Vinovest Capital Whiskey Fund

July 3, 2024
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Vinovest’s Capital Whiskey Fund on Alto Marketplace opens the door for individual investors to gain exposure to whiskey investments

Investors are increasingly moving to private assets, where AUM has more than doubled in just over ten years. Sectors like venture capital, private equity, and real estate are increasingly making mainstream news headlines, and with the newfound retailization of alternatives, individual investors are increasingly searching for new ways to diversify portfolios. One such way can be to uncork a portfolio’s potential with fine wine and rare spirits.

Research indicates an ever-increasing interest among individual investors in allocating more to alternatives, but high barriers to entry have historically limited access. Until recently, this alternative asset class has been like many alts: difficult to access except for those with considerable resources and network connections, like institutional investors and ultra-high-net worth individuals, or UHNWIs for short.

Alto and Vinovest have joined forces to lower barriers to access for individual investors with the Vinovest Capital Whiskey Fund SPV, an investment vehicle offered by Alto Capital that allows individual investors to invest in the Vinovest Capital Whiskey Fund on Alto Marketplace, registered as Alto Securities.

Vinovest grows investor capital with three pillars of expertise: fund management, technology, and fine wine and spirits

To understand the Vinovest Capital Whiskey Fund, it may first be helpful to meet the Fund’s General Partner (GP), Vinovest.

Led by co-founder and CEO Anthony Zhang, Vinovest’s strength is in their three-pillar talent stack, combining expertise in active fund management, technology, and fine wine and spirits.

Anthony has successfully founded and sold two previous VC-backed startups, where he honed his skills in managing growth and technology.

Together, the Vinovest team has spotted an opportunity in fine wine and rare spirits. Values of the wine and whiskey markets have grown in the last decade: 149% and 322%, respectively.

Vinovest is increasing their involvement accordingly. They’ve accumulated $100m+ in AUM through their direct investment platform, 75% in wine and 25% in whiskey.

Source illustration by Storyset

With that momentum, the group’s wine trading team has boosted their relationship-building efforts and grown a global network. Specifically, they create and nurture professional, trusting friendships with vineyards and whiskey producers. But they also work hard to know the people in the sector’s support services, such as insurers, legal teams, and distribution brands.

Vinovest is also improving and standardizing the many processes involved in both buying fine wine and rare spirits and exiting those acquisitions. They’re also working to perfect the value-add growth opportunity that happens during the holding period. For example, as product is made and allowed to age, Vinovest handles tasks like storage, quality control, and insurance management. They’re doing all this while inviting retail investors to participate passively through new vehicles like the Vinovest Capital Whiskey Fund.

The Vinovest Capital Whiskey Fund creates a compelling new entry point for investors interested in whiskey

The Vinovest Capital Whiskey Fund is a $30m, five-year, closed-end vehicle in the growing whiskey market.

Source: Statista, February, 2023

That growth has resulted in demand increases, pressuring distilleries and their service providers to make more whiskey. But any production increase requires substantial capital. In the past, when investors have stepped in and answered the call to help, their investment has been rewarded when they exit.

Understandably, this may sound interesting to retail investors, as the Vinovest Capital Whiskey Fund offers access to a category that has been known for high barriers to entry, complicated regulations, and niche logistics related to storage and insurance. Vinovest addresses these challenges so that retail investors can finally participate more easily in whiskey investment strategies.

The Vinovest Capital Whiskey Fund gives retail investors a head start by taking on the legwork. The Vinovest team is capitalizing on their relationships within the production, storage, management, and distribution process to choose and engage the best service providers on investors’ behalf. The Fund also extends Vinovest’s professional custody solutions and insurance to their own investment partners. As for the complex processes of buying and selling the asset, they’re handling that on behalf of investors, too.

5 reasons investors may consider allocating capital to the Vinovest Capital Whiskey Fund

As an investor, you need to do your own research. One way to get started is to learn why an asset, fund manager, or even a specific fund has found traction in its sector amongst broader market trends.

For example, the continually increasing global consumption of alcohol, which is forecasted to experience a new peak in 2028, may be helping to drive adoption of fine wine and rare spirits investments. Among the varieties of investment-grade and collectible spirits, whiskey is seeing the most business growth, with the number of US craft distilleries quadrupling in the past decade. Additionally, analysts note that younger generations are drinking less beer and instead favoring cocktails.

Sector growth is only one of many reasons investors are complementing their other diversified assets by participating in the Vinovest Capital Whiskey Fund.

Here are four more.

1. Whiskey naturally matures over time, as investments are intended to do

Whiskey typically takes 3-6 years to mature, depending on the type. Investors can go into the Fund expecting the rare spirit to be purified through the asset’s natural time horizon, developing in color, viscosity, and flavor profile.

Source illustration by Storyset

Meanwhile, when pricing and valuing assets, Vinovest’s management team is constantly monitoring various currency risks. They strategize for the varying buying powers of the US dollar, the British pound, the Euro, the Australian dollar, and more, calculating those data points into the (denominated) likelihood of low acquisitions and profitable exits on investors’ behalf.

Participating in the Vinovest Capital Whiskey Fund allows investors to gain exposure to the potential for passive appreciation of the underlying whiskey assets, because of its physical nature, while the Fund manager handling its strategy is anything but passive.

2. Active management and ongoing refinement of the Fund strategy

The Fund’s managements team aims to…
  • Target categories of whiskey more intelligently
    Flexible allocations of the spirits sold within the Fund’s management allow for exposure to a variety of segments like American Single Malt, emerging Scotch, Bourbon, and Irish whiskey.
  • Leverage its existing relationships to help overcome challenges that naturally arise within the sector
    For example, the shortage of new-make American Oak barrels has resulted in a new barrier to entry, since the biggest conglomerates are scooping up supply before it’s available to smaller firms. Vinovest’s current relationships make them the only US company known to be able to offer new-make barrels to the public.
  • Utilize the absolute best quality control measures available
    Vinovest knows that high-quality inventory increases value (and therefore exit pricing), so they store and insure the product according to the highest and most transparent authentication principles.
  • Acquire and sell whiskey designed for the masses, a largely untapped market
    This move demonstrates that Vinovest practices what they preach: diversification by way of “function over form.” Decisions like this are to help increase liquidity potential and mitigate some portfolio risks.

3. Vinovest Capital Whiskey Fund is employing a novel approach for the sector

The management team has strategized to source whiskey based on supply and demand in a number of curated, closely monitored markets, compared to longstanding norms of investment based on rarity. This new approach means that the asset can be sold to buyers of all types, purchasers intending it for high-end use, to brands using the barrels for ready to drink canned cocktails.

This spectrum provides flexibility to the Vinovest team, allowing them to choose between potential buyers while negotiating terms. These numerous exit options can make for a resilient Fund strategy.

The Vinovest Capital Whiskey Fund also stands out for facilitating the first-ever managed fund to include Scotch and American whiskey in one entity, in addition to Irish whiskey.

4. Whiskey is a tangible asset

Barrels of whiskey can be seen and touched. The asset’s existence and value aren’t theoretical, and size, location, age, and weight of a bottle of whiskey are real values.

If a threat ever endangers the asset, the item’s physical nature reveals clear lessons to ideally prevent the issue in future investments. Recipes, temperatures, barrel materials, and other tangible elements of the resulting whiskey product can be adjusted to safeguard or help increase its future value.

Vinovest stands out amongst the fine wine and rare spirits investment sector

If you’d like to learn more about investing in fine wine and rare spirits, Vinovest is a place to start that self-education. As fund managers, they pass many preliminary tests. Interestingly, the Vinovest Capital Whiskey Fund project showcases these outstanding qualities. Here’s how.

Data-driven market analysis and decisive leadership

It starts with smart analysis, valuation work, and targeting. Anthony and his team leverage analysis technology to make data-driven decisions that mitigate risk and increase the chances of well-timed acquisitions and divestitures. Their data analysis tools and acumen combine to give the group the ability to spot trends and the willingness to get ahead of them.

As an example, consider the burgeoning, opportunistic exposure of whiskey itself. Few, if any, wine and whiskey investment platforms have spotted or acted on this trend as decisively as Vinovest. They’ve spotted a trend (increasing global consumption of whiskey) and found the fastest-growing segments within that trend (for example, American single-malt whiskey). Then they located the most undervalued, high-demand entry point to invest in, and they’re offering that entry point to retail investors via Alto Marketplace.

As more retail investors enter the alternative assets space, they’re finding that the tools and processes typically used by general partners and their institutional investors are lagging. They’re either outdated or insufficient for real-time market analysis. It’s refreshing to see Vinovest’s leaders well-versed in the technologies available to them, and their willingness to act on what data they uncover.

Already operational relationships that grow value

Earlier we saw that one way the Vinovest Capital Whiskey Fund stands out from other investment options is in the way Anthony’s team capitalizes on the mutual trust they’ve built within long-standing industry relationships.

Trust only happens when relationships are grown with as much care and intentionality as the asset itself.

The Vinovest team devotes ongoing time and energy into building relationships with master distillers, blenders, contract distillery owners, and quality control inspectors. Those relationships hold no value to investors until it’s time to commit capital to a whiskey fund, at which point the mutual trust they’ve built suddenly becomes highly important.

Trust shows that people working on behalf of investors — people at every stage of the supply chain — are putting more than money on the line. They’re putting forward their reputations, many of which took decades to build. In many cases, a business owner or operator’s character is their most valuable business asset. Vinovest recognizes and rewards that investment.

Consider whiskey an opportunity: Alto and Vinovest can get you started

Alto offers access to alternative assets with their decorrelation from public markets and potential for returns, but we also appreciate alts for their ability to spark conversation and bring people together. Our research shows that about half of our investors choose diversification vehicles based on their passion and interests just as much as for the potential for returns. And very few assets inspire as much conversation as the opportunities seen in different types of whiskey today.

The Vinovest team has done foundational work that is needed for a potentially successful investment opportunity. They’ve leveraged their many years of experience in trading wines for profit to diversify into a high-growth market that’s continuing to accelerate and reward the capital allocators who use data to navigate challenges intelligently — and with integrity. They’ve built the relationships needed to identify and capitalize on smaller operational advantages that less astute fund managers would miss. And they’re offering the fruits of their work to the public for mutual benefit.

The Vinovest Capital Whiskey Fund itself is a culmination and expression of these qualities: An emerging market with capable leaders. As a tech-enabling partner, we at Alto want you to be aware of the ways Vinovest can serve investors in the whiskey space. To learn more about how to participate in the Vinovest Capital Whiskey Fund as well as other opportunities Vinovest brings to investors, visit Alto Marketplace today.

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