”, “Earn up to 13% per annum*” and “Discounted purchase prices available”.
The asterisks linked to qualifying text at the bottom that stated, “*Estimated return and not guaranteed **The investment in whiskey may not be suitable for all. Investors should seek independent investment, legal and tax advice concerning the potential consequences of investing in cask whiskey ***Figures taken from the Knight Frank Wealth Report – which [sic] on the main LCC website”.
b. The second national newspaper ad, seen on 22 November 2022 in the Metro, included a logo for the World Whiskies Awards 2021. The ad included similar text to that in ad (a).
c. The website www.londoncaskco.com, seen on 23 September 2022, included the heading “Be a ‘Glass Half Full’ Kind of Investor”. Text underneath stated, “At London Cask Company, we combine a passion for Irish whiskey with a desire to share not just the taste but the value of this great physical commodity, stirred together with the right amount of support and guidance from our team of professional whiskey portfolio managers and suppliers. We believe that the experience of investing in a cask of whiskey can be richly rewarding and that you shouldn’t have to be a seasoned connoisseur or an investment expert to enjoy the benefits”.
Underneath, text stated, “AS FEATURED IN” and included logos for The Guardian, The Mail On Sunday, News Anyway and The Times.
Under the heading “Why invest in Whiskey?”, text stated, “Here at London Cask Co, we believe many investors are increasingly moving away from conventional offerings and embracing tangible, sustainable, and experiential commodities, with whiskey at the heart of this. We operate under three core values: Potential Growth Market Did you know that rare whiskey has seen a *478% growth between 2010 and 2020? Whiskey is an investment where the process of ageing only adds to the potential value. Source: Click here Experiential Value […] Tangible and Liquid Assets When you invest in whiskey, you hold a tangible asset which is yours to use as you please – you can buy and sell quickly (if the market allows) or hold onto your whiskey as it matures. Best of all, we do all the background work and negotiating so that you don’t have to – offering all of our customers the highest grade whiskey casks at the best prices”.
Small text in the page’s footer stated, “The investment in whiskey may not be suitable for all. Investors should seek independent investment, legal and tax advice concerning the potential consequences of investing in cask whiskey. All investments present the risk of loss of capital to the investor. Past and current performance does not imply that future trends will follow the same or similar pattern. Projections stated may not be achieved, and the actual performance may differ materially. Any investment made by any person based on a statement or representation that is not contained herein or inconsistent with information contained herein shall be solely at the investor’s risk. This is an unregulated product and therefore investing in this asset, does not afford the same protection as regulated products, any investment is, therefore, speculative”.
d. The paid-for Google ad, seen on 23 September 2022, featured text that stated “London Cask Company – Whisky Cask Investment Make stable returns in one of the world’s most profitable liquid assets. Access Our Guide. Cask Ownership Benefits Request Our Free Cask Ownership Investment Guide For More Details […] Discover the benefits of Cask Whiskey Ownership”.
Issue
The ASA received two complaints: one in relation to ad (a) and one in relation to ad (b).
1. One complainant, in relation to ad (a), and the ASA, in relation to ads (b) and (c), challenged whether the investment return claims were misleading and could be substantiated.
The ASA also challenged whether the ads were misleading because they:
2. implied that consumers could achieve a guaranteed return by investing in the advertiser’s whisky and did not make clear the risks involved in the investment; and
3. did not make clear that fees applied or that there were terms and conditions to the service.
4. One complainant, in relation to the World Whiskies Awards 2021 logo in ad (b), and the ASA, in relation to the newspaper logos in ad (c), challenged whether the use of the logos misleadingly suggested London Cask Co. had received awards or endorsements from those organisations.
Response
1. In relation to the claims “earn an average of 13% per annum” and “earn up to 13% per annum”, London Cask Co. Ltd said that they did not believe the references to different amounts of return were misleading. The statements were separate and not linked in anyway. They believed these emphasised the lack of guarantees in returns; in some years the return could be lower than the amount stated and in others it could be more. An individual could earn up to 13% in a particular year, it could also be more, but they felt that would have overstated the figure and so they used the average figure in the heading. They could have used many different return figures, but they wanted to keep it realistic. They referred to an article by the Independent’s Business Reporter that stated, “BC20 cask index [is] reporting an average of 13.09 per cent over the past five years”. This aligned with the claim “EARN AN AVERAGE OF 13%* PER ANNUM INVESTING IN WHISKEY” in ads (a) and (b) and emphasised that over the past five years, a single year must have returned 13%, and potentially exceeded this if there had been other years that it did not reach 13%.
They said that their website (ad (c)) clearly stated the source to substantiate the claim “rare whiskey has seen a *478% growth between 2010 and 2020”. The website linked to the UK Investor Magazine which stated, “Rare whisky is another strong performer, with a 478% growth over the past decade”.
Ad (a) referred to figures that were outlined in the Knight Frank Luxury Investment Index update on rare whisky. They provided a link to the update and believed that this substantiated the claim “Over the past ten years, rare whiskey prices have increased by an impressive 586%***”. They said that other whiskey investment firms quoted the same figures, but that they did not include the warning that London Cask Co. had included.
They made clear that returns were not guaranteed and stated, “Please note that past performance is not a reliable indicator of future results”.
They said they had a total of 180 clients. Most clients chose to hold their casks for a minimum of three to five years, which meant that they had not sold many of their clients’ casks yet. They did have two clients who had chosen to sell their casks very shortly after they had purchased them. On those occasions, London Cask Co. had bought the casks back at the same price they sold them for and did not deduct any fees.
2. They believed that the ads made clear that the returns were not guaranteed by use of appropriate risk warnings. Ads (a) and (b) clearly stated and pointed readers to the warning “estimated returns and not guaranteed”. The ads also stated that whiskey investment may not be suitable for all and investors should seek independent advice. Ad (c) also stated that past performance was not a reliable indicator of future results.
They did not believe that the requirements of regulated investment products would be applied to the purchase of a barrel of whiskey, which was not a purchase of a financial product. When consumers bought a barrel of whiskey, they had a barrel of whiskey and not a financial product linked to stock markets or other indices. If the value were to ever fall, they would still have the barrel of whiskey. Notwithstanding that, they understood the need to provide consumers with full disclosures and so their website clearly set out the risks. Each page of the website included a warning which stated, “All investments present the risk of loss of capital to the investor. Past and current performance does not imply that future trends will follow the same or similar pattern. Projections stated may not be achieved, and the actual performance may differ materially. Any investment made by any person based on a statement or representation that is not contained herein or inconsistent with information contained herein shall be solely at the investor’s risk. This is an unregulated product and therefore investing in this asset, does not afford the same protection as regulated products, any investment is, therefore, speculative”.Ads (a) and (b) referred readers to the website and to get further information.
The ads were generic in nature and offered full support and information to anyone who needed it. Their process did not allow anyone to proceed until London Cask Co. were assured of their understanding and aware of the risks involved.
3. When purchasing a barrel of whisky from London Cask Co., there were no limitations, penalties or fees associated with the purchase. They therefore did not believe that any material information about fees had been omitted. As the ads were short and generic in their content, they included information that showed the website, phone number and QR code should they require further free information. This information was provided to every consumer prior to any element of purchase. The website made clear that a purchase would not proceed until a consultation had taken place, the consumers circumstances had been discussed, all terms and conditions had been provided and the consumers’ questions had been answered. Consumers were offered a free training event with no obligation to purchase.
They said that the purchase price of a cask included the cost to store and insure it for five years with the bonded warehouse where it would be kept. When customers wanted to sell their cask, if they chose to do so with London Cask C., then they would charge a fee of 5% on any profits made from the sale.They provided a copy of their terms and conditions and their whisky investment guide.
4. Regarding ad (b), they did not believe that it indicated that they had won a World Whiskies Award. The generic logo had been included for reader interest only, as they may have found looking at and researching the awards interesting and informative.
Regarding ad (c), they did not believe that the reference to “As featured in” alongside logos of news organisations could be construed as receiving a positive endorsement. They provided copies of the ads that were featured in each of the publications.
Assessment
1. Upheld
The CAP Code stated that marketing communications must not materially mislead or be likely to do so. It also stated that marketing communications should make clear that past performance or experience did not necessarily give a guide for the future; if they were used in marketing communications, examples of past performance or experience should not be unrepresentative.
Ads (a) and (b) stated “EARN AN AVERAGE OF 13%* PER ANNUM INVESTING IN WHISKY” and “Earn up to 13% per annum*”. Ad (a) also stated “Over the past ten years, rare whiskey prices have increased by an impressive 586%***”. Ad (c) stated “rare whiskey has seen a *478% growth between 2010 and 2020”.
The ASA considered the references to “EARN AN AVERAGE OF” and “Earn up to”, in relation to the annual investment return of 13%, were different statistics; the first would be understood as being the average and therefore there was potential for some investments to have returns greater than 13%, whereas the second referred to a maximum return. We therefore considered that ads (a) and (b) were ambiguous as to the yearly returns. Nonetheless, because the claim which referred to earning an average was the headline claim which appeared in large text, we considered that consumers would understand the ads to mean that, by purchasing a cask of whisky through London Cask Co., they could expect to achieve a return of around 13% each year. We further considered that the claims that rare whisky prices had increased by 586% and 478% over a 10-year period, in ads (a) and (c) respectively, would be understood by consumers as meaning that purchasing a cask of whisky would be a lucrative investment and that they could expect to make returns of that scale if they held their investment for 10 years.
London Cask Co. had two customers who had bought and sold casks of whisky through them. However, we understood that because those customers had sold their casks soon after they bought them, neither had made a return on their purchase. We therefore considered that because consumers would understand the claim to mean that they could earn an average of 13% a year by purchasing a cask of whisky from London Cask Co., and we had not seen evidence to demonstrate that was the case, we considered the claim was misleading.
We next considered the evidence they had provided relating to the wider cask whisky investment market. They provided an extract from a news article that reported that the BC20 Whisky Cask Index showed annual growth of 13.09%. We understood that the BC20 Whisky Cask Index related to the values of 20 whisky casks from distilleries across Scotland. We understood that although London Cask Co. sold casks of both Irish and Scotch whisky, the main distillery they sold casks from was an Irish distillery. We had not seen evidence that the Scotch whiskies included in the BC20 Whisky Cask Index were reflective of the whiskies London Cask Co. sold and could achieve equivalent levels of returns. We therefore considered that this evidence was not sufficient to substantiate the claim.
Ad (a) included small text at the bottom of the ad that referred to the claim that rare whisky prices had increased 586% over the past 10 years and stated that this was taken from the Knight Frank Wealth Report. Ad (c) included a link underneath the claim that rare whisky had grown 478% between 2010 and 2020, which, when clicked, took readers to an online magazine article about investing in luxury assets. We understood that the 586% figure was from an article by Knight Frank published in 2020, which reported that over the 10-year period before the beginning of 2020, their Rare Whisky Index had risen by that amount. The 478% figure was from the 2021 Knight Frank Wealth Report, which stated that their Rare Whisky Index for the 10-year period before the end of 2020 had risen by that amount. We understood that The Knight Frank Rare Whisky Index was determined by tracking the UK auction prices of 100 bottles of rare Scotch whisky. We considered that because the ads were promoting London Cask Co.’s service of investing in whisky casks, consumers would understand the investment return claims to be for whisky cask investments. Therefore, the performance of bottles of whisky was not relevant to substantiate the claims. We had not seen evidence that whisky casks had the same investment returns as whisky bottles. Additionally, as referenced above, the main distillery London Cask Co. sold from was an Irish distillery. We had not seen evidence that the Scotch whiskies included in the Knight Frank Index were reflective of the whiskies London Cask Co sold and could achieve equivalent levels of returns. We therefore considered that this evidence was not sufficient to substantiate the claims.
We also considered that London Cask Co. had used the past performance of bottles of whisky to encourage consumers to invest in their whisky casks. Notwithstanding the above, ad (a) did not include information to make clear to consumers that past performance was not necessarily a guide for the future. Ad (c) included text in the footer that stated, “Past and current performance does not imply that future trends will follow the same or similar pattern”. However, we considered the placement of the qualification in the footer of the website was such that it was likely to have been overlooked by consumers.
Therefore, because consumers would understand the returns claims to be achievable on whisky casks bought from London Cask Co., and we had not seen evidence that that was the case, and because they had not made clear that past performance was not necessarily a guide for future performance, we concluded the investment returns claims were misleading.
On this point, ads (a), (b) and (c) breached CAP Code (Edition 12) rules 3.1 (Misleading advertising), 3.7 (Substantiation), 3.9, 3.10 (Qualification), 14.3 and 14.5 (Financial products).
2. & 3. Upheld
The CAP Code required that offers of financial products must be set out in a way that allowed them to be understood easily by the audience being addressed. It also required that marketers ensure that they did not take advantage of consumers' inexperience or credulity, and that marketing communications state the nature of the contract being offered, any limitation, expense, penalty or charge, and the terms of withdrawal. The CAP Code also required that marketing communications for investments made clear that the value of investments was variable and, unless guaranteed, could go down as well as up, and also that significant limitations and qualifications were stated and presented clearly. Marketing communications must not mislead the consumer by omitting material information, or by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information was information that the consumer needed to make informed decisions in relation to a product. We understood that the value of whisky cask investments was not guaranteed, and the whisky cask investment market was not regulated within the UK nor was it subject to the protections afforded by the Financial Services Compensation Scheme or the Financial Ombudsman Service. We considered the fact that whisky cask investments were unregulated, and also that there were fees associated with the purchase, ongoing ownership and exiting of the investment, as well as that there were terms and conditions to the purchase of a whisky cask, to be material information that consumers required in order to make informed decisions about London Cask Co.’s services.
With regards to ads (a) and (b), the headline claims, which stated “EARN AN AVERAGE OF 13%* PER ANNUM INVESTING IN WHISKEY**”, included asterisks which linked to qualifying text at the bottom of the page. The qualifying text included information that the return was an estimate and not guaranteed, and that investors should seek independent advice about the potential consequences of investing in cask whisky. We considered that while consumers would understand from this that a return of 13% was an average and not guaranteed, it did not include any information that the value of the investment could go down as well as up. We also considered that while the qualifying text stated that there were potential consequences when investing in cask whisky, it did not include information that whisky cask investments were unregulated in the UK. With regards to ad (c), the websites’ footer included a disclaimer that was similar to the qualifying text in ads (a) and (b), and also included information that cask whisky investments were unregulated and therefore did not have the same protection as regulated products. However, we considered the placement of the disclaimer in the footer was likely to have been overlooked by consumers. With regards to ad (d), we acknowledged that where an ad was constrained by time or space, the measures that the marketer took to make that information available to the consumer by other means were relevant when considering whether it was misleading. We understood that the ad linked through to the London Cask Co. website (ad (c)). However, as referenced above, we considered that the placement of the disclaimer on the website was such that it was likely to have been overlooked by consumers. We therefore considered that ads (a) and (b) had omitted material information that cask whisky investments could go down as well as up and that they were unregulated in the UK, and that ads (c) and (d) did not make sufficiently clear that the investment was not guaranteed or that it was unregulated in the UK.
We understood that when purchasing a whisky cask from London Cask Co., the purchase price included the cask itself, the New Make spirit (a high-proof, unaged spirit) filled in the cask, transportation of the cask to a bonded warehouse, and the storage and insurance of the cask for five years. We understood that, because the initial purchase agreement only included storage and insurance of the cask of whisky for five years, regardless of what consumers chose to do with their whisky cask at the end of that period, they would incur further costs. If they chose to continue the maturation of the whisky, an agreement needed to be made with London Cask Co.’s bonding partner to continue storing the cask at the bonded warehouse. There would be a fee to store it for the additional period. The consumer would also be responsible for arranging and paying for insurance for the cask for that period. If consumers chose to exit their investment, they could do so either through one of London Cask Co.’s four exit strategies, or by bottling the whisky. The exit strategies included selling the cask through London Cask Co.’s private investor club, whisky clubs, online whisky platforms or auction houses. London Cask Co. took a 5% fee from the profits made. While whisky casks were in bonded warehouses, they were not subject to VAT and duty. We understood that when cask whisky was bottled, the consumer would be responsible for paying VAT on the purchase price of the cask, paying duty on the cask, the cost of transporting the cask from the bonded warehouse to a bottling plant, as well as the costs to actually bottle the whisky. London Cask Co. offered a service to bottle the whisky and have it delivered to the consumer, but there was a fee for this. We therefore considered that, in addition to the cost for the cask of whisky, there were other upfront costs and ongoing costs throughout the ownership of a cask of whisky. We also understood that when purchasing a whisky cask from London Cask Co., there were terms and conditions to the service. These included, but were not limited to, acknowledging that the volume of spirit in the cask will reduce over time due to losses for sampling and the evaporation of liquid from the cask (known as the Angels Share). New Make spirit had to be matured for at least three years in a cask before it could be classed as whisky. During the maturation period the New Make spirit/whisky could lose alcoholic strength. In order to be classed as whisky, the spirit needed to have a minimum strength of 40%. There were also other terms and conditions including around London Cask Co. not being obliged to buy back casks of New Make spirit or whisky, stock availability, price and payment and bottling. We considered that there being fees and terms and conditions to using the service was material information that was likely to influence a consumer’s transactional decision and should have been made sufficiently clear from the outset. None of the ads included information that fees applied or that there were terms and conditions to the service. We acknowledged that where an ad was constrained by time or space, the measures that the marketer took to make that information available to the consumer by other means were relevant when considering whether it was misleading. We did not consider that ads (a), (b) and (c) were constrained by space in the way that London Cask Co. described. Ad (d) linked through to the London Cask Co. website (ad (c)). However, as referenced above, there was no information on the landing page to make clear to consumers that fees and terms and conditions applied. Therefore, because none of the ads, nor the landing page the ad immediately linked to in the case of ad (d), included information about fees and terms and conditions relating to investing in whisky casks, we considered the ads had omitted material information.
We acknowledged London Cask Co.’s comments that before a consumer could proceed with investing in a cask of whisky, they were informed of the risks of the investment and were provided with the terms and conditions. Nonetheless, in the absence of information to the contrary or because the information was not presented clearly, we considered that consumers would not have been aware that investing in cask whisky could not achieve guaranteed returns, that returns could go down as well as up, the investment was unregulated, and that there were terms and conditions and fees to the service. We therefore concluded that the ads had failed to set out an offer for a financial product in a way that allowed it to be easily understood by the audience being addressed.
On this point, ads (a), (b), (c) and (d) breached CAP Code (Edition 12) rules 3.1, 3.3 (Misleading advertising), 3.9, 3.10 (Qualification), 14.1, 14.2 and 14.4 (Financial products).
4. Upheld
The ASA considered that consumers would understand from the inclusion of the World Whiskies Awards 2021 logo in ad (b) that London Cask Co. had received an award. We understood that Boann Distillery, which was one of the distilleries that London Cask Co. worked with, had won the World Whiskies ‘World’s Best New Make & Young Spirit’ award for one of its spirits in 2021. Therefore, because the use of the logo implied that London Cask Co. had won the award when that was not the case, we concluded that ad (b) was misleading.
We considered that consumers would understand “AS FEATURED IN” alongside logos for The Guardian, The Mail on Sunday, News Anyway and The Times in ad (c) to mean that those newspapers and websites had chosen to run editorial features on London Cask Co. We understood that London Cask Co. had paid to have ads placed in those news publications. Therefore, because the use of the newspaper logos implied the news publications had chosen to run editorial features on London Cask Co. when that was not the case, we concluded that ad (c) was misleading.
On this point, ads (b) and (c) breached CAP Code (Edition 12) rules 3.1 (Misleading advertising), 3.7 (Substantiation) and 3.45 (Endorsements and testimonials).
Action
The ads must not appear again in the form complained about. We told London Cask Co. Ltd to ensure that their future ads did not quote average returns unless they held adequate evidence to substantiate the claims. We also told them to set out offers for financial products in a way that allowed them to be easily understood by the audience being addressed, including by making sufficiently clear that the value of investments in cask whisky was variable and could go down as well as up, that past performance was not necessarily a guide for future performance, that cask whisky investments were unregulated, and by not omitting material information about the fees and terms and conditions to use the service. We also told them to ensure their ads did not mislead by suggesting they had won an award or that news publications had chosen to run editorial features on them, if that was not the case.
CAP Code (Edition 12)
3.1 3.3 3.7 3.45 14.1 14.2 14.3 14.4 14.5 3.10 3.9
