Bourbon: a long term outlook?

[tdelling]

I was just thinking tonight (as I procrastinate, listening to the Dick

Spottswood show streaming Old Timey music...) about the long term

outlook for bourbon.

What might happen to the industry that might cause its downfall?

As a disclaimer, I'm not overly worried that these things are

going to happen... but they're worth thinking about nonetheless.

The first thing that EVERY industry should fear is Wal-Mart, which currently

sells, what, 20% of the country's dog food, a lot of it their own brand.

And they just got into the soap business as well, much to the chagrin

of soap makers.

Would Wal-Mart ever go into the bourbon business? Perhaps

contract distillation, or their own label(s) of bulk bourbon, which I'm

sure a few distilleries would gladly sell to Wal-Mart?

I can think of a few reasons why they wouldn't do so. They might have

moral qualms against it. It wouldn't allow them to leverage their sweet

distribution network, since alcohol requires a distributor's license. The

profit opportunity might be too small.

I would guess that if the do get into the business, they would go big with

alcohol in general, pouring money into buying legislators to overturn

distribution laws, and developing all sorts of products, from vodka to wine.

The other think thing to fear from Wal-Mart is concentration of power.

What happens if Wal-Mart sells 25% of the country's bourbon? Will they

be able to dicatate terms to distillers?

Other long term issues:

Marijuana legalization. If I were a betting man, I'd say that Canada and

the EU will eventually legalize (or at least radically decriminalize) cannabis.

Will the US follow? Once the baby boomers start to die, will GenX voters be

less conservative than today's voters? Will legal marijuana compete with

bourbon?

What about aging populations in general? Classical music and opera are

having a hard time getting younger ticketbuyers and album buyers. Will

bourbon's all-American image continue to appeal to the next generations,

or will they be wooed away by sugary booze and beer's advertizing budgets?

Legislative threats? (These are bit less likely.) Will states tax distilled

spirits out of existance? The beer people would love that. Perhaps a

wave of anti-smoking, anti-"hard liquor" fervor might lead to all kinds of

bad legislation.

Just a few idle thoughts.

Tim Dellinger

[OneCubeOnly]

I'll throw in two other possibilities:

1. Suitable wood for barrels becomes too scarce & cost-prohibitive to use.

2. Lawsuits similar to those currently plaguing the tobacco industry.

[bobbyc]

Wal-Mart currently sells Beer so I think they don't have a real big moral dilema moving on up to the hard stuff. They have reserved the right to censor some computer games and video's , I wonder if they give a shit or if they are playing to the Bible Belt/Nascar crowd. They still sell Dixie Chicks CDs So they aren't playing to politics at least on that level. These are good points you bring up. As the distilleries came along , after the blenders had a run at it , The wholesale distributors wagged the tail( Distilleries) as it were for a brief time. I don't know if Wal-Mart being the largest seller of spirits would be a good thing. I remember the 70s when a South American Cement company bought the Gibson Guitar Company, they tried to crank out guitars like cement and was successfull, Any instrument from this era suffered greatly and they almost ran it in the ground.

[tdelling]

> Suitable wood for barrels becomes too scarce & cost-prohibitive to use.

That's not as far-fetched as you might think. There is a threat due

to (I'm not making this up, folks...) "SODS", Sudden Oak Death Syndrome.

Apparently it's a fungus. See http://danr.ucop.edu/news/MediaKit/SODfacts.html.

Tim Dellinger

[tdelling]

>Wal-Mart currently sells Beer so I think they don't have a real big moral

>dilema moving on up to the hard stuff.

Super Wal-Mart already sells bourbon. The question is whether they will start

their own line of bourbon, which will (of course) get the prime shelf space

in Wal-Mart.

>They have reserved the right to censor some computer games and

>video's, I wonder if they give a shit or if they are playing to the Bible

>Belt/Nascar crowd.

Wal-Mart no longer carries the magazine Maxim for moral reasons, despite

being (by my estimate) the most popular men's magazine out

there, and undoubtedly a huge money maker for Wal-Mart.

>I don't know if Wal-Mart being the largest seller of spirits would be

>a good thing.

Exactly. If a distillery doesn't do everything that Wal-Mart tells it

to, then that distillery might lose its shelf space. Gives Wal-Mart

too much power.

Tim Dellinger

[tdelling]

>Marijuana legalization. If I were a betting man, I'd say that Canada and

>the EU will eventually legalize (or at least radically decriminalize) cannabis.

>Will the US follow?

Just to follow up on my own post: legalization has obvious financial advantages

from a governmental standpoint. You can tax the heck out of it.

[boone]

Cost of barrels?... A barrel cost $114.00 each a few years ago...I was really surprised at how much they cost...A distillery producing 500 barrels a day... total cost $57,000.00 a day just in barrels...

They went after the tobacco companies with both barrels...In time...they will chew their way into the spirits industry...The only thing holding them back now is the great amout of tax money the spirits industry produces each year for the government...I "think" that Heaven Hill pays 2.5 million dollars a week in federal taxes, 130 million a year...Now that's a chunk of money...(HH is not the largest)...It's hard to imagine what the total federal revenue from the spirits industry is....Money, is the only thing that will keep them going...For now...HELL...ya never know what's going to happen...Who would have thought that prohibition could happen...but it did...

Bettye Jo

[robbyvirus]

> Suitable wood for barrels becomes too scarce & cost-prohibitive to use.

That's not as far-fetched as you might think. There is a threat due

to (I'm not making this up, folks...) "SODS", Sudden Oak Death Syndrome.

Apparently it's a fungus. See http://danr.ucop.edu/news/MediaKit/SODfacts.html.

Sudden Oak Death Syndrome is no joke. It's devestating oaks out here in California, and there are worries it will spread. Remember, there are no chestnut trees in eastern forests anymore, and elms are few and far between, due to chestnut blight and dutch elm disease respectively, and these trees used to be as common as oaks. It could certainly happen again.

[kgiammarco]

That's a little scary... No more oak?

In a worst case scenario, i wonder what would happen... is it possible to grow an oak tree enough to make a barrel out of it in the time it takes for bourbon to mature? (i doubt it)... If it is, i guess they could make some isolated place to grow oaks and every time they cut one down to make a barrel they can plant a new one in it's place... I am sure it would probably make the whole thing financially unatractive tho... Let's hope we never have to find out...

-Chris

[bobbyc]

Sudden Oak Death Syndrome is no joke

I have posted before that within a hundred feet of the house here I have about 6 dead white oaks. I think someone else posted that white oak isn't being used for as many things as it was a hundred years ago so there is an endless supply. I don't know about that , I do know there are a lot of dead white oak trees on this property. I think a large amount of the wood used for barrels is from Arkansas, and Missouri. Still a White oak from Ky, Tenn, Virginnia , all would work and have been used in the past.

[boone]

A little barrel making info for ya...

Independent Stave...

I would suspect that these folks "already have" a longterm plan, to all of the possible things that could happen in the years to come...

They also have a page selling bourbon...Master Distiller's Select...Knob Creek etc...

Bettye Jo

BTW...This is the company who sponsor's the "free" concert--every other year--(on Friday night) during the bourbon festival...Last time, they had John Michael Montgomery, the year before Neil McCoy, then Tanya Tucker etc...

[CL]

If WM would to put their own label on any alcohol, I think without a doubt that it would first be beer. There's alot more for them to make on beer than bourbon.

Then again, so much about beer is branding, so maybe they couldn't even make a go with it at that. Same logic for bourbon.

[ratcheer]

That's a little scary... No more oak?

Just read the Winnie the Pooh book, Half a Haycorn Pie.

Tim