New fund taps into American single malt boom

The founders of a new fund dedicated to American single malt discuss the category’s huge growth potential and their goal to buy more than half of the inventory in the US to meet future demand.

Launched in January to coincide with the official designation for American single malt (ASM), the ASM Capital Whiskey Fund aims to elevate the category globally through its barrel investment model.

The ASM fund was developed by father-and-son duo, Rob and Hunter Robillard, alongside other experts across the spirits and investment industries.

Rob Robillard was a former engineer who began home distilling as a hobby. He launched Cabin Fever Maple Whiskey in 2007, which was sold to Diageo five years later.

Meanwhile, Hunter Robillard studied business and finance and comes from a whiskey investment background. He has worked for Custom Spirits, his family’s alcohol consulting firm with its own portfolio of spirits brands.

After the contract with Diageo ended, the duo entered the whiskey investment space and started buying barrels, Hunter explained, which were then sold to their contacts in the industry.

Light bulb moment

On the creation of the fund, Hunter said: “During that process, in 2022 the TTB [Alcohol and Tobacco Tax and Trade Bureau] announced that they were going to start creating guidelines for American single malt. And when they did that, all of a sudden, we started getting a ton of inbound requests from new brands that were looking for aged single malt.

“But because it wasn’t like a designated category yet, there really wasn’t a lot of people out there making single malt or had large stores of aged single malt. And that’s when the light bulb struck. If this new category does become ratified, eventually there’s going to be a lot of new entrants into the space, and there’s going to be a big need for supply.

“And that’s when we started working on this vision for ASM Capital.”

The founders spent a year planning, establishing relationships with distilleries and setting out how the new business would be structured.

Hunter explains that ASM Capital is a private placement fund, which means that it can only be sold to accredited investors, and friends and family.

He notes that historically whisky investment has been targeted to individuals, but with ASM, the founders are taking a “different approach” by targeting the institutional investment channel.

At the end of 2024, the fund raised nearly US$10 million, with the goal of securing US$250m by 2026.

“We’ve got close to about US$50-60 million in due diligence right now, that’ll close this quarter which we’re excited about, and that’ll act as a nice springboard to start raising the rest of the capital in the fund,” Hunter said.

His father is keen to stress that the company is “not just buying new make, waiting five years and hopefully it sells”.

Rob explained: “We’re already doing exits now. So we’re already bringing in capital and showing like, ‘Hey, we’re exiting some of these barrels now’. So we’re buying two-year-old, we’re buying four-year. Our goal is to try to buy more than half of the inventory in the United States and start from there.”

He added: “We’re orchestrating the exits to put these barrels in the best position possible for our investors. [It] goes a long way when these when these institutions are considering using us.”

How the fund works

Explaining how the ASM Fund is different to other whisky investment companies, Hunter says there are two areas that set their business apart: structure and team.

“Most whisky investment companies in the space today are basically cash brokers or barrel brokers, and so you as the individual investor, essentially own your barrel outright. So you’re the beneficiary owner of a single barrel, or a block of barrels, or a couple of pallets of barrels, right? And with that model and structure, those companies are marking up the barrels and selling it to investors.

“So there’s pluses and minuses to each type of structure. The minus with that structure is you as the investor are getting a higher entry price into the asset, which in this case is barrels of whiskies, right? So those companies might buy a barrel at US$1,000 a barrel and sell it to you for US$2,000 a barrel.

“With our structure, we’re a regulated product. So we’re a fund – a regulated investment vehicle – and we can’t mark up the product. So if we buy a barrel at US$1,000 our investors are getting in at that ultra-wholesale price of US$1,000 – they’re getting it at the actual value that it sells for.”

Hunter adds that the fund operates through a general partner (GP) carried interest, meaning that his business won’t make money until the backers get their investment back.

“We get to share 20% of the profits that the investor makes after they’ve made 100% return on their capital,” he states. “And so our incentives are aligned. You get all of your money back first, until we start to get any money as the GP, as the managers.”

The fund is a five-year vehicle, with all of the capital returned back to investors within five years, but backers will start receiving proceeds back within a year.

“Every time we make a deal or transaction where we sell barrels to a brand or a distillery takes on that options contract, we take the profits and we distribute it out to the investors,” Hunter said. “So the life cycle is five years, but you start getting money back, let’s say year one, every year over the course of that five-year period.”

Due to the fact that it’s regulated, the ASM Fund also has to have an auditor to audit not only the financials but the assets, Hunter explains. Through this process, the auditor visits the barrels and checks the inventory, unlike in other direct ownership models that don’t have these regulatory requirements, he points out.

Hunter also notes that the team behind the ASM Fund are experts in the whisky sector, including Scott Sciberras, Ross Duignan and Ryan La Valle.

Diversified portfolio

The ASM Fund works with a number of distilleries directly across the American single malt industry, some of which are high volume and some that are smaller and more specialised, with the aim of having a diverse assortment of producers.

Hunter highlights the similarities to the Scotch sector, as more “regional American single malts” enter the market.

“You have Texas American single malt, which is very patriotic in cowboy Texas. And then you see the Rocky Mountains, which is aged at elevation in the mountains with beautiful water that comes off the Rockies. And so we’re starting to see this regional split too – we’re working with regional distilleries that cater to brands in those regions.”

The ASM Fund has recently started working with Ohio-based Middle West Spirits, the “sixth-largest distillery in North America and a pioneer in the single malt space” that has been making American single malt for more than a decade. The company now has a long-term partnership with Middle West, buying barrels from the distillery last year.

The ASM Capital Whiskey Fund buys mostly new make spirit as it can provide the highest return, then holds it for two to four years as the “quality of the whiskey is getting better” says Hunter. A minority of the time, the company will buy pre-aged whiskey, if for example, a distillery is in distress and is trying to raise capital.

“We might come in and buy that three-year-old single malt, but we’re getting it at a discount to the market value. We only hold it for six months or a year, and then we sell it once it becomes four years old, for example,” Hunter noted.

ASM’s growth potential

On whether they would consider moving into other categories, Hunter explains that the main priority is on American single malt as “there’s a lot of growth potential”.

Hunter notes: “We’re 100% dedicated to American single malt, so it kind of seems like we’re putting all our eggs in one basket, but American single malt is actually a bigger category than people realise.”

He highlights that American single malt has “basically been growing close to double digits annually, including last year, and this year, it’s going to be hopefully even more with the recent ratification”.

Citing IWSR data, American single malt has outpaced the global whisky market, which rose by a compound annual growth rate (CAGR) of 9.17% between 2018-2024. American single malts rose by 85% in total over that period – making the segment the ‘fastest-growing whisky sector’.

The volume of American single malt is projected to reach nearly 170,000 nine-litre cases by 2028 (IWSR 2024 figures). The category’s value is expected to hit nearly US$120,000 by 2028, up from US$50,000 a decade earlier.

Rob highlights that the recent rule for American single malts was “ground-breaking” as the TTB “don’t do this very often”.

“So our investors, they have a chance to get in early on something that’s potentially something that could be just as large 20 years from now,” he added. “And here they are getting in on the ground floor. It’s hard to overstate just the magnitude of what the TTB did with opening up this new category for us, and that’s both in the United States and internationally as well.”