Podcast Summary: How I Invest with David Weisburd

Episode E241: How Spirits Became a $1 Trillion Alternative Asset Class
Date: November 13, 2025
Host: David Weisburd
Guest: CIO of InvestBev (Giuseppe)

Overview

This episode explores how spirits—especially whiskey—have emerged as a $1 trillion alternative asset class. Host David Weisburd interviews the CIO of InvestBev, delving into his career journey from an OCIO at RVK to pioneering funds that invest in aged spirits. The discussion breaks down the unique investment case for spirits, incentives and challenges within institutional investing, portfolio construction, fund scaling, and the evolving edge of data and AI in the industry.

Key Discussion Points & Insights

1. Institutional Investing Incentives & Consultant Dynamics

• Consultant Incentives:

  • Consultants and large allocators often prefer established funds to avoid personal or institutional risk, leading to herd behavior.
  • “If you propose something new, unique and different, if it performs well, you, you get no compensation for that. And if it performs poorly, you’re oftentimes could be considered the scapegoat…” (B, 01:52)
  • Portfolios gravitate toward the mean, resulting in missed opportunities for alpha from emerging managers.

• Identifying Innovative Consultants:

  • Look for consultants who have a track record of supporting differentiated strategies and are willing to create customized relationships (fee reductions, co-invest rights, etc.).

• Sourcing Managers:

  • InvestBev’s team self-sourced over 90% of their investments, seeking unique opportunities, even contemplating spinning out teams from larger firms.
  • “We really turn over the stones to find the new and interesting differentiated teams...” (B, 05:06)

2. The Spirits Investment Thesis

• Genesis of InvestBev:

  • Guest’s partnership began with industry veteran Brian Rosen; recognized the investment potential in alcohol, especially whiskey.
  • Noted that aged whiskey is akin to real assets like timber or real estate—but with the unique trait of improving (and appreciating in value) over time.

• The Case for Whiskey as a Real Asset:

  • Value increases as whiskey ages—older barrels command higher prices:
    • “The maturation of whiskey is you get a better product as time goes on.” (B, 06:53)
  • Tangible real asset—comparison to timber, but with historically higher returns and a product that improves with age.

3. Returns & Risk Characteristics

• Historical Returns:

  • IRRs have ranged as high as the 40s% in peak times, with more typical results in the high teens to 20s% range.
  • “...high times in the 40s% IRR. ...Returns in some of our vintages are going to be in the, in the 20s, potentially even in the, in the high teens.” (B, 08:03)

• Correlation & Diversification:

  • Kellogg School analysis shows almost zero correlation to equities, interest rates, or macro cycles.
  • “People drink in good times and bad, right? It’s a non-correlated category. And the data bore that out.” (B, 09:15)
  • Standard deviation of alcohol sales is half or less compared to traditional assets, offering lower volatility.

• Portfolio Fit:

  • Not always a ready-made bucket for alcohol in institutional portfolios; best fits within real assets or opportunistic allocations, depending on the investor's flexibility.

4. Educating the Market & Gaining Adoption

• Three-Part Education Arc:

  1. Convince LPs of category viability (“trillion dollar category”, uncorrelated, stable growth)
  2. Present the specific strategy (e.g., whiskey barrel aging)
  3. Make the case for the manager/team and their industry edge
  • Differentiation: Deep industry relationships (Bacardi, Molson, Coors alumni), unique deal flow, and exit strategy.

• Challenges:

  • Asset managers must “pick their hard”: compete in established markets or educate and create a new one—both are difficult but potentially lucrative.
  • “There are huge rewards for people that start marketing... But there is no free lunch.” (A, 14:15)

• Adoption Patterns:

  • Early adopters are both individuals and organizations, but individuals drive organizational innovation.

5. Economics of Spirits Production

• Cost Breakdown:
  • Barrel: ~$250 (wood) + $200 (materials/labor) = $450 cost-basis
  • Wholesale: InvestBev buys at ~$750/barrel
  • Sale (after ~4 years aging): ~$2,000/barrel
  • Net: ~27% IRR, fits their fund model (B, 18:14)
  • After bottling & margins along the three-tiered system, a $7 bottle may retail for ~$50.

6. Building and Scaling a Spirits Fund

• Lessons Learned:

  • Staffing: More operational hires early would have enabled faster growth and capital deployment.
  • Early funds were under-sized due to uncertainty; led to positive oversubscription but also limited subsequent fund jumps to preserve credibility.
  • “If we had a crystal ball... I think we would have invested even more upfront. We would have built a bigger team, we would have built more resources and we would raise more money earlier...” (B, 20:34)

• Fund Scaling:

  • Doubling fund size between vintages is seen as acceptable growth—for example, $100m to $200m to $400m.
  • Larger allocations and co-investments help empirically prove market size and manager’s capacity.

• Launching Credit Products:

  • Caution urged in expanding to private credit—kernel of overlap in spirits via inventory finance, but otherwise, new strategies require dedicated teams and domain expertise.

7. Data, Technology, and AI in Spirits

• Operational Technology:

  • Early investment in data collection, valuation modeling, and operations would have streamlined scaling.
  • “Had we brought the rigor... to get more precise on pricing, I think we could have been even more aggressive than we ultimately were.” (B, 28:09)

• AI Applications:

  • Used for researching potential clients and analyzing product characteristics (e.g., Mashville recipes).
  • Exploring AI to spot emerging trends (like the hard seltzer surge) and as a “third-party” devil’s advocate in investment committees.
  • “You do get some group think sometimes as a team ... you get an inanimate being... that can be really useful.” (B, 33:55)

8. Advice from the Field & LP Relationships

• Key LP Feedback:

  • “No investor is ever upset about returning their capital.” (B, 29:27)
  • Even returning capital at 1x over many years can win trust and credibility with sophisticated LPs.

• Current Industry Sentiment:

  • Liquidity is prized—capital tied up in slow distributions is a challenge across private markets.

Notable Quotes & Memorable Moments

• On Institutional Risk Aversion:

  • “There’s not a lot of incentive for either the consultant or, or the investment staff to take those risks.” (B, 01:52)

• On Aging Whiskey as an Investment:

  • “The good itself was actually getting better over time.” (B, 06:40)

• On Alpha and Sourcing:

  • “Your execution. Sourcing like that is your alpha.” (A, 15:09)
  • “Everyone wants that financial trade but they don’t want to capture a beta. They, they want to capture alpha.” (A, 15:09)

• On Early Returns:

  • “No one is going to be upset about getting money back.” (B, 29:27)

• On AI as a Contrarian Partner:

  • “You do get some group think sometimes as a team ... you get an inanimate being... that can be really useful.” (B, 33:55)

• On Market Education:

  • “The first of those is... the most difficult. Once you get to... the strategy on the bourbon barrels is really compelling.” (B, 12:05)

Important Timestamps

• 00:10–01:30: Consultant incentives & unique sourcing at RVK
• 05:44–07:54: Genesis of InvestBev and investing in aged whiskey
• 08:03–09:15: Discussion of historical returns and correlations
• 10:49–12:05: Asset allocation and fitting spirits into an institutional portfolio
• 13:56–16:49: On educating the market, picking “your hard”, and alpha generation
• 18:14–20:25: Economics of spirits production; three-tier system
• 20:34–22:06: Fund scaling dynamics and lessons learned
• 28:09–29:22: Technology, modeling, and use of data
• 31:00–31:36: LP relationships, DPI, and liquidity in the market
• 33:05–33:55: How InvestBev is using AI for research, trend-spotting, and decision-making

Tone & Language

The conversation is candid, pragmatic, and reflective of real-world institutional investment decision-making. Both host and guest share actionable insights, personal anecdotes, and maintain a conversational yet analytical tone throughout.

For listeners seeking a breakdown of spirits as an alternative asset class, and keen to understand both the investment mechanics and institutional psychology behind new asset adoption, this episode is a must-listen.