Our ongoing observations about whether the boom has peaked

[Sluffo]

15 hours ago, flahute said:

Not sure what sort of inside information you allude to. They look at trends and growth over time and other metrics in order to forecast their capacity needs. 

 

Right.  They know the real market.  And based on the growth trends they believe will continue, they are investing heavily.  If they thought the bourbon boom was ending, or even slowing, they wouldn't be putting that kind of coin into expansion.  Therefore, if they're right (no reason to believe they aren't) this "shortage" still has a long way to run its course.  Unfortunately.

[T Comp]

NOPE

 

[garbanzobean]

Unfortunately serious price adjustments for limited editions and highly sought after normal bourbons are likely inevitable.  Beam Suntory already appears to have caught on, and I expect the other major producers to only hold out for so long.  It seems as though they are trying everything but jacking prices up, to some positive and some negative results.  

 

Four Roses seems to be doing okay with their releases--mostly because the gift shops virtually guarantee LE bottlings if one is willing go to Kentucky and wait in line, and oh by the way come pick out some unicorn private selections while you are here.  Wild Turkey seems to be doing fine.  Old Forester and Woodford are fine now, but the OFBB situation seems to be building up.  Heaven Hill seems okay, not great.  The BTAC/Van Winkle situation in particular seems a real mess.  Could be that mess is working well for Sazerac now, but I don't think things will stay that way.  The level of frustration building up on all levels around those  releases does not seem healthy.

 

Personally I think the best case scenario for all is that the producers (BT particularly) open up a lot more options for barrel picks, so everyone can nerd out on some age stated OWA, BT, ETL, etc (maybe even reward select stores with private Van Winkle 10-12 barrels) instead of everyone chasing after the same 10 whiskies every fall.

 

Edit: yes I know private pappiez are not feasible right now.  I am thinking 3-5 years from now when MAYBE BTs production is finally catching up.

Edited November 19, 2016 by garbanzobean

[Flyfish]

On 11/18/2016 at 3:41 PM, Sluffo said:

 

Right.  They know the real market.  And based on the growth trends they believe will continue, they are investing heavily.  If they thought the bourbon boom was ending, or even slowing, they wouldn't be putting that kind of coin into expansion.  Therefore, if they're right (no reason to believe they aren't) this "shortage" still has a long way to run its course.  Unfortunately.

I wonder if distillers have factored in the potential market competition from legalized pot. I hope they have not because it might lead them to overproduce to our benefit.

[Grain Belt]

On November 19, 2016 at 11:12 AM, T Comp said:

NOPE

 

 

Looks to me that some unfortunate stock boy added a 1 to the price placard.  Even at $50 I would not be a buyer. Of course I'm a cheap SOB overall. 

[Harry in WashDC]

12 hours ago, Flyfish said:

I wonder if distillers have factored in the potential market competition from legalized pot. I hope they have not because it might lead them to overproduce to our benefit.

I would expect they have even if pot, any more than cigarettes, is not a one-to-one substitute for spirits.  I do recall some twenty (or, was it thirty???) years ago when a friend of mine doing trademark law told me he'd done some work for tobacco companies filing to protect future brand names with a cannabis slant.  I suppose the distillers are just as aware of alternatives to their products in addition to wine, beer, and those weird malt beverage things in cans with vodka- and tequila-like logos.

 

Mayhap legalized pot will be the shiny new object, but I wouldn't bet on it until we all see how the new Federal policies on controlled substances mesh with state laws and policies on pot growing, sale, and use.  IN SUM, this can likely will get kicked down the road at least four years.

 

[Sean Bond]

On 11/17/2016 at 10:08 PM, Sluffo said:

And Four Roses is in the middle of expanding their distillery.  Adding a new still and doubler which will effectively double their production capacity.  They are convinced the boom is more of a renaissance and won't end any time soon.  That's a lot of coin for a major producer to invest without some inside information.

I think they're right, to a certain extent. I don't think the craze will continue to exist forever as it currently is (there will be a day when Pappy and the like are again on shelves, at least for a few minutes), because production will continue to increase, and a lot of the people that are chasing these whiskies will see that A) they're no longer worth as much on the secondary market and B ) they don't get as many "likes" and jealous comments on their social media posts (so the appeal of spending $100+ on a bottle is lessened).

 

With that being said, I think bourbon will turn into a similar situation to craft beer (which, ironically, has only recently started seeing the "issues" that the high-end bourbon market has had for a while), where most of these people who have gotten into bourbon via craft beer or some other similar means will see how much good bourbon is in the world (well, country), and will concentrate on finding their favorites, instead of just the "whales." This, coupled with increased production in the next 5-10 years, and I'd imagine that we'll start being able to actually find Weller 12 on shelves, or ETL, or whatever the equivalent is. The big releases will still be tough to get (since the theory is that Pappy and Four Roses and the like won't all of a sudden start producing worse bourbon), but they won't be entirely impossible as they currently are. 

 

To again draw the craft beer comparison, a couple years ago all the big bourbon barrel-aged stouts were almost impossible to find in the bigger liquor stores in Chicago. Now, a few years later, we have many more quality offerings, and people have gotten more of a sense of what they like and don't like, and suddenly many of these "whales" aren't quite as hard to find anymore.

 

tl;dr - I think Four Roses will find that their LE bourbons may not continue to command super high prices on the secondary market, but I would imagine that they will continue to do very well, as long as they keep pumping out the same quality as they are now.

[Saul_cooperstein]

Great to read this thread and my first post outside of the new to SB thread. 

 

I think the analogy to craft beer is astute as would be comparing to California Cabernet. However, some differences including:

 

1) with spirits the market is far more inefficient with limited distribution channels. For example the majority of cult CA Cabernets are mailing list allocated not sold through retail. The wineries manage their own allocations and are able to reward long term customers with increased allocations and special offerings. Some wineries (such as Schrader I believe) have also begun tracking if any mailing list customers flip their bottles with those caught removed from future allocations. In many cases the liquor allocation process may actually further enhance flippers - even in retail. For example tied allocations, where a retailer may be required to buy cases of something widely available that they may not really want or need in order to get allocated limited editions, may almost require retail to charge a premium for LEs above MSRP because their true cost to acquire is higher than just the bottle cost. 

 

2) 10-15 years ago a huge number of cult Cabernets were 'flippable'. However with increased number of really high quality producers subscribing to the cult formula for their products and price increases year after year, most mailing list wines are now priced pretty close to secondary market - with a small number of notable exceptions (screaming eagle, SQN long aged, etc). This has removed flippers but also priced many long ago drinkers out of the market. Supply does now very closely mirror demand. And with it there are many many more great wines than 10-15 years ago, although costs may be higher - there is still great Ca cab at almost any price point. This should be even more true moving forward with US whiskey where a large part of price increases for wine has been astronomic real estate in sought after areas like Napa. This should not be the case with whiskey. However I still see the same trend emerging over time with whiskey where MSRP and secondary are very close for all but a very small number of whiskeys (pappy/BTAC?, michters long aged, etc). This has even started with things like the knob creek 2001 and the michters 10's now not showing much difference between MSRP and secondary. However as stated for some of these, tied allocations may distort things a bit. 

 

3) the third major difference I think between wine and whiskey is reliance on critics. With wine a small number of critics (Robert Parker and wine spectator) became very influential in driving pricing. For example With Robert Parker a one point difference in score (100 vs 99) could lead to a doubling in price. I do not think this situation yet exists for whiskey and it will likely be more difficult for such a powerful 'price moving' critic to emerge in whiskey based on emergence of blogs, vlogs, forums, etc. The emergence of Parker was driven as much by the 100 point scale as the 100 point score (something I have never seen from any critic for an American whiskey) and his involvement as the de facto critic as the industry for CA cab and the creation of cult cabs was just coming into its own. Let's hope no such critic emerges and the whiskey world - for most of us - remains driven by recommendations on sites like this. 

[Louisiana]

 

Bars/Restaurants are gulping up allocation here. I personally talked with the owner of a high end restaurant & high end liquor shop. They are located in the same building. Old wooden style plaza place. He said the ratio was 2:1. Maybe worse. He's got every BTAC & PVW on the menu, but said it was like pulling teeth to get supply for the store.

 

This brings me to another thought. Bunkers aren't being filled up with these bottles like people think. A lot of this fine whiskey is being drank. And that's okay with me. I still would like a bottle though.

 

 

 

[Sean Bond]

I may be alone in this feeling, but I think it's a shame that so much of the high end stuff goes to restaurants and bars. Obviously I understand that they're some of the best customers, but it's still kind of unfortunate to see a bar get (for example) bottle of PVW23 and instantly put it up for $100 a 1 oz. pour. Were the situation different and most bars were offering the same bourbon for, say $30 a pour (which is still a lot of money for an oz. of liquid, but bars gotta make money!), I'd feel differently. As it is, it feels like these places are hoarding the bourbon so that mostly only the high-rollers are able to get the stuff. Which...feels awfully similar to how it works in some stores and the secondary market. 

[Clueby]

And buying a high-dollar pour at a restaurant always feels like a gamble that I'm actually getting what I paid for.

[Guinny_Ire]

I don't mind not getting it , if someone else is but I do mind it if it's being hoarded/steered to the bars and restaurants. So if that's the case, let some schmuck pay 30 a pour, there is a ton of good bourbon out there that is reasonably priced. My favorite bourbon right now is Very Old Bardstown, a white elephant if you live in Missouri, that some buddies brought back for me from fly fishing in Arkansas. Four Roses Barrel Select, really is Pappy or an Antique Collection twice as good as the price is on some of the middling stuff? More of a bragging right.

[Sean Bond]

Yeah, I think we all agree that Pappy is overpriced anywhere it's not being sold at close to MSRP, and the only reason I'd pay $30 for a pour of the 23 is that I've never had it (and $30 is cheaper than I've ever seen the 23 for). I tend to like barrel-proof stuff mostly to the exclusion of everything else, so I'm already paying more (baseline) for my bourbon than a lot of people. 

 

Now, do I think BTAC and some of the other bourbons are twice as good? I dunno; maybe, depends. I'm not high on Blanton's (which is around $60 where I live), so yeah, I'd take a BTAC or a limited release FR for $120 before paying for Blanton's again. But it definitely depends, and again, paying much more than MSRP is either 1) because you've got the money, and don't give a shit or 2) for the bragging-rights and Instagram pics like you said.

[mosugoji64]

On December 1, 2016 at 0:54 PM, Louisiana said:

 

Bars/Restaurants are gulping up allocation here. I personally talked with the owner of a high end restaurant & high end liquor shop. They are located in the same building. Old wooden style plaza place. He said the ratio was 2:1. Maybe worse. He's got every BTAC & PVW on the menu, but said it was like pulling teeth to get supply for the store.

 

This brings me to another thought. Bunkers aren't being filled up with these bottles like people think. A lot of this fine whiskey is being drank. And that's okay with me. I still would like a bottle though.

 

 

 

 

Same here. I spoke to a distributor a couple of years ago about one of the CEHT releases and found that it all went to on-premise accounts. It's sad, but that's just the way it is now. As long as bars/restaurants are able to command a premium for the limiteds, they will continue to do so. I we're paying, they're pouring!

[Paddy]

Speaking of paying.....today, I was shocked to see that standard 4RSB prices have jumped $9 in the past week.  Sadly, we'd already seen a price 'adjustment' six months, or so, ago. 

 

Prior to these recent developments, regular price around here was $28.99.  The first bump took it to $32.99.  Today, I'm looking at $41.99.  Two years ago I could pick up a barrel proofer of any recipe for $44.99.   

 

The good news is that the product is still always on the shelf.  The bad news is that with the given demand, vs the strain on production capabilities, the product, and price, are still likely to continue in opposite directions on the QPR scale.

[jeffrey r]

Paddy, that is unfortunately close to the going rate now for FRSB. FRSB used to be close to $30 here in NJ, now it is close to $40. But that is why a few years ago, when I came across a shelf-full of FRSB gift packs with FR rocks glasses for $30, I bought a bunch of them. Got some great rocks glasses that I used to stock my bar, and got cheap FRSB to stock the bunker. Well, anyway, FRSB is still worth the $40 to me if I had to spend that to restock.

[flahute]

10 hours ago, Paddy said:

Speaking of paying.....today, I was shocked to see that standard 4RSB prices have jumped $9 in the past week.  Sadly, we'd already seen a price 'adjustment' six months, or so, ago. 

 

Prior to these recent developments, regular price around here was $28.99.  The first bump took it to $32.99.  Today, I'm looking at $41.99.  Two years ago I could pick up a barrel proofer of any recipe for $44.99.   

 

The good news is that the product is still always on the shelf.  The bad news is that with the given demand, vs the strain on production capabilities, the product, and price, are still likely to continue in opposite directions on the QPR scale.

Ouch.

$41.99 has been the going rate for 4RSiB around here for a few years now and I'm now starting to see it for $49.99 in some places. All of the PS barrel proofers are $79.99 to $81.99.

Boy have times ever changed quickly. 

 

On a recent barrel pick trip at 4R, there were only 6 barrels to taste from (as opposed to the usual 10) and quality across the board was down. Barrels were younger too. I'm afraid that the demands on 4R have impacted the supply negatively and that quality is a bit down. The base distillate is still good of course. I believe that more barrels that would have gone into Yellow Label are now being used for the Single Barrels because the stock of those older and higher quality barrels is too diminished.

I used to buy any and all PS bottles I came across because they were always outstanding. I'm more discerning now. If I haven't tasted it yet, I need to know who the pickers were if I'm buying blind.

[JoeTerp]

FRSB is at $44.99 in VA with no PS

[mbroo5880i]

12 hours ago, Paddy said:

Speaking of paying.....today, I was shocked to see that standard 4RSB prices have jumped $9 in the past week.  Sadly, we'd already seen a price 'adjustment' six months, or so, ago. 

 

Prior to these recent developments, regular price around here was $28.99.  The first bump took it to $32.99.  Today, I'm looking at $41.99.  Two years ago I could pick up a barrel proofer of any recipe for $44.99.   

 

The good news is that the product is still always on the shelf.  The bad news is that with the given demand, vs the strain on production capabilities, the product, and price, are still likely to continue in opposite directions on the QPR scale.

 

I can find standard FRSB for $36.99 and top notch PS barrel proofs for $54.99 regularly.  Interestingly, the price of the FRSB has risen significantly more quickly than the PS barrel proofs.  Unfortunately, I don't find the flavor as rich as in the past.  I haven't enjoyed the last two standard FRSBs that I had as much.  I understand barrel variability but these were two different barrels from different time periods and from different stores.  I passed on a FRSB today (on sale) for $31.  I thought long and hard about it and even picked it up and looked at it.  But, in the end, there are other options in the $30-40 price range that I prefer right now.  Two years ago, that wouldn't have been the case.  I would have opened the trunk and had the sales clerk help me load up, except the price would have been in the mid-$20s.

 

On topic, I saw OE 101 for $29..99 at a very reasonably priced store.  This was $19.99 in the spring and, occasionally, could be found for $15.99.

[garbanzobean]

On 12/2/2016 at 3:54 AM, Louisiana said:

 

Bars/Restaurants are gulping up allocation here. I personally talked with the owner of a high end restaurant & high end liquor shop. They are located in the same building. Old wooden style plaza place. He said the ratio was 2:1. Maybe worse. He's got every BTAC & PVW on the menu, but said it was like pulling teeth to get supply for the store.

 

This brings me to another thought. Bunkers aren't being filled up with these bottles like people think. A lot of this fine whiskey is being drank. And that's okay with me. I still would like a bottle though.

 

 

 

If I recall correctly, Buffalo Trace/Sazerac are intentionally encouraging the allocation disparity as a response to rampant flipping.  I'm sure distributors are more than happy to work with them on that, as well.  Either way, the on premise demand for rare bottles is here to stay, and will likely outlast peak consumer demand. 

 

I don't mind it, really.  I'd rather be able to try something that's a little overpriced if I really want to try it than never be able to try it for less than secondary price for an entire bottle.  I may feel differently in a few years if bar prices keep skyrocketing, but for now it scratches the itch.

[Saul_cooperstein]

I think the on premises market provides greater opaqueness for increased pricing vs wholesale and likely higher customer lifetime value by having restaurant/bar guests be able to actually try ( through a well program or specialty cocktail), and then start buying on their own, other less limited brand products that may be tied to an allocation of LE products to those restaurants/bars 

[Louisiana]

On December 2, 2016 at 5:04 PM, mosugoji64 said:

 

Same here. I spoke to a distributor a couple of years ago about one of the CEHT releases and found that it all went to on-premise accounts. It's sad, but that's just the way it is now. As long as bars/restaurants are able to command a premium for the limiteds, they will continue to do so. I we're paying, they're pouring!

 

Your right. The few bars that actually sell pours for a descent price don't keep inventory long. I was able to procure a few bottles of BTAC at retail, but unless supply increases very soon I don't see it happening in the future. I even heard today that restaurants are buying up the little supply that retailers are getting around the area. $30-$100  per ounce at a Bar/Restaurant can buy the retailers inventory quick.

[Louisiana]

6 hours ago, garbanzobean said:

If I recall correctly, Buffalo Trace/Sazerac are intentionally encouraging the allocation disparity as a response to rampant flipping.  I'm sure distributors are more than happy to work with them on that, as well.  Either way, the on premise demand for rare bottles is here to stay, and will likely outlast peak consumer demand. 

 

I don't mind it, really.  I'd rather be able to try something that's a little overpriced if I really want to try it than never be able to try it for less than secondary price for an entire bottle.  I may feel differently in a few years if bar prices keep skyrocketing, but for now it scratches the itch.

 

I also would rather a business make the extra money over a flipper. We know that any drink is only worth so much though. Hopefully these guys will keep their prices in check, so we can enjoy some Great Bourbon.

[garbanzobean]

1 hour ago, Louisiana said:

 

I also would rather a business make the extra money over a flipper. We know that any drink is only worth so much though. Hopefully these guys will keep their prices in check, so we can enjoy some Great Bourbon.

Cheers to that!  

[Thig]

I am not qualified to say whether the boom has peaked or not but I am seeing a lot of people on here getting the limited releases this year, and we are only a small percentage of the bourbon drinkers out there. Makes me think more of it is becoming available even if I am not getting it.