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TNbourbon
01-22-2007, 19:13
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TNbourbon
01-22-2007, 19:27
Many among us consider the current bourbon landscape as a "Golden Age", with many fine, well-aged bottlings -- and even desireable bottlings appearing from non-distilling, independent bottlers. It results, largely, from a whiskey glut accumulated during an industry sales slump which began in the late-'50s and continued to the '90s. Even today, it's the market for premium bourbons which is booming, while standard bottlings sales remain stagnant.
Does the appearance of these 'premium' bottlings indicate that the glut is over -- with all the 'extra', well-aged bourbon disappearing into them -- and that future sales will rely on a return to the standard bottlings and current distillation?
How, for example, can Buffalo Trace -- with each one of its whiskeys on allocation (limited sales to distributors/regions) -- continue to sell everything it can bottle AND sock away barrels for long aging? Will brands disappear so that distillers can allocate their limited barrels into the remaining ones? Will new distillers appear to supply enough quantity to gap the difference between current and anticipated future demand?
Discuss please.

SBOmarc
01-22-2007, 19:34
From waht I have gathered from my readings I doubt that we can rely on any new distillers to address this issue. Everytime I here that discussed it is accompanied by "don't hold your breath".

Sometime ago I recall a list of all of the whisky being stored by the various distillers. I could look it up but that same question was being asked at that time.

Gillman
01-22-2007, 19:38
I think this means that the old arts of batching and vatting will come to the fore again.

If there isn't the luxury of filling up those KC bottles with, say, 10-12 year old whiskey, use younger whiskey (just at the legal nine year point for most of it) but blend in, carefully, a little older whiskey to give it style and class. The whiskey may not taste like it did when first released (which whiskey does, really) but it may be as good.

I must confess that I found this current KC a little astringent and not what I expected. Maybe it is just this bottle.

Gary

ThomasH
01-22-2007, 19:53
All of the above may very well be true. However, if the amount of extra aged bourbon coming to market diminishes to levels below what they are now, upward pricing pressure is almost certain to follow. Add to this the fact that consumption on the export market will and to a certain extent already has risen and will only add to this pricing pressure. There is already a shortage of certain scotch whiskey looming on the horizon due to one simple factor: rising consumption in China. I recently read an article that stated if China's per capita consumption of scotch reaches that of the US, it could easily outstrip the supply of scotch that is now aging in warehouses in Scotland. Something to seriously think about. I don't really consume at a rapid rate and have nearly enough to last me until retirement sets in. Becomiing used to regular consumption of premium brands may become quite an expensive proposition compared to now!

Thomas

ggilbertva
01-22-2007, 19:59
All the more reason to increase the size of our bunkers...buy buy buy!!

cowdery
01-23-2007, 15:48
Extra aged bourbons have become part of the landscape and all of the distilleries are making sure they have supplies in the pipeline to meet that demand. Since it's hard to exactly predict demand so far into the future, distillers are happy if the demand is just a little bit stronger than the supply.

The current tightness in supplies of whiskey 8+ years old likely will abate somewhat as steadily increasing production catches up with the demand curve.

As goes scotch so will go bourbon, probably. There have been many predictions of a looming shortage of both, due especially to growing demand in Asia, but some of that is wishful thinking. A solid growth curve that allows all of the world's whiskey producers to operate at capacity, steadily increase their capacity, and sell everything they can make at a tidy profit is good for them and, ultimately, good for us. The whiskey glut was fun while it lasted, but it wasn't good for the long term health of the industry. This is better.

The people who get hurt in this are the independent bottlers, especially those who relied on the spot market. A few years ago you could make a business out of buying up extra-aged whiskey cheap and selling it for a good profit. Now that the market for extra-aged whiskey is established, the producers are going to keep it for themselves. Extra-aged bulk whiskey today isn't cheap if it's available at all.

As for bunkering, some of the current bargains in extra-aged bourbon, such as Weller 12 and Elijah Craig are likely to be where we'll see future price increases, assuming current trends continue. Beam has been selling Knob Creek cheap to build up volume and share, but that may taper off in the not too distant future.

Although there are no significant new producers entering the market and it seems unlikely that any new distilleries will be built or taken out of mothballs in the foreseeable future, many current producers are increasing their capacity, not dramatically but steadily. Overall bourbon production is increasing at about 5% per year.

melting
01-23-2007, 16:08
I think it's kind of humorous that you think there is going to be some sort of bourbon shortage. What's so hard to understand about selling all of what you bottle while keeping some behind? If people want the premium bottlings they will certainly be produced.

As for the possibility of significant price increases, I wouldn't worry about that either. If the price even comes close to the price of a decent scotch, which do you think the consumer is going to purchase. I'm not talking about dedicated bourbon drinkers, it's the average joe that drives profits.

I guarantee much more Highland Park 15 year old gets sold than any of the high end bourbons in the same price range. Perception is everything to the casual drinker. Scotch = higher quality than american whiskey in any of it's forms. If these folks think that they are going to have pricing power then I'd suggest they seriously improve their marketing campaigns. Maybe an add every day in the Wall Street Journal next to the Balvenie add would help. Yeah right.

Chris

BourbonJoe
01-24-2007, 17:35
Scotch = higher quality than american whiskey in any of it's forms.
Chris

Blasphemy and:horseshit: . Just my opinion.
Joe :usflag:

melting
01-24-2007, 18:06
Just for the record I was certainly not speaking for myself when comparing scotch and american whiskeys. I will, however, share some observations that I'm sure most of you are familiar with already.

I work at a typical blue collar factory in the central Taxachusetts. Approximately 350 employees including roughly 35 dedicated to equipment and building maintenance, repair, etc. Hang around this crew on any Monday morning and you can get a pretty good indication of what's being consumed as far as alcoholic beverages are concerned as well as their general views.

Bud and Coors light are the heavy hitters. An occasional splurge into some Sam Adams but it costs twice as much.

Jim Beam white and Jack Daniels is the best that the U.S. has to offer as far as whiskey is concerned.

Jameson's is the best drink out there.

Scotch is very expensive, therefore it has to be better than the American offerings. It all tastes the same and burns on the way down so why spend big bucks. I believe we are usually talking blended versions here. Not many of these guys are likely to spend more than $20.00 per bottle.

Then we got one lone guy who seems to miss the occasional Monday. On Tuesday he always blames it on the "green drinks", whatever they are.

I know it's way off topic. But I would bet that these 35 guys buy at least 70 cases of beer and 5 bottles of whiskey each and every week. I would also bet that not one of them is going to bother spending even the smallest premium over their regular drinks for something supposedly better or higher quality. I don't see any premium bourbon shortage in the future if this is what main stream america is buying on a regular basis.

Chris

ILLfarmboy
01-24-2007, 18:11
While this may be a legitimate concern to an extent I doubt it's cause for pannic. I would imagine there will always be reasonably well aged bourbon at a reasonable price. Market forces should keep things on an even keel. I'm more concerned with producers lowering the bottling proof of established brands to strech stocks than letting quality slip (too much).

Fear of a great bourbon/rye shortage reminds me when I was about 10 or so I thought we might have a world wide lead shortage before I was old enough to own and enjoy a firearms collection:slappin:

robbyvirus
01-24-2007, 20:44
Extra aged bourbons have become part of the landscape and all of the distilleries are making sure they have supplies in the pipeline to meet that demand. Since it's hard to exactly predict demand so far into the future, distillers are happy if the demand is just a little bit stronger than the supply.

The current tightness in supplies of whiskey 8+ years old likely will abate somewhat as steadily increasing production catches up with the demand curve.

As goes scotch so will go bourbon, probably. There have been many predictions of a looming shortage of both, due especially to growing demand in Asia, but some of that is wishful thinking. A solid growth curve that allows all of the world's whiskey producers to operate at capacity, steadily increase their capacity, and sell everything they can make at a tidy profit is good for them and, ultimately, good for us. The whiskey glut was fun while it lasted, but it wasn't good for the long term health of the industry. This is better.

The people who get hurt in this are the independent bottlers, especially those who relied on the spot market. A few years ago you could make a business out of buying up extra-aged whiskey cheap and selling it for a good profit. Now that the market for extra-aged whiskey is established, the producers are going to keep it for themselves. Extra-aged bulk whiskey today isn't cheap if it's available at all.

As for bunkering, some of the current bargains in extra-aged bourbon, such as Weller 12 and Elijah Craig are likely to be where we'll see future price increases, assuming current trends continue. Beam has been selling Knob Creek cheap to build up volume and share, but that may taper off in the not too distant future.

Although there are no significant new producers entering the market and it seems unlikely that any new distilleries will be built or taken out of mothballs in the foreseeable future, many current producers are increasing their capacity, not dramatically but steadily. Overall bourbon production is increasing at about 5% per year.

I think a new verb has just been coined: bunkering.

Actually, it's a gerund.

Edward_call_me_Ed
01-26-2007, 01:25
I am not too worried about the American market drinking up all Our good bourbon, but if the Chinese and or the Indians get a taste for bourbon, well then we might find ourselves in a bourbon shortage.

Ed

Gillman
01-26-2007, 05:14
Ed, aren't there Japanese-made whiskies which are similar to bourbon? Are there any that are very close in palate?

If Japan (or any foreign country) wanted to emulate bourbon, I don't see why it couldn't do that. It could not sell it as American whiskey of course, so much of the marketing cachet would be lost, but just in terms of palate emulation, I don't see why this could not be achieved. Maize or corn, rye, barley malt are available everywhere in the world, the barrels can be bought from an American supplier, etc.

Gary

doubleblank
01-26-2007, 06:37
Hey Ed, there already exists a large whisk(e)y industry in India. In fact, it is reported to outsell Scotland (100 million cases vs 83 million). So far, they have tried to emulate scotch in both flavors and marketing. My guess is that if Indians develop a taste for bourbon, they will produce its equivalent right there at home.....as Gary suggested might occur. Import duties and production costs will ensure it happens, if ever.

My concerns over pricing are not only related to typical supply/demand issues but from our friendly local, state and national gov'ts. The KY distillers recently had to battle their local and state gov'ts over higher taxes in the state where it is produced. Higher taxes on hard liquor is an easy sell as it doesn't impact the average citizen very much. Tobacco is also an easy target. Texas recently enacted a higher tax on cigs.......by $1 a pack! With budget deficits expected to grow and politicians being who they are, its only a matter of time.

Higher energy and other production costs are also going to ultimately get passed through too. Sometimes its what you don't or can't possibly anticipate that ends up affecting an industry the most.

Randy

cowdery
01-26-2007, 11:40
While it is true that India has a large domestic "whisky" industry, the term "whisky" belongs in quotes because the spirit is generally not grain based but made from sugar cane, and while they attempt to flavor and color it to resemble scotch, it is a very poor imitation. While the legitimate scotch whisky industry can't do anything about what the Indians do in India, they have managed to keep them from exporting the stuff and calling it "whisky" elsewhere.

There is a large and growing market for "real" scotch in India, but the duties are very high so the price is still prohibitive for most people, but sales are growing anyway as India becomes more prosperous. You also get smuggling and all of that sort of thing. Because of the Raj and all that history, scotch still equals whisky in India, but the same generational change that happened in Japan could also happen there for all of the same reasons.

But, bottom line, these are all interesting trends and what it mostly means to us is that the global market for American whiskey is still largely untapped. I see any trend that keeps whiskey-makers growing and profitable as good for our interests as drinkers.

CrispyCritter
01-27-2007, 22:39
Ed, aren't there Japanese-made whiskies which are similar to bourbon? Are there any that are very close in palate?

I think most Japanese whisky is more like Scotch than bourbon. I've had a Japanese single malt (Suntory Yamazaki 10yo) that would be very solid competitor to non-peated Highland single malts.

On the other hand, I've never had a Yoichi, nor any other Japanse whiskies.