Prospero Responds to WSJ Article

January 17, 2025

Hi Friends and Investors,

From the Barrel to the Bottom Line, a lot of conversation can be made around a bottle of Whiskey. I hope that through your introduction to Prospero Spirit Funds, you are starting to notice that Whiskey is everywhere, even in the news.

A few weeks ago, we shared the attached Barron’s article “Alternative Investments: The Super-Rich are Buying…Whiskey Barrels…” that highlights the strong investment interest of family offices and high-net-worth-individuals (HNWIs) in the whiskey market, and we wanted to follow up with some additional context in light of a more recent Wall Street Journal piece, "America’s Bourbon Boom…"

While the attached article focuses on the supply/pricing pressures from the cyclicality of the current bourbon market, we believe it overlooks the ongoing opportunities to invest in both new-fill and aged barrels at particularly low prices for investors. At Prospero Spirit Funds, we remain committed to providing market insights, and we will continue to share all relevant whiskey market news—both positive and negative—so you can stay informed and confident in your investment decisions.

Please read below for our perspective on the current market dynamics and the long-term investment opportunities we see:

Refuting the "Bourbon Boom Hangover" Narrative: Why Prospero Spirit Funds Sees Opportunity in a Transitory Market

The article “America’s Bourbon Boom…” published by The Wall Street Journal paints a somewhat gloomy picture of the current Bourbon industry, with sales slowing and inventory piling up. While it's true that some market correction may be taking place, Prospero Spirit Fund’s investment philosophy remains focused on long-term value, making us believe the "hangover" is a sign of the market maturing/evolving, not crashing.

1. A Healthy Market Correction: Opportunity in a Downturn

Prospero Spirit Funds (PSF) believes that the so-called "end" of the bourbon boom is actually a healthy, if somewhat overdue, correction. The rapid growth in the past few years was unsustainable, and now the market is simply adjusting to a more balanced pace. For investors like PSF, this creates an opportunity to acquire inventory at more favorable prices, setting us up for long-term success. The current environment presents an ideal moment to invest strategically, while others may be hesitant or uncertain

2. Partnering with the Best in Bourbon: Quality Over Quantity

In challenging times, there’s always a flight to quality. And at Prospero Spirit Funds, we’re all about quality. Our strategy focuses on partnering with leading distilleries in Kentucky—like Bardstown Bourbon Company, Green River, Lux Row, Castle & Key, Log Still, and Western Kentucky—ensuring we have access to the highest quality inventory. While the market corrects itself, we have greater confidence because of the premium inventory we’re securing. The headlines may scream "doom and gloom," but the reality is that consumers are still deeply engaged with Bourbon. People are still waiting in line for those special releases, and the demand for premium products remains strong.

3. Bourbon Tourism and Consumer Engagement Are Thriving

Despite the market’s current hiccups, Bourbon tourism is still booming, and the love for the spirit is as strong as ever. Enthusiasts are actively engaging in tasting events, distillery tours, and, of course, those highly coveted releases. The demand for top-shelf bottles has not disappeared; it’s just evolving. People still love their whiskey, and the demand is shifting towards the premium, aged varieties. In fact, Bourbon’s appeal continues to grow across the globe, with new demographics embracing the spirit as a symbol of sophistication. So, while some might say the market is slowing down, Prospero Spirit Funds believes it’s simply maturing into a more refined, quality-driven space.

4. Warren Buffett’s Maxim: “When Others Are Fearful, Be Greedy”

We remind investors of Warren Buffett’s famous words: “When others are fearful, be greedy.” When the market is uncertain and others are pulling back, that’s exactly when PSF is looking for opportunities. The correction is allowing us to invest in inventory at better prices, positioning ourselves for success when the market stabilizes. So, while some are taking a more cautious approach, we’re capitalizing on the market's evolution, confident that our patience and timing will result in strong returns. If this were the stock market, we’d be the ones buying blue-chip Bourbon at a discount.

5. Aligning with the Best: Investment Philosophy in Action

Prospero Spirit Funds wholeheartedly agree with the philosophy articulated by our partner Bardstown Bourbon, Kentucky’s largest contract distillery, which continues to invest and expand even in uncertain times. As President Pete Marino put it, “Every period of disruption provides opportunities. We’re investing through the downturn.” We share this mindset. Our nuanced approach means we’re strategically positioning ourselves for future growth, despite temporary market fluctuations. We may not be the loudest voice in the room, but we’re certainly the most patient and disciplined—and when it comes to Bourbon, that makes all the difference.

6. Our Conviction: Patience, Discipline, and Long-Term Value

Prospero Spirit Funds has a rock-solid conviction in the long-term potential of our investment strategy. We’re not swayed by the latest market noise, and we’re not in a rush to capitalize on short-term trends. Our approach is focused on acquiring premium barrels, letting them age to perfection, and letting time do its work. We are confident that, as the market matures and consumer demand grows, our patience will be rewarded. In fact, we’re more excited about the future than ever before—it’s like letting a fine Bourbon age in the barrel. Great things take time.

7. Diversification among whiskey types

Prospero Spirit Funds offers investors distinct investment opportunities not only in Bourbon, but also Rye, Scotch, and Irish Whiskey. We even have a separate fund for 10+ year old barrels / casks for ultra-rare opportunities called the Collectible Spirits Fund. Note that each of these Funds has up to 10% flexibility to invest in other whiskey types. One of the reasons for this dynamic product offering is to take advantage of any short-term dislocations in any of the underlying whiskey markets. Prospero Spirit Funds views the current dynamics of the Bourbon market to be just such an opportunity for our investors in both the Bourbon Opportunity Fund and our other whiskey investment offerings.

Conclusion: Why Prospero Spirit Funds Is Positioned for Long-Term Success Despite the current correction, we remain bullish on the future of Bourbon as both an asset class and a beloved consumer product. The market may be experiencing a temporary dip, but we believe it’s merely recalibrating to a healthier, more sustainable growth trajectory. Our focus on quality, strategic partnerships with top distilleries, and disciplined, long-term approach positions Prospero Spirit Funds to not just weather the storm—but to emerge stronger as the market stabilizes. While others may focus on the "hangover," Prospero Spirit Funds is strategically positioned for long-term success and value. Prospero Spirit Funds: Distilling Value one barrel at a time…I hope it was helpful to hear our perspective on current whiskey industry dynamics!

Cheers,

Ben

Check out the articles using the links below:

Barron's: https://www.barrons.com/articles/alternative-investments-super-rich-marinas-whiskey-1f4035af

WSJ: https://www.wsj.com/business/americas-bourbon-boom-is-over-now-the-hangover-is-here-3e9961d7