Our ongoing observations about whether the boom has peaked

[TunnelTiger]

If I would have kept all my '60's baseball cards and comics I'd be retired now and would care how much a bottle of great bourbon cost.

[johnnyflake45]

I've only been into Whiskey, Bourbon & Rye a short time, 6/7 months, however, I have already decided not to get too involved with special releases and the newer high end releases. I've been trying a lot of the older established, reasonably priced bottlings, and sticking with them. They are dam good and usually available. Old Forester 86 or 100, OGD 114, OGD Bonded, Buffalo Trace, Dickel 12, Dickel Rye, Colonel Lee, Rittenhouse Rye, Baby Saz, CC Small Batch 12yo, are a few of what I am referring to. I can get any of them for $30 or less and a few at $20 or less. Hell, a handle of Colonel lee is just $14 and awfully dam good for the price!

[ken_mays]

These recent trends live and die by social media. Another year and you will see interest wane as attention spans move on to the hot new thing. Those who are trend conscious will drop bourbon like a hot potato because nothing is worse than staying with something after it has become passé. This will be triggered by a spate of articles on clickbait sites to the effect of "10 Reasons The Bourbon Fad is Over". There will be some who truly enjoy bourbon and who stick around, but most of the pressure will drop off.

[TunnelTiger]

I certainly hope you are correct in your assessment but I think highly more likely congress will pass a long term highway bill and a balanced budget first.

[Lepisto]

I certainly hope you are correct in your assessment but I think highly more likely congress will pass a long term highway bill and a balanced budget first.

Which they'll fund by taxing the secondary market.

[nd2005]

Store owners are taking a real risk of locking in some multi-decade shelf turds when the production increases the majors started making several years back start catching up and the good, excellent QPR stuff comes flooding back.

OWA is already starting to gingerly sneak its way back onto the shelves nationwide.

Again all I hear is a lot of wishful thinking.

The boom will continue for some time. Too much money and too many nouveaux riche

[The Black Tot]

The same could be said in reverse about negative thinking. Both sides are speculating. It's just fun.

Also, there are far more nouveaux pauvres being generated today than nouveaux riches. The flood of money into whiskey is more about the decline of respect for the value of a dollar than it is the generation of new wealth. Ask your parents (or someone else's) if they ever thought they'd see a day when we'd pay $250 for a bottle of bourbon.

The above is another concept who's days are numbered. Any significant economic event and all this mysterious loose money could disappear pretty fast. The bourbon won't - it's already laid down and aging.

For the boom to hold you've got to hold together an unprecedented reckless attitude towards spending plus an unwavering interest in bourbon plus purchasing growth in line with the greatest production ramp-up in US history, all while enthusiasts already stock more in their bunker inventories than they can drink in 2yrs + . And you've got to hold it for another 5yrs at least.

All of those things are vulnerable, and the derailment of any one of them marks the end of the boom.

Edited September 10, 2015 by The Black Tot

[willmohawk5]

Again all I hear is a lot of wishful thinking.

The boom will continue for some time. Too much money and too many nouveaux riche

Mostly kids living in their parents basement having no trouble dropping $300 a bottle because they pay no rent. And having the time to drive to 10 different liquor stores all day while everyone else is at work.

[The Black Tot]

Mostly kids living in their parents basement having no trouble dropping $300 a bottle because they pay no rent. And having the time to drive to 10 different liquor stores all day while everyone else is at work.

Gold, willmohawk5. Gold. A more fun phrasing than my edit above.

[The Black Tot]

Hell, if they raise the interest rate back even half way toward the historical average of 7%, the loose cash funding the bourbon boom ends immediately.

[willmohawk5]

Gold, willmohawk5. Gold. A more fun phrasing than my edit above.

I'm also into craft beer so I see that crap all the time in that market. Truck chasing, hoarding, driving hours to other states for a few bottles of some limited release. If you see some of these guys you wonder how they have all this time during the day while everyone's at work. You think some bourbon prices are high, you should see some of the secondary prices on some 22oz beer bottles. It's ridiculous. I'd much rather pay $50 for a bottle of Blanton's than $30 or even $20 for some 6-8% abv bottle of beer. It just become stupid.

[The Black Tot]

Exactly. The current attitude toward the value of the dollar extends far further than our community here.

For every $300 bottle of bourbon, there's a partner buying a $300 pair of shoes or a $700 handbag.

I saw it described as a "culture of excess" recently. That looks real to me, but I think most people don't notice because it's been building up very gradually, like the frog in the tank of slowly-heating water.

Can such a culture of excess continue long or even medium term? I guess I can't say for sure. But it never has in any society/economy. And I've never heard a good rational argument for what could plausibly sustain it.

[willmohawk5]

I don't mind someone spending whatever on anything. Just consume it. It bothers me when these idiots are just acquiring and hoarding stuff to flip on the secondary market. That is what ruins the hobby if you want to call it a hobby.

If I want to clear the shelf of ETL so be it. But I will drink every drop of that juice because I like it. I won't try and make a few bucks like some of these douches do.

[madtownbourbon]

Related to Diageo and their use of limited releases, I'm continually surprised at people's preference toward older, more oak-forward taste profiles. In terms of food, I have a very neutral palette. I like most things and don't find many flavors off-putting. That said, I don't care for bourbons dominated by oak, but I've had the privlege of reading these forums and taking the advice of those much more "seasoned" than myself (meaning that from the beginning I had a more favorable impression toward all bottles and profiles).

I belive that people's tastes are being largely influenced by the sticker price and corresponding profile. If a bottle costs $100 and is dominated by oak, it must be better than a more balanced $35 profile.

*I don't dislike the oak flavor in a bourbon, but I prefer it be balanced out with other layers of flavor. Much of the older stuff on the market today lacks balance, though there are certainly exceptions. I haven't read completely through this thread, so I apologize if this point has been made:)

[Harry in WashDC]

Exactly. The current attitude toward the value of the dollar extends far further than our community here.

For every $300 bottle of bourbon, there's a partner buying a $300 pair of shoes or a $700 handbag.

I saw it described as a "culture of excess" recently. That looks real to me, but I think most people don't notice because it's been building up very gradually, like the frog in the tank of slowly-heating water.

Can such a culture of excess continue long or even medium term? I guess I can't say for sure. But it never has in any society/economy. And I've never heard a good rational argument for what could plausibly sustain it.

Can you say, "Bubble"? Can you say, "Irrational exuberance"? How about saying, "Pay the Piper." Sooner or later, to borrow a phrase, "All good things come to an end." I wonder how many other clichés we could list. "I wonder. I wonder. I wonder, but I really don't want to know.":rolleyes:

Edit (to ensure the proper tone here): In short, TBT, you are spot on.

[TunnelTiger]

If I want to clear the shelf of ETL so be it. But I will drink every drop of that juice because I like it. I won't try and make a few bucks like some of these douches do.

Preach it brother, I'm right with you!

[smokinjoe]

I think we sometime blur the line too much between the "bourbon boom" (of the industry and product which goes back at least to the time that this site was created in 1999. Why do we think SB was even thought of then?), and the "bourbon bubble" (Which is all the crazy and irrational things we see, but particularly relating to, and reported on, happenings in the secondary market and it's trickle down here-and -there.) They are two separate and distinct occurrences. The bubble will surely burst, but I'm not sure it will be noticed by the industry much more than a gnat is on an elephants butt. Actually, if I were to make a prediction, the "bourbon boom" and the industry's actions to keep it fueled, will kill the "bourbon bubble". Then, just keep on booming.

And, we here, will be just fine. No, better.

Edited September 11, 2015 by smokinjoe

[oke&coke]

The great part about a bursting bubble is that it clears away the riff raff.

[Auracom]

Can't imagine us getting over the giant hump-of-a-boom for 3-4 more years. Insatiable isn't a strong enough descriptor for the hoard that has descended. Example - I made it to a store down south for the very first time a few weeks ago. Had known about it for a while but it's about an hour south and I never found a good amount of free time to go until then. Happen to find a few Four Roses picks, one with a particularly unique label and backstory. Grabbed a couple bottles because it's my favorite of the 10 recipes.

I get home, check Facebook, and bang! A guy posts the same bottle in quantity. Now he was neither flipping (thankfully) nor discussing the quality of that particular juice but I know for a fact that the store sold out the very next day. Because of a single, comment-less, picture. Apparently that is all that's all you need to speculate these days.

This LE season will suck but let's be honest, it was a horrible year either way. EC12 slowly reaching NAS purgatory, Four Roses Private program getting absolutely hammered, Rutledge gone, BT truly lacking the ability to sustain even the most basic of offerings, and WT seemingly messing up in every possible way (except for standard 101... Oh wait I just jinxed it).

[willmohawk5]

I get home, check Facebook, and bang! A guy posts the same bottle in quantity. Now he was neither flipping (thankfully) nor discussing the quality of that particular juice but I know for a fact that the store sold out the very next day. Because of a single, comment-less, picture. Apparently that is all that's all you need to speculate these days.

Yup. FOMO. Fear of missing out. All it takes is one or a few people posting a picture of a somewhat limited bottle online via social media, maybe exaggerating on how rare or how great it is and you have everyone looking for it and hoarding it.

[BigBoldBully]

Joe’s erudite post distinguishing between “boom” and “bubble” (around 10 posts ago) raises an interesting point, although I do not know enough currently to be able to fully agree (or disagree) with him. I initially emphasized the term Boom because I was not sure if we could definitively say it had entered a Bubble phase.

That was, of course, before “Blood Oath” et al. Now I feel confident there is a clearly diagnosable Bubble (or Bubbles), at least within part of the bourbon market. And this Bubble will surely pop before the overall Boom peaks. There has been a long, gradual buildup beginning I guess in the 90s, that accelerated and became a Boom at some point. It is a fascinating thing, to me, witnessing how the Bubble(s) will relate to the overall boom.

Probably it is best to recognize multiple Bubbles, like the froth at the top of a big wave. The Bubbles may well pop and yet, as Joe predicts, the wave will continue on at or near its apex for quite some time. Or, might the Bubble popping correspond to the absolute peak of what is after all a fragile boom (“Rome was not built in a day, but fell in one,” etc.), which crashes quickly thereafter? Personally, I believe it is too early to say. It would seem a single huge factor, like a devastating atrophy of foreign demand, could even bring down the Boom before the individual Bubbles have popped. These Bubbles might then linger on, stranded on the beach for a long time completely oblivious to the crash that left them there.

[The Black Tot]

The big China emerging market theory for bourbon expansion recently fell flat, with the market crash there and devaluation of the yuan making imported spirits more expensive and hampering their takeoff there.

I think it's also important, when we use the words boom and bubble, to consider we're talking about sales.

BBB's and Joe's (excellent) posts speak to a steadily rising demand slope, and I sort of agree, in the sense that appreciation of US whiskey is growing and consumption (as in liquid poured into glasses, not purchases from stores) may stay strong with moderate growth over the years to come.

However, the boom and bust is I think more related to sales figures and availability of higher end product to buy (since the middle/lower shelves haven't REALLY suffered too much. I know we can't get ETL, Blanton's, OWA, or ECBP whenever we want it, but let's also face it, most of us who make an effort have been able to find and purchase every one of these within the last year at some point). We're talking about a premium product supply limitation.

Despite there being a growing appreciation for US whiskey and even assuming this is poised for steady growth in consumption and enjoyment, we're still in a point in time where bottles are accumulating, sealed, in bunkers or on collectors' mantelpieces all over the place.

In short, the real bubble is by how much purchasing has outpaced actual consumption. We saw in Auracom's post how based on seeing something on facebook some dude went out and bought multiples "in quantity". What is the rate at which this shelf-clearer is drinking? If many of us here drank everything we bought before we bought our next batch we'd never make it out the door to get to work - which on the surface doesn't sound like such a bad thing...but in reality, I think with the way some of us buy if we drank everything we bought at the rate we bought it most of us wouldn't survive until 2017

So THAT'S the bubble. People are buying more high end products than they are drinking. Bunkers are accumulating. The popularity of drinking bourbon was fine - if everyone wasn't hoarding and building a stash, the production of the limiteds would go around just fine to satisfy even the steadily rising consumption. It just can't supply enough bottles for everyone's consumption plus bunkering a 10yr future supply.

This principle has a backlash - there's no point in getting around that at some point, and it will be a different point for every unique person, they'll say "Yeah, this is out of control. I've got a closet/room/house/storage space filled with more bourbon than I can drink in what time I probably have left."

At this point, even though they will still be consuming bourbon at the rate they enjoy (what BBB/Joe refer to as the boom), the heavy users will stop the shelf-clearing, and may turn inwards on their own collections and NOT BUY AT ALL.

Bourbon still popular...still "booming" culturally...but sales drop sharply and availability returns to the higher shelves, because it's hard to sell what will basically be igloos to Eskimos.

So there's a difference between a surge in popularity of consumption of the product and the sales volume of the product itself. Now people are buying way more than they drink - later they'll have to drink way more than they buy.

So the bubble has all these things conspiring to burst it:

1. Many people (and certainly the heaviest user limited edition shelf-clearing crowd) could stop buying tomorrow and still drink bourbon at their comfort rate for 2yrs+

2. The economy may not sustain attitudes about the value of the dollar that rationalize $200+ for bottles of booze.

3. Supply has ramped up furiously several years ago which will in the next 2years start appearing in the 7yr range products. It's again ramping up hard recently, meaning in 7-8 years the supply increases will be quite serious.

4. Frustrated enthusiasts tired of this frustrating/aggravated-by-opportunists market may jump ship to another spirit category with more availability or better price/performance in the limited area (we agree nobody is going to unseat the mid-bottom shelfers in the foreseeable future, can I get an amen!)

5. Cultural trends may shift toward drinking less (it has happened before) or different things (as happened [still mysteriously] in the 70s which brought on the last glut).

6. And I include this sort of as a joke, but it's a joke with a grain (seed?) of possibility behind it. Most of us here remember JVW's quote from an interview a few years ago (I'm paraphrasing here because I don't have the article to hand.) "We distill a whole bunch of whiskey, and then they legalize marijuana, and I'm left with a bunch of product on my hands that I can't sell"

7. The world economy which lots of people thought would exponentially grow the US whiskey category is turning out to not be as strong as people hoped.

Any one of the above could kill the bubble dead. A few of them happening quickly could kill it very fast.

Most of us would agree that the current market is at least a little "crazy". Whether you want to call it crazy, pressurized, irrational, frenzied, or whatever - none of these words are famous for long durations. Bourbon takes a long time to produce, it's true - but a 6-case of barrel proof also takes a long time to drink, despite it taking only a few minutes to purchase. Those chickens have no choice over time but to come home to roost.

Edited September 11, 2015 by The Black Tot

[Richnimrod]

Mr. Tot you are an analytical wizard, my friend.

All the points you make are likely to come to pass, it only remains to see how soon, how much effect they have, and how foolishly some folx will continue to spend/hoard.

My suspicion is that all will turn out well for those of us who only wish to be left to drink our preferred drams, at a reasonable cost, and have an occasional splurge of something a little more special.

[The Black Tot]

Rich, that reminds me of a lovely girl I used to work with while scrubbing pots in a hospital kitchen. She once said to me:

"...remember, Paul, the first four letters of analyze spell anal..."

Funny the things you remember randomly from 25yrs ago.

[smokinjoe]

I'm waiting for the Cliff Notes version...