A cask is porous. Over years, liquid passes through the wood and evaporates, and what is left behind is both less in volume and different in strength.
How much is lost
In Scotland's cool, damp climate the figure usually quoted is around 2% of volume a year. In hot climates — Kentucky, India, Taiwan — losses are far higher, which is why whiskies matured there reach a comparable degree of maturity in far fewer years and why a twenty-year-old is rare in those places.
Which evaporates, water or alcohol?
Both, in proportions set by the humidity of the warehouse. In damp air more alcohol leaves than water, so strength falls over time. In dry heat more water leaves, and the strength of the remaining spirit can rise. This is the same mechanism that makes cask-strength figures unpredictable.
Why it drives price
The loss compounds. A cask laid down for twenty-five years may have lost a third or more of its volume, and every year of that loss is carried by the smaller quantity that survives. The age on the bottle is also a statement about how much was given away to get there.
The devil's cut
The counterpart term: spirit absorbed into the wood of the cask itself rather than lost to the air, which can be recovered by treating the emptied staves.