Our ongoing observations about whether the boom has peaked

[The Black Tot]

1 hour ago, mosugoji64 said:

 

I'm holding you to your word, Paul! You owe me a bottle if that's not the case 

I'm so certain I've got a HANDLE for you Brian!

[The Black Tot]

47 minutes ago, musekatcher said:

I did really enjoy OWA <$20, but that was over 2 years ago. When it reaches our shelves in droves come March 2019, it may likely be over $30, maybe even over $40. 

When supply goes up, prices go down, not up. It will be selling for retail instead of store owners gouging for 80 plus, and stores will have to compete for your business.

 

I don't foresee retail going over 30. If BT hasn't raised the price in this, their darkest supply hour, I don't know why they'd do it when it's back around.

 

They've got to at least have a period where they entice the one bottle at a time Weller fans I mentioned earlier back to the brand. Those guys ain't paying no 40 bucks, no way, no how.

[BottledInBond]

1 hour ago, The Black Tot said:

When supply goes up, prices go down, not up. It will be selling for retail instead of store owners gouging for 80 plus, and stores will have to compete for your business.

 

I don't foresee retail going over 30. If BT hasn't raised the price in this, their darkest supply hour, I don't know why they'd do it when it's back around.

 

They've got to at least have a period where they entice the one bottle at a time Weller fans I mentioned earlier back to the brand. Those guys ain't paying no 40 bucks, no way, no how.

Supply and demand intersecting to arrive at a fair market price is a core theory of economics. But another core theory of economics is inflation. Inflation over long periods of time of both the prices of goods/services as well as wages. Just because a bottle of OWA was $20 pre-boom does not mean it will be $20 again post-boom. The average annual inflation rate in the US over long periods of time is about 3.5%. Theoretically over the course of a decade wages and goods/services both go up by that amount on average. OWA isn't a 10 year old product but part of BT's ramp up in wheated production goes to feed the Van Winkle beast as well as WLW, W12, and some BTEC or EHT wheated one offs. I think from when shelves started getting thinner several years ago to when a product like OWA is available all the time for any store that wants to stock it and demand has settled so that their isn't any ability for retailers to gouge is probably almost 10 years total assuming no total bust of demand soon. Over that 10 year period even if BT doesn't get specifically greedy with pricing average long term inflation would basically make it just about a $30 bottle. So I think that is really about the best case scenario assuming really. 

 

Now the people that have made comments assuming demand never eases clearly haven't paid attention to history. There are countless examples out there of single products, whole companies, and even whole industries who have become obsolete and gone out of business due to increased competition, regulatory changes, or just changes in consumer tastes. Every one of us can simply think back to our own lives to think about products we consumed that we thought were great and are basically gone for examples, above and beyond the very specific histories in the alcohol beverage world. Could demand stick around longer at current levels? Sure but nobody knows for how long, just like nobody knew this was coming for sure. Let's just all pray that if demand sticks around like this the distilleries don't follow the Scotch path of insane prices for limited edition releases. Michter's tested that with the Sour Mash Celebration stuff. I for one have no problem with today's prices at least where I live, although of course I can't always find what I want. I would hate to live in a world where I could find a bottle of Stagg a little more readily but it cost $2K at retail, which sounds stupid but really isn't considering the situation with high end Scotch as a comparison. 

 

But, find some good store picks of KCSB and Four Roses and remain calm, because tasted blind what's in your glass is probably just as good as 90%+ of the LEs that we all complain about not being able to buy (for higher prices when we can). 

Edited October 19, 2017 by BottledInBond

[FasterHorses]

1 hour ago, The Black Tot said:

When supply goes up, prices go down, not up. It will be selling for retail instead of store owners gouging for 80 plus, and stores will have to compete for your business.

 

I don't foresee retail going over 30. If BT hasn't raised the price in this, their darkest supply hour, I don't know why they'd do it when it's back around.

 

They've got to at least have a period where they entice the one bottle at a time Weller fans I mentioned earlier back to the brand. Those guys ain't paying no 40 bucks, no way, no how.

My last two bottles of OWA I have paid $29.99 and $26.99. Both in the last two weeks. Just walking in off the streets with no prior relationship to the LS owner. This is in metro Nashville  where, if you can find anything that is in short supply, it is always marked up at least $20.00 and usually a lot more.  I think you may be smarter than even you knew.

[lcpfratn]

I agree it's not the everyman who is bunker building, but there are enough of them.
 
Don't take my word for it -  go to the stores that got OWA barrels and didn't have limits. Ask the staff how many people bought multiples or a 6 case.  

Paul, You are absolutely correct. There are more people bunker building allocated bourbon than DCfan is aware of. Even the "everyman" or "common man" that normally only replaces a bottle as he drinks it is likely buying an extra or maybe two now. That's because he now knows when he's able to find one of his favorite allocated bourbons on the shelf, and it's reasonably priced, he better buy an extra or two,if he can, because he may not see it again for six months or more.

I'm not sure that I agree that OWA will be readily available on shelves in most markets by March 2019. You may be a little early on that prediction, so I think you may have to give up that handle of OWA to Brian. However, I do think it will be on the shelves by the following year or two.

In regards to the speed of sales and quantity purchases from stores that received barrel picks of OWA, I'm aware of at least four stores in my area that received private selection barrels of OWA. Most of the stores had no limits and their entire barrel of bottles was gone in a matter of hours with many full case (12 bottles) purchases, including one 3 case purchase that I'm aware of. At the one store that had purchase limits, the barrel was gone in a couple of days. They received their barrel later in the week than the others and had it priced slightly higher ($32/750ml and $59/1.75L) than the stores that received it earlier in the week and had it priced below $30/750ml.


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[Theiano]

2 hours ago, The Black Tot said:

I agree it's not the everyman who is bunker building, but there are enough of them.

Bunker building is a key aspect but I think the another significant impact is during the transition from availability of a product to scarcity. A lot of regular consumers, who may not necessarily be keeping a "bunker" as such suddenly begin to see a product they enjoy becoming scarce, they then start to buy it in bulk (2+ bottles), rather than one at a time, or on pace with their consumption. This creates a sudden surge in demand right at the point increasing popularity. From a supply driven market, it suddenly changes to demand driven, and demand is artificially high. Some people might buy 6 or 12 bottles, as mentioned above. These people effectively represent 6-12 individuals in an economic sense. How long will it continue?, until the supply catches up with the increased demand.

 

However from a producers perspective, there is a significant risk that once supply catches up and that increased demand is fulfilled there could be a sudden drop in demand, as now the person who was purchasing 6-12 bottles, ceases purchasing them until their bunker reduces to a more manageable number. Then there could be a glut, and since the producers have to wait 4+ years until the product is ready, they may overproduce significantly and for an extended period. I imagine distilleries are very cautious when ramping up production so that they don't overproduce and because of that the supply can take years to catch up. Another aspect is that the more specific a product has to be (e.g. age, mashbill, BIB) the harder it is for them to prepare. The best way to approach is probably to create pockets of availability in one area vs another, rather than everywhere at once, that way you can track the true demand, vs inflated or deflated numbers.

 

I don't generally have any issue with people bunkering a product that they like, and is scarce, I just wish perhaps they didn't completely clear the shelf each time.

 

[kevinbrink]

BT is in a good position if they over produce Weller, if they end up with stock sitting on store shelves of OWA they can stop bottling it and wait a few years for it to grow up to be ORVW, W12 or WLW, if they have a batch that doesn't taste all that good they can just sell it as Lot B like they do now!  

[Clueby]

1 hour ago, Theiano said:

Bunker building is a key aspect but I think the another significant impact is during the transition from availability of a product to scarcity. A lot of regular consumers, who may not necessarily be keeping a "bunker" as such suddenly begin to see a product they enjoy becoming scarce, they then start to buy it in bulk (2+ bottles), rather than one at a time, or on pace with their consumption. This creates a sudden surge in demand right at the point increasing popularity. From a supply driven market, it suddenly changes to demand driven, and demand is artificially high. Some people might buy 6 or 12 bottles, as mentioned above. These people effectively represent 6-12 individuals in an economic sense. How long will it continue?, until the supply catches up with the increased demand.

 

However from a producers perspective, there is a significant risk that once supply catches up and that increased demand is fulfilled there could be a sudden drop in demand, as now the person who was purchasing 6-12 bottles, ceases purchasing them until their bunker reduces to a more manageable number. Then there could be a glut, and since the producers have to wait 4+ years until the product is ready, they may overproduce significantly and for an extended period. I imagine distilleries are very cautious when ramping up production so that they don't overproduce and because of that the supply can take years to catch up. Another aspect is that the more specific a product has to be (e.g. age, mashbill, BIB) the harder it is for them to prepare. The best way to approach is probably to create pockets of availability in one area vs another, rather than everywhere at once, that way you can track the true demand, vs inflated or deflated numbers.

 

I don't generally have any issue with people bunkering a product that they like, and is scarce, I just wish perhaps they didn't completely clear the shelf each time.

 

That's the best rationale I've seen so far as to why some markets seem to get certain products at a much greater level than others. You will not find OWA in the St. Louis market for retail..if at all. Even when a store like TWCP got their own barrel it was allocated to their rewards members only and sold at a (slightly) higher than typical retail.

[DCFan]

6 hours ago, The Black Tot said:

I agree it's not the everyman who is bunker building, but there are enough of them.

 

Don't take my word for it -  go to the stores that got OWA barrels and didn't have limits. Ask the staff how many people bought multiples or a 6 case.  

Judging by the responses in this thread, maybe 10 buyers cleared the shelf. And that might be too generous. So not a lot of hoarders in this equation.

[The Black Tot]

6 hours ago, lcpfratn said:

I'm not sure that I agree that OWA will be readily available on shelves in most markets by March 2019... I think you may have to give up that handle of OWA to Brian. However

There are worse fates. It will give me motivation to drop in on him in Arizona and drink some of it back.

[fishnbowljoe]

5 hours ago, kevinbrink said:

BT is in a good position if they over produce Weller, if they end up with stock sitting on store shelves of OWA they can stop bottling it and wait a few years for it to grow up to be ORVW, W12 or WLW, if they have a batch that doesn't taste all that good they can just sell it as Lot B like they do now!  

Or maybe reintroduce Weller Centennial. 

 

Cheers! Joe

[lcpfratn]

Judging by the responses in this thread, maybe 10 buyers cleared the shelf. And that might be too generous. So not a lot of hoarders in this equation.

Math is obviously not one of your strengths. There were a LOT more than 10 multiple bottle purchasers (hoarders based on your definition) per store. As an example, in the one store that sold three cases to one buyer and a few cases to other buyers, that probably still left 120 to 144 bottles that were mostly bought by multiple bottle purchasers (probably 2-4 at a time). So, my guess is that there were at least 40 "hoarding" buyers at each store, and probably closer to 70 at the store that had a 3 bottle limit.

 

 

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[DCFan]

2 hours ago, lcpfratn said:

Math is obviously not one of your strengths. There were a LOT more than 10 multiple bottle purchasers (hoarders based on your definition) per store. As an example, in the one store that sold three cases to one buyer and a few cases to other buyers, that probably still left 120 to 144 bottles that were mostly bought by multiple bottle purchasers (probably 2-4 at a time). So, my guess is that there were at least 40 "hoarding" buyers at each store, and probably closer to 70 at the store that had a 3 bottle limit.

 

 

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So my guess is a math deficiency and your guess is right on the money. 

[lcpfratn]

So my guess is a math deficiency and your guess is right on the money. [emoji3]

No, my "guess" was based on actual experience and discussions with three of the four store managers that received OWA barrels, while I suspect that your guess was just a number that you came up with out of thin air to try and support your thesis regarding how many hoarders (multiple bottle purchasers) are out there.


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[birdie]

Somewhere earlier in the thread someone made a great point, it was along the lines of 'for every person that is slowing down and dropping out of the hunt there are 5 more joining the hunt', I know people that 2 years ago could not spell bourbon that are now cruising stores from Colorado Springs to Fort Collins.

 

If everyone would take a bottle and leave a bottle things may improve..........that was my sentiment a year or so ago and one I did my best to practice, however my view now has changed because I am the one nursing half a bottle of OWA whilst others are posting bunkers with a dozen bottles on the shelf......next time I see something allocated that I like there will be multiple bottles coming home.

[losin_mo]

Long time bourbon fan... Whisky fan in general I will post some pics of my setup down the road. I do believe like every bubble this to will burst. I do believe their will be a day again where a pappy 10 or 12 or BTAC will be on the shelf, my guess would be 10 years down the road. There are a lot of external factors effecting this bubble as well. The U.S. economy is doing great, people are spending more. I think this bubble will burst rapidly once the economy takes a turn down which of course it will some day. The last thing people will be keeping is a bottle of whisky that is worth something when jobs are harder to find etc. Also supply will be up tremendously in that time too. Buffalo Trace isnt stupid. They know they are sitting on gold with BTAC and will produce more of it, as well as pappy, they would be stupid not too. Last year i did not chase LE's as it just wasnt fun for me and frankly i dont have the time. I work 12 hours 5-6 days a week I want to sit down and just enjoy a glass... or two... or three, so Instead i bought into 2 different barrels w/ my local liquor store, I put in $2500 a piece and got approx 12 cases of each. I got to go down and pick out a barrel of 4 Roses and WT Ky Spirit. People are paying $2500 for 5 bottles of Stagg or 1 pappy 23, when for that money I got 24 total cases of bourbon i got to personally select and it is delicious. I recommend this strategy if you know a local store that does picks alot of the will let you in for the right amount (mine was $2500 average $38ish/ bottle and i got to pick each barrel. A lot of money yes, but not really when you will get to enjoy it years down the road. Plus the store does save some LE's for me. Just my 2 cents guys to get through this difficult time as a whisky lover. 

[DCFan]

6 minutes ago, losin_mo said:

Long time bourbon fan...  

With some ingenutiy and drive to get around the current market conditions. Well done sir. 

[The Black Tot]

28 minutes ago, birdie said:

If everyone would take a bottle and leave a bottle things may improve..........that was my sentiment a year or so ago and one I did my best to practice, however my view now has changed because I am the one nursing half a bottle of OWA whilst others are posting bunkers with a dozen bottles on the shelf......next time I see something allocated that I like there will be multiple bottles coming home.

Go for it. There is no reason to be bitter with bunker builders. Most of us built our bunkers when nobody gave a crap about OWA. If anything, the increased sales in the early days encouraged them to expand production earlier. You're welcome.

 

Above you are describing exactly what I was saying about FOMO anxiety and what starts bunker building.

[birdie]

And I would agree with you if I had a bunker, but I don't, I don't have the luxury of reaching for that next bottle when  one runs dry. I appreciate that some of these bunkers were built prior to the frenzy, but I still see plenty of posts on this forum that start with "here is my latest road trip haul".

 

And if I am honest I don't want to wait 10yrs for this bubble to burst to have a bottle of xxxxxx sitting on my shelf.

[The Black Tot]

1 minute ago, birdie said:

And if I am honest I don't want to wait 10yrs for this bubble to burst to have a bottle of xxxxxx sitting on my shelf.

Then drink yyyyyy and be happy.

[birdie]

Easily said when you already have plenty of xxxxxxx.

[Harry in WashDC]

On 10/16/2017 at 1:44 PM, Bob_Loblaw said:

 * * * * *

 

One last thought.  Bourbon has to be aged in new white oak barrels yes?  They cannot be re-used?  With every distiller significantly ramping up production and all the new craft distillers will we reach a point where there is a shortage of new white oak barrels?

Bob, good observation.  This was a topic here with two or three threads overlapping and lots of "sturm und drang" a couple years ago.  Also, Chuck Cowdery wrote several articles on his blog and in his newsletter, and I think either he or Fred Minnick or both wrote about it in "Whisky Advocate" (although now that I think about it, that may have been somewhere else or even separately with each on his own blog).  WHATEVER, browse Chuck's blog (and Fred's, too, I think) to get the timing and a summary of the discussion.  That should save you some time and effort if you want to read more.  IIRC, there was one post by Squire giving us the history of the lumber industry generally and white oak growth, harvesting, and properties specifically (and you better not disagree with him!) and some first-person business-side fact-checking by SBers who spoke directly with cooperages.

 

Bottom line - bottlenecks in production and delivery the appeared several years ago have been addressed.  We are probably OK for the next decade or so.  Still, keep those eyes open because stuff does happen.

 

(Apologies if this repeats advice further down this thread.  I just had my second cup of coffee and got carried away.) 

[Harry in WashDC]

2 hours ago, birdie said:

Easily said when you already have plenty of xxxxxxx.

I have no xxxxx.  (or is it xxxxxx?).  I do have a bunker, much to my wife's, "What?  ANOTHER bottle?  You haven't finished the ones you HAVE!"  I just point to her shoe collection and say, "You wear a few of these most of the time, some of them some of the time, and a few rarely and on special occasions.  Think of my bourbons as shoes for my palate.  Some of them even taste sooty and musty like I'm guessing your shoes would."  It started with wines, added some port, then moved on to (mostly) bourbons.  It's been about a 30 year project with only the last ten or so being bourbon.

 

Anyway, at the risk of stepping in it while I'm on this coffee high, my bunker consists mostly of stuff that I REALLY like and want to keep around to drink over time rather than rarities and LEs and out-of-production dusties.  My KC, Bookers, and OGD 114 stashes were bought on sale or long before the price hikes.  I do buy "more than one at a time" of some things.  VOB BIB is spotty in WashDC, and I did hit a honey barrel of HMcK 10 yr BIB awhile back and will admit to cruising multiple stores to scarf up all the bottles I could find with that barrel number (less than a dozen before I stopped).   Like Losin_Mo above, I buy to drink and share.  And the LEs?  As I think I posted recently above, I'll try them at their huge markups in a restaurant, but I've found maybe two in five years that I chased.  Too much other stuff out there to spend my time, energy, and money on.  So, in my case, xxxxx = KC, yyyyyyy = VIB BIB, etc.  [Joe Pollito, if you're still out there, my 2014 GTS is almost gone, and no, I don't need a replacement - I've had some pours of the recent ones and am picking up 4R PSs instead.]

[smokinjoe]

34 minutes ago, Harry in WashDC said:

I have no xxxxx.  (or is it xxxxxx?).  I do have a bunker, much to my wife's, "What?  ANOTHER bottle?  You haven't finished the ones you HAVE!"  I just point to her shoe collection and say, "You wear a few of these most of the time, some of them some of the time, and a few rarely and on special occasions.  Think of my bourbons as shoes for my palate.  Some of them even taste sooty and musty like I'm guessing your shoes would."  

Good Lord, Harry!!!  If we don't hear from you for an extended time soon, we'll know where she shoved those shoes...   

[RWBadley]

56 minutes ago, Harry in WashDC said:

 I do have a bunker, much to my wife's, "What?  ANOTHER bottle?  You haven't finished the ones you HAVE!"  I just point to her shoe collection and say, "You wear a few of these most of the time, some of them some of the time, and a few rarely and on special occasions.  Think of my bourbons as shoes for my palate.  Some of them even taste sooty and musty like I'm guessing your shoes would." 

Hahah this is hysterical     "Think of my bourbons as shoes for my palate" 

 

- Inferring to your lovely spouse her shoes remind of anything but Lavender and Roses sounds like.... just a bad idea.  Let us know how this all works out for ya.