Our ongoing observations about whether the boom has peaked

[HoustonNit]

For Better or worse, I don't think you're going to win many bourbon drinkers on this site over to tea...

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Drinking tea is probably a better vice than bourbon.

[Vosgar]

7 hours ago, ModestGlutton said:

Yes I agree preference isn't the issue either, it is just what the scope of what the product has to offer. Alcohol is in general very straight forward, you drink it, the flavor can vary, some can be rough or smooth, but the feeling it gives you doesn't. Look into pu-erh tea.

 

 

Since you quoted my earlier post but didn't answer the question, I guess I was right, you're new to bourbon. Not being a snob by any means, just saying that it makes a big difference in what you taste...........

[ModestGlutton]

I guess you can assume my experiences and what I'm able to taste...as I don't see how that is applicable... but I'll bite. First, I tried to avoid that assumption: that we can assume each others abilities to taste things similarly, or more indepth. My point before was that there are other things in the world that move past a singularity such as taste which are more popular thus command higher prices and are subject to actual temperamental price increases. So now for what you don't know....You have multiple senses in your body and taste (and I'll include look and smell, appearance, intoxicaiton) are 4 aspects of the whole gamut of experiences that bourbon commands. But there are other things too look for when judging. For example, when you eat a steak, 1) you see it. 2) you smell 3) you taste it. 4) you chew it 5) you feel full/satisfied. Steak is more complex than bourbon because that extra component of chewing it, it has a texture. And people have different preferences of that texture (black and blue - fully "juices run dry" well done). Specifically pu-erh tea includes the same aspects as steak except, in every aspect it has much much more variety (and also includes intoxication, you can feel: drunk, high, blissful, calm/relaxed, hazy and others that I haven't yet to experience). The range is quite astounding, and far more "complex". But you won't know until you know. However this thread is about bourbon as a financial aspect, not in it's taste. So a more pertinent question to ask is; how much money are you invested in the US market? we can include liquidity, or stocks, shares, notes etc etc? Or are we to compare apples (bourbon tastes) to oranges (bourbon prices)? See? there is no point in comparing the wisdom of someone's palate to a fiscal question. I'm not saying I can tell you if Booker's is worth the price increase. I am saying there is no boom/bubble because relative to other commodities and movement of the price over time, it is normal given globalization opening new markets. 

 

But there is no hangover's with tea just some mild dehydration. But I'm not trying to convert you to tea, I was saying it is a bit farfetched to think the bourbon is going through some sort of bubble/boom when it's normal price increases, caused by normal inflation, coupled with a slight popularity boost, compared to something that is the second largest consumed beverage behind water. Or even more modestly vodka, which in the US is still the most consumed alcoholic beverage. Tea in general that is pu-erh is a niche variety of tea that has value as a collectable consumable good, and thus is more temperamental to fluctuations in market demands and speculations where real bubbles can be felt eg large companies/factories got shut down, billions lost.

 

 I guess you guys can guess this by now but I am terrible at expressing my ideas coherently and easily. Stone cold sober i'll make a last attempt. The point of mentioning tea (BACKGROUND INFORMATION) was that in the 70's-80's these teas which are sold as cakes on average 357 grams were dirt cheap, around $1-2 dollars for good stuff and yes it could get more expensive and you could get it if you wanted it. (HISTORY) Then at around early 2000's the prices of cakes shot up from around $8 to $40. Nowadays they are an easily a $100 and more and more common to be around $100-300 a cake, for normal good stuff, really quality goes for almost a grand, a cake that has been aging for 10 years can hit a grand like brisk walk at auction, and that's not even the stuff the Chinese are willing to let leave the country... (LEADING TO THE POINT) In the midst of the insane price increases in 2008 there was a massive bubble burst but that didn't really have any affect on the market. (THE POINT) Moral of the story: shit's getting more expensive (look at wine for example too), and it aint gona stop. (VOLUNTARY OPINION) I don't expect the price of coca-cola to come down, milk is still going to cost more too. The only way to round out the market is to only buy good stuff and only recommend good stuff. (RECOMMENDATION) Kick the guys in the nuts when they try to sell the crap. It's nonsensical to demand prices to decrease when people want to get paid more for their labor to match inflation so people like me can still afford toothpaste. The only thing that can be demanded with actual possibility of accomplishing the demand is an increase in quality of the product. (END OF STORY)

Edited April 18, 2017 by ModestGlutton

[Bbstout]

32 minutes ago, ModestGlutton said:

I guess you can assume my experiences and what I'm able to taste...as I don't see how that is applicable... but I'll bite. First, I tried to avoid that assumption: that we can assume each others abilities to taste things similarly, or more indepth. My point before was that there are other things in the world that move past a singularity such as taste which are more popular thus command higher prices and are subject to actual temperamental price increases. So now for what you don't know....You have multiple senses in your body and taste (and I'll include look and smell, appearance, intoxicaiton) are 4 aspects of the whole gamut of experiences that bourbon commands. But there are other things too look for when judging. For example, when you eat a steak, 1) you see it. 2) you smell 3) you taste it. 4) you chew it 5) you feel full/satisfied. Steak is more complex than bourbon because that extra component of chewing it, it has a texture. And people have different preferences of that texture (black and blue - fully "juices run dry" well done). Specifically pu-erh tea includes the same aspects as steak except, in every aspect it has much much more variety (and also includes intoxication, you can feel: drunk, high, blissful, calm/relaxed, hazy and others that I haven't yet to experience). The range is quite astounding, and far more "complex". But you won't know until you know. However this thread is about bourbon as a financial aspect, not in it's taste. So a more pertinent question to ask is; how much money are you invested in the US market? we can include liquidity, or stocks, shares, notes etc etc? Or are we to compare apples (bourbon tastes) to oranges (bourbon prices)? See? there is no point in comparing the wisdom of someone's palate to a fiscal question. I'm not saying I can tell you if Booker's is worth the price increase. I am saying there is no boom/bubble because relative to other commodities and movement of the price over time, it is normal given globalization opening new markets. 

 

But there is no hangover's with tea just some mild dehydration. But I'm not trying to convert you to tea, I was saying it is a bit farfetched to think the bourbon is going through some sort of bubble/boom when it's normal price increases, caused by normal inflation, coupled with a slight popularity boost, compared to something that is the second largest consumed beverage behind water. Or even more modestly vodka, which in the US is still the most consumed alcoholic beverage. Tea in general that is pu-erh is a niche variety of tea that has value as a collectable consumable good, and thus is more temperamental to fluctuations in market demands and speculations where real bubbles can be felt eg large companies/factories got shut down, billions lost.

 

 I guess you guys can guess this by now but I am terrible at expressing my ideas coherently and easily. Stone cold sober i'll make a last attempt. The point of mentioning tea (BACKGROUND INFORMATION) was that in the 70's-80's these teas which are sold as cakes on average 357 grams were dirt cheap, around $1-2 dollars for good stuff and yes it could get more expensive and you could get it if you wanted it. (HISTORY) Then at around early 2000's the prices of cakes shot up from around $8 to $40. Nowadays they are an easily a $100 and more and more common to be around $100-300 a cake, for normal good stuff, really quality goes for almost a grand, a cake that has been aging for 10 years can hit a grand like brisk walk at auction, and that's not even the stuff the Chinese are willing to let leave the country... (LEADING TO THE POINT) In the midst of the insane price increases in 2008 there was a massive bubble burst but that didn't really have any affect on the market. (THE POINT) Moral of the story: shit's getting more expensive (look at wine for example too), and it aint gona stop. (VOLUNTARY OPINION) I don't expect the price of coca-cola to come down, milk is still going to cost more too. The only way to round out the market is to only buy good stuff and only recommend good stuff. (RECOMMENDATION) Kick the guys in the nuts when they try to sell the crap. It's nonsensical to demand prices to decrease when people want to get paid more for their labor to match inflation so people like me can still afford toothpaste. The only thing that can be demanded with actual possibility of accomplishing the demand is an increase in quality of the product. (END OF STORY)

 

You wrote this "stone cold sober". I want whatever you are smoking ????

[Harry in WashDC]

51 minutes ago, ModestGlutton said:

. . .  I am saying there is no boom/bubble because relative to other commodities and movement of the price over time, it is normal given globalization opening new markets . . . 

FROM huffpost (Joe Satran 06 July 2015) which quotes a WashPost article (and I think the links work - 

 

"Kentucky’s distillers are trying to meet the world’s growing thirst for bourbon by ramping up production as fast as they can. According to The Washington Post, Kentucky bourbon production climbed to 1.3 million barrels in 2014, the highest level since 1970 and nearly three times as high as production in 1999."

 

I don't think the American whiskey bust circa 1970-1975 can be attributed to a drop in the global birth rate (or a drop in persons legally able to purchase spirits) or that the more than the three-fold increase in production from 1999 to 2014 can be attributed, primarily, to an increase in global trade (or persons reaching drinking age).   Even if it can be, I could not find very many other commodities (other than oil, which, I note is NOT US$100+ a barrel right now like it was a few years ago) that matched a three-fold increase in price during a comparable 15 year period during the 1900s-to date.  The only contractions I found occurred in the 1930s.  Also, compounded inflation 1999 to 2014 was about 48%.  Hence, one would expect the price of a $10 bottle of bourbon in 1999 to be about $14 in

2014 assuming no productivity improvements.  Instead, prices of such bourbons have, in many cases, more than doubled and a few are out of even MY price range.

 

ASIDE - I have now exhausted my 40 years' worth of experience working with market numbers.  All mistakes and errors in judgment are NOT my fault - blame it on my previous employers.

 

[DCFan]

5 hours ago, Harry in WashDC said:

I don't think the American whiskey bust circa 1970-1975 can be attributed to a drop in the global birth rate (or a drop in persons legally able to purchase spirits) 

 

 

The legal age to drink beer and wine was lowered to 18 at that time, drug use was exploding, and the country went into a recession after the war and the first OPEC cutbacks all contributed to that, imho.

[Flyfish]

On 3/30/2015 at 10:49 PM, squire said:

Yes, Bourbon is not a finite resource, they're making more of it every day.

Which means the distillers have already decided the boom is sustainable. You don't invest $gazillions in new facilities and then wait several years for your investment to bear fruit unless you expect the market to be there in 2025 and beyond.

[Harry in WashDC]

To that guy who posted a quote from the Huff Post - Does he realize he equated changes in production (i.e., supply) with identical changes in price?  Hence, his argument, while marginally attractive, makes no sense.  SEE Samuelson's ECON 101 and the Supply/Demand charts all through the book - Price is a function of supply (production) AND demand. 

 

To which that dumb bunny replies: OF COURSE I know that, but it is better to look good than to be good. 

 

Herewith endeth the lesson which is: Don't do research online while blogging and watching TCM and drinking OF 1897.  The combination of those variables leads to fuzzy thinking. and blogging.

[lcpfratn]

Which means the distillers have already decided the boom is sustainable. You don't invest $gazillions in new facilities and then wait several years for your investment to bear fruit unless you expect the market to be there in 2025 and beyond.

The world is full of examples throughout history of large investments being made that didn't pan out. Accordingly, you cannot extrapolate from a businesses large investment that there will be a guaranteed return on that investment in the future. There is always the expectation that the investment will be worthwhile or it wouldn't be made, as you point out, but expectations and actual results are not always the same. I look at the huge investments and growing competition and see the eventual bust unless there is a coinciding growth in customers and demand, which is the speculative part of the equation. The two most recent large scale examples of over investment that didn't pan out are the housing industry in the mid 2000s and domestic oil and gas drilling and production most recently. The markets eventually recover, and there are certainly different variables in every market that can impact success or failure, but when everyone starts to think that the party can never end, that's a sign that it likely will end sooner than later.

Having said that, there will always be limited availability and increasing prices for products that are in high demand without a foreseeable substantial growth in supply, so I don't see an end to the scarcity of Pappy, BTAC and a few other LEs anytime soon. But many products that were perceived as value buys in the past have also risen in price and become more scarce in the last few years. Those products are the canaries in the mine shaft. When they finally start sitting on the shelves or become more readily available, the boom will be ending. Figuring out whether the slow down occurs a few years from now or five to ten years from now is the big question, but I'm convinced it will occur.


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[HoustonNit]

Didn't the whiskey bust of the mid 70s have more to do with a change in consumer tastes to neutral spirits vs. a decrease in birth rates or economic factors?

[Paddy]

1 hour ago, HoustonNit said:

Didn't the whiskey bust of the mid 70s have more to do with a change in consumer tastes to neutral spirits vs. a decrease in birth rates or economic factors?

I would tend to think this more than economic factors, as there was plenty of 'cheap' bourbon available at this particular time. 

 

Bourbon wasn't groovy... it was just what the old granddaddy's were drinking!   

[Richnimrod]

1 hour ago, HoustonNit said:

Didn't the whiskey bust of the mid 70s have more to do with a change in consumer tastes to neutral spirits vs. a decrease in birth rates or economic factors?

 

4 minutes ago, Paddy said:

I would tend to think this more than economic factors, as there was plenty of 'cheap' bourbon available at this particular time. 

 

Bourbon wasn't groovy... it was just what the old granddaddy's were drinking!   

 

Both of these common-sense points make waaaaaay more sense to me than much of the preceding nonsense. 

...And, they are stated with little fanfare or extraneous Bullsh_t.    An approach I favor; .....but, as you can see don't follow very well, myself.   HA!

[Flyfish]

2 hours ago, lcpfratn said:

The world is full of examples throughout history of large investments being made that didn't pan out. 


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Perhaps I should have suggested that people who have a stake in getting the answer right and spend a lot of time and money thinking about it probably have a more valid opinion that those of us who spend our spare time casually kicking an idea around. 

[Richnimrod]

2 minutes ago, Flyfish said:

Perhaps I should have suggested that people who have a stake in getting the answer right and spend a lot of time and money thinking about it probably have a more valid opinion that those of us who spend our spare time casually kicking an idea around. 

CASUALLY!!!????      I'm very invested in carefully booting ideas around using all the foolishness at my disposal!    And, I feel offended by your cavalier attitude toward my cavalier attitude!    Heeeeeee He!

[lcpfratn]

Perhaps I should have suggested that people who have a stake in getting the answer right and spend a lot of time and money thinking about it probably have a more valid opinion that those of us who spend our spare time casually kicking an idea around. 

That is a valid point. However, the gist of what I was trying to say is that just because knowledgeable people spend a lot of time and money on an investment doesn't guarantee that they will be rewarded for that investment.


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[b1gcountry]

I imagine the boom will produce a number of long term bourbon drinkers. I also imagine the added attention will have a long term affect on premium bourbon's standing in relation to other forms of whiskey.

I don't think the trendiness can last, and I don't think the effort people put into the hunt will last either.

I expect the product to improve as people become more savvy, distillers catch up with the demand, and young distillate is allowed to mature before it is bottled.

I don't expect much drop in price, but I do expect availability to improve, and the ridiculous gouging at the top end to level out into a more stable msrp.

I have no basis other than my own intuition for any of this...

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[ModestGlutton]

4 hours ago, lcpfratn said:

That is a valid point. However, the gist of what I was trying to say is that just because knowledgeable people spend a lot of time and money on an investment doesn't guarantee that they will be rewarded for that investment.


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16 hours ago, Harry in WashDC said:

FROM huffpost (Joe Satran 06 July 2015) which quotes a WashPost article (and I think the links work - 

 

"Kentucky’s distillers are trying to meet the world’s growing thirst for bourbon by ramping up production as fast as they can. According to The Washington Post, Kentucky bourbon production climbed to 1.3 million barrels in 2014, the highest level since 1970 and nearly three times as high as production in 1999."

 

I don't think the American whiskey bust circa 1970-1975 can be attributed to a drop in the global birth rate (or a drop in persons legally able to purchase spirits) or that the more than the three-fold increase in production from 1999 to 2014 can be attributed, primarily, to an increase in global trade (or persons reaching drinking age).   Even if it can be, I could not find very many other commodities (other than oil, which, I note is NOT US$100+ a barrel right now like it was a few years ago) that matched a three-fold increase in price during a comparable 15 year period during the 1900s-to date.  The only contractions I found occurred in the 1930s.  Also, compounded inflation 1999 to 2014 was about 48%.  Hence, one would expect the price of a $10 bottle of bourbon in 1999 to be about $14 in

2014 assuming no productivity improvements.  Instead, prices of such bourbons have, in many cases, more than doubled and a few are out of even MY price range.

 

ASIDE - I have now exhausted my 40 years' worth of experience working with market numbers.  All mistakes and errors in judgment are NOT my fault - blame it on my previous employers.

 

 

I would think that war and decrease in the morality of the country which leads to increase in drug and alcohol use. And with demand the market fluctuated to take advantage of the times. Also could explain whey there is a roll out of cheaper bourbon being rolled out now.

 

Also what is really interesting to me is that there are a few main distillers producing most of the product that are available.

Edited April 18, 2017 by ModestGlutton

[Harry in WashDC]

9 hours ago, lcpfratn said:

. . . But many products that were perceived as value buys in the past have also risen in price and become more scarce in the last few years. Those products are the canaries in the mine shaft. When they finally start sitting on the shelves or become more readily available, the boom will be ending. Figuring out whether the slow down occurs a few years from now or five to ten years from now is the big question, but I'm convinced it will occur.


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Here is this warm body HOPING that Booker's is the first canary.  Now that its shelf price in most places has stabilized @ $60-70 around here, it seems to spend much more time on the shelf.  Considering that, until Booker's moved from its unnamed batches to the cute batch names, nobody paid attention to what a bargain (at least in my opinion) it was and THEN we all went, "WHOA!! Forgot about this one!", it is nice to see a staple bourbon that seems to have hit (a little above) its supply/demand price.  Now that it is fairly priced (again, in my opinion although I bunkered so much @ $40-50 I will wait for the crash  or "sales" before I buy more), it languishes.

[Harry in WashDC]

9 hours ago, HoustonNit said:

Didn't the whiskey bust of the mid 70s have more to do with a change in consumer tastes to neutral spirits vs. a decrease in birth rates or economic factors?

yup.

 

Had a LONG conversation with the mid-Atlantic rep. for Brown Foreman about that circa 1974. 9orginal post ended here)

 

EDIT added about 20 minutes later -- (somebody told me to quit blogging and eat dinner, dammit, so my blog post was incomplete. Not that that in and of itself is unexpected.  Now, I'm back.)  The conversation centered on BF's Frost 8-80, a white whiskey "aged" for 8 years in, I guess, a tun.  The idea was to have it compete with vodka which was kicking whiskey's butt.  I mean, back then grain neutral spirits that took hours to distill were diluted to 80 proof with a fancy label and were priced at or above whiskey which had spent 6 to 10 years in new white American oak barrels (with the consequent excise taxes on "inventory") and were outselling whiskey and did so until, I think, last year according to the Distilled Spirits Council.  Whatever, Frost 880 was a bust.  Consumers did not want "whiskey". even if it looked, tasted, and "mixed" just like vodka.

 

Go figure.

Edited April 19, 2017 by Harry in WashDC

[jvd99]

'74, the good ole days when my bottle was filled with milk, not booze

[Paddy]

18 minutes ago, Harry in WashDC said:

yup.

 

Had a LONG conversation with the mid-Atlantic rep. for Brown Forman about that circa 1974.

What were you drinking in '74 Harry... whiskey sours, Seven and Seven? 

 

Personally, I was a bit under-aged in '74, but when I started I went straight to the good stuff... Boone's Farm! 

[Harry in WashDC]

7 minutes ago, Paddy said:

What were you drinking in '74 Harry... whiskey sours, Seven and Seven? 

 

Personally, I was a bit under-aged in '74, but when I started I went straight to the good stuff... Boone's Farm! 

LOL.  in 1974 it was neat or rocks JD at 90 proof - why ELSE would I be talking to a BF representative at a cocktail party?  That conversation led to a surprise in the mail a couple of weeks later - a package from JD making me a Tennessee Squire with a little ID card, a deed saying I "owned" a piece of property, and about twenty years of occasional letters, glasses, funny little gifts, etc.  AND, I felt guilty leaving JD behind when they cut the proof circa 1987 as I lived on it for years.  I went back (thanks to comments here on SB) when they started with their recent spate of new products.  I particularly like, and have several iterations of, their barrel proof.  It is not cheap, but I can ALWAYS find it.

 

Ripple and some thing that tasted like Hawaiian Punch (forget the name) were our go-to's.  THEN, I found beer -well, the Army sent me to Germany where I defended freedom from some of the best gasthauses anybody could find.

[flahute]

4 hours ago, Harry in WashDC said:

LOL.  in 1974 it was neat or rocks JD at 90 proof - why ELSE would I be talking to a BF representative at a cocktail party?  That conversation led to a surprise in the mail a couple of weeks later - a package from JD making me a Tennessee Squire with a little ID card, a deed saying I "owned" a piece of property, and about twenty years of occasional letters, glasses, funny little gifts, etc.  AND, I felt guilty leaving JD behind when they cut the proof circa 1987 as I lived on it for years.  I went back (thanks to comments here on SB) when they started with their recent spate of new products.  I particularly like, and have several iterations of, their barrel proof.  It is not cheap, but I can ALWAYS find it.

 

Ripple and some thing that tasted like Hawaiian Punch (forget the name) were our go-to's.  THEN, I found beer -well, the Army sent me to Germany where I defended freedom from some of the best gasthauses anybody could find.

We thank you for your beer fueled service. Somebody had to do it.

[Flyfish]

17 hours ago, lcpfratn said:

That is a valid point. However, the gist of what I was trying to say is that just because knowledgeable people spend a lot of time and money on an investment doesn't guarantee that they will be rewarded for that investment.


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Definitely true.

[TexanBrad]

Definitely true.

From a guy who didn't go into finance, but had a handful of college roommates who did, I am much less in awe of what large scale investors and funds do now than I used to be. That's not to say they're not professionals and probably do it better than I ever would, but it is often a VERY human looking endeavor. Combine that with the detached nature that comes from working with someone else's money in a fund or the company... you get some interesting decisions.

Fortunately, when they goof on booze, you can usually find some quality cheap juice to drink out of it!


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