NEW YORK • One amusing account of whisky's origin holds that it was invented by the Irish as an embrocation for sick mules.

Then the Scots learnt the knack of distilling fermented grain mash and discovered it was much more enjoyable to drink than rub on the skin of ailing animals.

Scotch has come a long way since then. Exports last year brought in £3.9 billion (S$6.9 billion) to the Scottish economy, with more exclusive single malts now making up 25 per cent of that amount, up from 18 per cent five years ago.

That increasing sophistication is reflected in a small but robust auction market for rare bottles of aged whisky, which have quietly gained the reputation of being a canny alternative investment.

Prices at auction in Britain, by far the biggest resale market for collectible whiskies, have risen 23.25 per cent over the past 12 months, according to Rare Whisky 101, a website that tracks sales of regularly traded collectors' bottles through its Icon 100 index.

By comparison, the equivalent benchmark Live-ex Fine Wine 100 Index of resale prices was 10.4 per cent higher over the corresponding period.

"Scotch is a globally cherished drink and the supply of rare bottles is diminishing because people actually drink it," said Mr Andy Simpson, a co-founder of Rare Whisky 101.

"Rarity drives the market, but that also keeps it small," added Mr Simpson, who estimated the entire value of annual sales in the international retail and British resale market for collector-grade whisky at £100 million to £120 million. By comparison, international wine auctions last year raised US$346 million (S$467.8 million), according to an analysis by the Wine Spectator.

Small-scale investors can get into the market for US$500 to US$5,000 for a bottle of potentially collectible whisky.

Among the lots sold on Aug 10 during a sale at the Glasgow auction house McTear's was a bottle of 1974 single malt from the Port Ellen distillery on Islay, which closed, or became what aficionados call "silent", in 1983. The whisky, bottled by the Scottish retailers Gordon & MacPhail, sold for a hammer price of £400.

In 2012, McTear's, which holds such sales 10 times a year, sold another bottle of the same Port Ellen vintage for £170, according to Rare Whisky 101.

"The older and rarer it is, the better. And buy silent. Silent is golden," said Mr Simpson, citing Port Ellen, Brora, Glenugie and Rosebank as defunct distilleries whose whiskies are now in vogue.

He described collector-grade whisky as a "10- to 20-year medium- term investment".

The high alcohol content of whisky, which ensures its longevity, makes old bottles less of a gamble than wine.

The most expensive lot at McTear's was a Macallan 1938 with a handwritten label - exactly the sort of combination of age and quirkiness that might make a Bordeaux buyer nervous. It sold for £5,500, above its high estimate of £4,500.

McTear's auction raised £84,000 plus an additional £20,000 in buyers' fees with about 95 per cent of the lots selling, showing that whisky can be a consistent, if quiet, earner for a regional auction house.

Whisky, like wine, is the type of commodity that lends itself to Internet trading and the vast majority of single malts auctioned in Britain are sold purely online.

Established in 2011, Scotch Whisky Auctions is one of the biggest of about a half-dozen such players, holding monthly auctions of 2,500 to 4,500 bottles at which consignors sell for £5 a lot and buyers pay just 10 per cent commission, undercutting the higher fees of live auctioneers.

Like many online salesrooms, Scotch Whisky Auctions was reluctant to release the total and the success rate of its latest sale, which ended on Aug 7, but three of the 4,198 lots sold for more than £10,000, led by the £17,500 paid for a presentation set of Mortlach 1939 - billed as the oldest single malt ever bottled. The sets were released by Gordon & MacPhail last year in 100 specially commissioned crystal decanters, priced at £20,000 each.

Such limited-edition malts aimed at collectors form the apex of both the primary and secondary Scotch whisky markets.

The Macallan, a Speyside distillery owned by the Edrington group since 1999, is the world's No. 1 "super premium" brand by value, according to International Wine and Spirits Research. It also represents about 25 per cent of the auction market, according to Rare Whisky 101.

In 2014, a Macallan 6-litre "M" Decanter by Lalique set an auction high for single-malt whisky when it sold for HK4.9 million (S$854,370) at a charity sale in Hong Kong.

In June, the Macallan released another collaboration with Lalique, The Peerless Spirit, a 65-year-old single malt limited to 450 bottles and priced at US$35,000 each.

Mr Geoff Kirk, director of prestige at the Macallan, said the United States and Asia were the biggest markets for the company's "Fine and Rare" single malts.

"In South-east Asia, it's more about consumption than display," said Mr Kirk, acknowledging that Scotch had yet to catch on in China the way it has in Japan and India, which both produce their own whiskies. "Cognac has been the spirit in China for the last 40 years. Corporate gift-giving was a huge part of the market."

The market for rare Scotch whisky, unlike that for France's most desirable wines, has not yet been galvanised - and destabilised - by speculative investment from China. This is partly because whisky, being more than 30 degrees proof, incurs high import duties and local taxes in Hong Kong and China.

Mr Daniel Lam, the specialist in charge of Bonhams' sale of whisky in Hong Kong, last Friday said about 90 per cent of the auction's 261 lots were entered by private sellers from the region. As those lots would not incur Hong Kong's 100 per cent import duty, auction prices tend be higher.

The star lot of the auction was a 50-year-old Macallan in a Lalique decanter, estimated at HK$280,000 to HK$320,000. It was released in 2005 in an edition of 470, priced at US$5,995. It sold for HK$420,000 to a Hong Kong collector in the room, who paid US$94,500 more in buyer's premium.

"Over the last year or so, we have seen a new group of buyers from mainland China, America, Russia and South-east Asia," Mr Lam said. "They're sensitive to price appreciation and want to look at other alternative investments."

He said his first Hong Kong whisky auction, in 2009, offered just 40 lots and attracted only 15 interested bidders. They now attract more than 100.

Whisky may look like an attractive investment, but inexperienced buyers beware: Do not store bottles on their side like wine. The stronger alcohol content can rot the cork and make it leak. Then all the whisky will be good for is embrocating mules.

NEW YORK TIMES