What Am I Getting For My $$$?

[DBM]

Instead of asking "Is It Worth It?" about an expensive bottle, the better inquiry might be "What Am I Getting For That Kind of Money?"

I was going to respond with something more philosophical, but when you really strip it down to the cost of goods and financial interest to age the final product, is there really a big difference in cost of production between similar style and age or bourbon? Does the cost of infrastructure, raw ingredients, distilling, barrels and aging fluctuate much between distillers?

In a related industry, the largest single cost factor to produce wine is one element - the cost of the grapes - which can be under $100/ton to over $30,000/ton. I am pretty certain that bourbon doesn't have a cost variation that wide.

[DBM]

Another way to look at it financially... if you value the price per glass, a bottle of whiskey offers twelve opportunities for enjoyment (standard 2oz pour). A bottle of wine offers four opportunities for enjoyment (standard 6oz pour). So for every $50 bottle of wine, a $150 bottle of bourbon provides a similar level of value.

I use this to explain my bourbon purchases to the wife when she buys a case of wine for $800.

[squire]

Ingredient costs are fixed and the same for all the product of a Bourbon distillery, whether destined for greatness or ending up in a bargain basement blend. As are the labor costs of moving the newly filled barrels into their resting spot but once in place the cost of leaving them undisturbed for years is negligible. What makes older whisky more valuable is there's less of it due to evaporation over time.

Edited November 25, 2014 by squire

[jvd99]

Add in the increased taxes paid for warehousing the older barrel vs. the younger barrel

[squire]

Depending on where warehoused yes, annual taxes do add to the overall cost. Of course Kentucky Straight Bourbon need spend only two years instate to earn it's designation. The barrels can then be shipped across the river and spend another 4-6 years resting in Indiana where the taxing environment is more favorable.

[jvd99]

You are a wealth of knowledge Squire, I didn't know that.

[Flyfish]

Depending on where warehoused yes, annual taxes do add to the overall cost. Of course Kentucky Straight Bourbon need spend only two years instate to earn it's designation. The barrels can then be shipped across the river and spend another 4-6 years resting in Indiana where the taxing environment is more favorable.

But what does that do to the critical factor of location in the rackhouse in the maturation of the bourbon? And do you know offhand which bourbons are actually shipped as opposed to the theoretical "can be shipped"?

[sutton]

Even the most expensive grapes are a fraction of the cost of a bottle of wine. Most of it is in packaging, marketing, taxes, and premium markups.

I suspect the same is the case for the overwhelming majority of whiskies.

[DBM]

Even the most expensive grapes are a fraction of the cost of a bottle of wine. Most of it is in packaging, marketing, taxes, and premium markups.

I suspect the same is the case for the overwhelming majority of whiskies.

Of course, but grapes are the largest single production variable in determining the price of a bottle before it's sold. If every ton of grapes was purchased for $500/ton, every bottle of wine would roughly cost the same price to produce. After that it's business overhead (employees, facilities, etc), profit margin, distribution and retail markups and taxes. I was inquiring if a similar variable occurs in the distillation of American whiskey.

[sutton]

Of course, but grapes are the largest single production variable in determining the price of a bottle before it's sold. If every ton of grapes was purchased for $500/ton, every bottle of wine would roughly cost the same price to produce.

No I do not think that is the case. It isn't so much about cost of production + a standard markup, it is about brand and marketing that drive that markup to be the biggest determinant in the price (vs. the price of the raw materials). If all markup was the same over cost, a bottle of premium wine (or bourbon or scotch) would be a fraction of what it really is. Even if the price of grapes (or corn, rye, etc) were the biggest variable in the cost of production, I do not think that is the primary driver over the ultimate price of the bottle.

As an example: I've purchased grapes from premium vineyards in Napa Valley - it cost me 3X what grapes from Amador County have cost. Not counting the cost of my own labor, the bottle I produced cost me about $15. Those same grapes are in bottles that cost over $75. I don't think my labor is that expensive ...

[ebo]

As someone who straddles the fence quite comfortably (I've pretty much built a party deck on top of that fence at this point), value is debatable. In an absolute sense, bourbon is probably always going to be the better value. It's a domestic spirit, so the logistics alone make it cheaper. Additionally, you don't find values in the scotch world like you do HH6BIB, for instance. QPR on value releases like that is insane. I personally don't think scotch whisky as a whole hits its stride until you move into the $50-$100 price range. At that range, there are some amazing scotch whiskies to be had. Take something like Laphroaig 18 or Lagavulin 16, which I enjoy as much as any of the best bourbons I've ever had. I know of at least three stores within 20 miles that sell those for around $65 and $50, respectively. I get as much enjoyment from those as I do the best BTAC and Four Roses releases, but I can actually walk into a store and buy them whenever I want to. What I'm getting for my $$$ in that case is whisky

that punches way above its weight in terms of my personal enjoyment. Heck, a place I go to occasionally sells Laphroaig 10 for $29.99. That's an insane value. But EC12 is $18.99 there, so bourbon probably still wins.

At the end of the day, one thing is for certain: If you hand me a $10 or a $20 and tell me to go buy a (750 ml) bottle of brown spirit for us to drink, there is about a 99.99999999999999% chance I will walk out of the liquor store with a bourbon of some kind. And be completely happy doing so. Can't think of a single scotch in that price range I'd be happy about drinking.

I agree. I'm a big fan of Scotch.....that's where I started. I guess what I was getting at was not so much the monetary value as much as the "overall" value.

Logistics and the "hometown" thing will always trump Scotch in $$$ value. I don't believe that is always the case as far as the different nuances that Scotch brings to the table over Bourbon. You're right..... I would take a $10 - $20 Bourbon over most any Scotch simply because I know it is a higher quality product given the maturity level of the spirit, relatively speaking.

I wonder if they have the same discussion in Scotland, just opposite?

Apologies. I did not mean to offend scotch enthusiast as I was a member of that club for 40 years before I got into bourbon/ rye.

I don't think that average bourbon cost for everyday great pours will ever catch up with scotch privinh

No apologies necessary. I didn't take it that way at all.

I got into Bourbon because I could no longer afford/justify the cost of Scotch. I still love it, but I rarely ever drink it anymore. I love Bourbon too!

Edited November 26, 2014 by ebo

[DBM]

No I do not think that is the case. It isn't so much about cost of production + a standard markup, it is about brand and marketing that drive that markup to be the biggest determinant in the price (vs. the price of the raw materials). If all markup was the same over cost, a bottle of premium wine (or bourbon or scotch) would be a fraction of what it really is. Even if the price of grapes (or corn, rye, etc) were the biggest variable in the cost of production, I do not think that is the primary driver over the ultimate price of the bottle.

As an example: I've purchased grapes from premium vineyards in Napa Valley - it cost me 3X what grapes from Amador County have cost. Not counting the cost of my own labor, the bottle I produced cost me about $15. Those same grapes are in bottles that cost over $75. I don't think my labor is that expensive ...

[cowdery]

Although it is technically true that Kentucky producers are only required to age their product in Kentucky for one year for the right to call it 'Kentucky bourbon,' no one moves barrels out of state to complete avoid the ad valorem tax. That happened once several decades ago when Kentucky tried to increase the tax. And after the tax change last year, which gives producers a credit for the ad valorem tax if they reinvest an equal amount in their Kentucky facilities, it's even less likely that anyone will ever do that again. So, they're not doing it now, haven't done it for decades, and have no incentive to ever do it again. Diageo, in fact, has sent new make from its distillery in Tennessee (George Dickel) to Stitzel-Weller in Kentucky for aging even though Tennessee has no ad valorem tax, because it ran out of warehouse capacity in Tennessee.

[squire]

Chuck I first heard of the practice from a Brown-Forman employee over 40 years ago. Apparently the spectre of oppressive whisky taxes still linger in Kentucky though, as recently as two years Bill Samuels Jr. called it "the dark cloud hanging over" the Kentucky Bourbon industry.

[jburlowski]

At (some) of today's prices, I hoping for at least a lap dance. :grin:

[Paddy]

At (some) of today's prices, I hoping for at least a lap dance. :grin:

No lap dances, but... I got fiddy on somebody coming out with a holiday gift set with a tube of lube by next Christmas! :bigeyes:

[393foureyedfox]

No lap dances, but... I got fiddy on somebody coming out with a holiday gift set with a tube of lube by next Christmas! :bigeyes:

'Pappy and lube' sounds so wrong, yet so appropriate these days

[Grain Belt]

After visiting a few Twin Cities liquor stores this weekend and seeing all kinds of $60 and plus bottles on the top shelf, I think there should be promotions offering coupons for reach-arounds. I bought a few IL bottles of bonded Dant for $15.99 a piece and left with my wallet intact.

[393foureyedfox]

^^

smart man.............