Whiskey valuation over time

[Ryan_W]

What is a good way to put value on a whiskey as it ages in the barrel? 

I know how much we spent in raw materials, labor, and utilities but I don't know how to account for age. I'm assuming that on our books we can value a 5 yr Whiskey over a 1 yr Whiskey, I just don't know how to get to that number. 

Any suggestions or is the value arbitrary and we just put whatever value we think it should be worth.

 

[Bier Distillery]

It is worth what you sold it for.

Other than that, it depends on what you want to use the value for.  At minimum it is worth your raw cogs + the value of your storage space.  A barrel might take up $60 in storage space per year, so a five year is cogs + $300.  It is probably actually worth more than that, but someone else could make it for the same amount.

[Foreshot]

For commodities use mark to market: https://www.investopedia.com/terms/m/marktomarket.asp

Research what other similar types of whiskey cost in bulk for the same age. Call up MGP or one of the many other bulk suppliers. Get quotes. Use them to create an average and there you go. If you use an average versus a premium it's easier to justify if someone were to look at your books. Do not use final sale price per bottle, that's not justifiable as your product is not bottled and ready for sale.