Our ongoing observations about whether the boom has peaked

[BottledInBond]

55 minutes ago, TexanBrad said:

 

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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I did go into finance, and have had Director and Vice President titles at huge firms that are household names. I have a degree in economics from a top school. 

 

Nobody gets all their investments right. Most large cap domestic mutual funds lag the S&P 500 over long periods of time. There is too much information available and the market is too efficient for them to overcome the fees associated with running the funds in addition to just beating the market on an absolute basis. Millions of people invest in these funds.....

 

There are countless examples of other business making large capital investments that don't pay off. Businesses fail all the time. History doesn't always repeat itself but it often rhymes. No business goes straight up in a linear fashion forever. Things ebb and flow over time. Remember when the Ford Explorer was the best selling SUV in the world? They still make them but they barely have any market share. Remember when Blackberry was an important tech company? Remember when Sears was a dominant retailer? Nothing lasts forever and the recent trajectory of the bourbon market won't either. I still find myself thinking it will just normalize a little eventually, not just "bust" or "glut". 

 

[RWBadley]

15 hours ago, Harry in WashDC said:

snip/

 

Ripple and some thing that tasted like Hawaiian Punch (forget the name) were our go-to's. 

Good lord I remember that stuff,

Ripple, Thunderbird, MD 20-20, Annie Green springs? Boones Farm? Ick and more ick.

One night back then I about lost most of my right hand thumb to a MD 20/20 fueled excursion gone awry. AND probably PO'ed nearly every female I knew at the time.

Then I discovered Old Crow...

Ah the good ol' days

Edited April 19, 2017 by RWBadley
...

[fishnbowljoe]

19 hours ago, Harry in WashDC said:

Ripple and some thing that tasted like Hawaiian Punch (forget the name) were our go-to's.

 

Might that be "Kickapoo Juice"?   That's what we called one similar connection when I was in the Army.

[Harry in WashDC]

4 hours ago, fishnbowljoe said:

 

Might that be "Kickapoo Juice"?   That's what we called one similar connection when I was in the Army.

Um, I think the commercial name of the stuff I remembered, now that I am awake and nondrinking, was "Bali Hai".  It was a wine-based, Hawaiian Punch-like concoction with a real label which one could purchase OTC.  HOWEVER, we did make Pantherpiss  (pronounced pan-THUR-piss) - a Grape Nehi-based mess (Welch's Grape juice was a POOR substitute) with overproof vodka similar to the civilians' Purple Jesus OR Alligatorpiss (pronounced alley-gah-TOR-piss) which was Orange Crush with overproof vodka.  As we were tankers, we learned early on (or were taught by our forbears) that the smell of our stuff could be obscured by spilling a little hydraulic fluid inside the tank. Kickapoo Joy Juice was stuff our fellow Southerners made - Mountain Dew with overproof vodka and some coffee shots for a caffeine rush.  Just what we needed - wide awake drunks in 60 ton tracked vehicles that could go just about anywhere they wanted.  MAN, I loved that.

[HoustonNit]

^sounds like a good time

[mosugoji64]

21 hours ago, BottledInBond said:

No business goes straight up in a linear fashion forever. Things ebb and flow over time. Remember when the Ford Explorer was the best selling SUV in the world? They still make them but they barely have any market share. Remember when Blackberry was an important tech company? Remember when Sears was a dominant retailer? Nothing lasts forever and the recent trajectory of the bourbon market won't either. I still find myself thinking it will just normalize a little eventually, not just "bust" or "glut". 

 

Thank you for pointing this out! One of the reasons I got out of retail was the obsession with linear increases in sales on a daily basis. Some members of upper management would even flip out if they saw hourly dips in sales. I would always try to point out long term gains but eventually got tired of the constant life-and-death freak outs displayed over short-term dips. Whatever. 

Anyway, I, too, don't expect a new glut but do look forward to the American whiskey market reaching a state of normalization. While prices may not come down, I would enjoy a little more ease in finding some things that hold my interest.

[smokinjoe]

It should be recognized that much of the capacity build is to replenish  already depleted inventories and accommodate real time demand increases.  I would believe the increases seen are at least sustainable for some time.  Now, any build-up based on future projections are somewhat a roll of the dice the farther they get away from their core customer base.  

[b1gcountry]

^^^
So based on just refilling their rack houses, are the new stills basically already paying for themselves?

Are the stills the limiting factor in the bourbon production lately? Is it the Rick houses? Or is it just not enough aged stock put down 10 years ago?

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[BottledInBond]

2 hours ago, b1gcountry said:

^^^
So based on just refilling their rack houses, are the new stills basically already paying for themselves?

Are the stills the limiting factor in the bourbon production lately? Is it the Rick houses? Or is it just not enough aged stock put down 10 years ago?

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Still size is big but doesn't fix everything. For example cooperage is also a limiting factor in some cases. They can build rickhouses fairly easily because that construction doesn't interrupt the rest of their production. Certainly the aspect of not laying down more barrels 10 years ago has a big impact on all the recent losses of age statements, etc. 

[smokinjoe]

All of the above!  

[flahute]

Joe beat me to it. All of the above.

 

Still size is limiting because whatever size it is, there's a maximum output. When the still is running at max capacity and it's not enough, you need to add more stills.

Rickhouses are also a limiting factor. When the ricks are full and you need to build new ones, it doesn't happen fast enough. Everybody else needs them too so the companies that build them have a backlog.

Not enough stock laid down 10 years ago is why age statements are dropping and rolling blackouts occur.

[Flyfish]

22 hours ago, flahute said:

 

Not enough stock laid down 10 years ago is why age statements are dropping and rolling blackouts occur.

Yep. You can make more of it pretty easily but it is still damn hard to make a 4YO bourbon in less than 4 years.

[garbanzobean]

3 hours ago, Flyfish said:

Yep. You can make more of it pretty easily but it is still damn hard to make a 4YO bourbon in less than 4 years.

Speaking of this, apparently social media is abuzz with rumors that HH6BIB is being replaced with an NAS 40% product.  Did SB already have a freakout and decide one way or another about this rumor?  I've not been on here as much lately.

 

If this speculation were true, it's another Jenga block taken out of the quality foundation of bourbon and moved up to the super premium lines.

[flahute]

1 hour ago, garbanzobean said:

Speaking of this, apparently social media is abuzz with rumors that HH6BIB is being replaced with an NAS 40% product.  Did SB already have a freakout and decide one way or another about this rumor?  I've not been on here as much lately.

 

If this speculation were true, it's another Jenga block taken out of the quality foundation of bourbon and moved up to the super premium lines.

Too my knowledge, it hasn't been discussed here.

[Paddy]

1 hour ago, garbanzobean said:

Speaking of this, apparently social media is abuzz with rumors that HH6BIB is being replaced with an NAS 40% product.  Did SB already have a freakout and decide one way or another about this rumor?  I've not been on here as much lately.

 

If this speculation were true, it's another Jenga block taken out of the quality foundation of bourbon and moved up to the super premium lines.

There has been a label change, in that they are bottling a NAS 80 proof bourbon in a label that is identical to the HH BIB label.  I saw handles of it yesterday, and was a bit confused by it (because I'm not used to seeing a HH white label handle).  Thankfully, the 750's nearby were all newly stocked, age stated, BIB's.  Monger said that HH was going to start using the same label for the whole HH lineup... 

[garbanzobean]

6 hours ago, Paddy said:

There has been a label change, in that they are bottling a NAS 80 proof bourbon in a label that is identical to the HH BIB label.  I saw handles of it yesterday, and was a bit confused by it (because I'm not used to seeing a HH white label handle).  Thankfully, the 750's nearby were all newly stocked, age stated, BIB's.  Monger said that HH was going to start using the same label for the whole HH lineup... 

I reached out to the local Heaven Hill distributor/rep and they just got back to me with the same thing.  Of course this should terrify you all, since every single time I have done this in the past, the product in question has been cancelled or had the age statement removed within 18 months.

Edited April 22, 2017 by garbanzobean

[Richnimrod]

1 hour ago, garbanzobean said:

I reached out to the local Heaven Hill distributor/rep and they just got back to me with the same thing.  Of course this should terrify you all, since every single time I have done this in the past, the product in question has been cancelled or had the age statement removed within 18 months.

Hmmmm, and the 'kiss of death' seems to be when a distributor (or even a distillery spokesperson) offers assurances that "something" isn't gonna happen.    ...Just sayin'....

[Hop]

8 hours ago, Paddy said:

There has been a label change, in that they are bottling a NAS 80 proof bourbon in a label that is identical to the HH BIB label.  I saw handles of it yesterday, and was a bit confused by it (because I'm not used to seeing a HH white label handle).  Thankfully, the 750's nearby were all newly stocked, age stated, BIB's.  Monger said that HH was going to start using the same label for the whole HH lineup... 

They've been doing this for years and this is what is distributed in NC so it's nothing new to what I've seen...

 

No reason to panic 

[HoustonNit]

There has been a label change, in that they are bottling a NAS 80 proof bourbon in a label that is identical to the HH BIB label.  I saw handles of it yesterday, and was a bit confused by it (because I'm not used to seeing a HH white label handle).  Thankfully, the 750's nearby were all newly stocked, age stated, BIB's.  Monger said that HH was going to start using the same label for the whole HH lineup... 

All another site this list new bourbon releases has listed a "New" Heaven Hill BiB.

My total guess is there going to start offering it in a more fancy bottle and up the price. Like OGD and JB BiB.

[jvd99]

Talked to a FR rep this week, he said they're only doing 6 private picks a month which is a severe curtailment of the private selection program.  I didn't think to ask at the time if that was 6 barrels or six stores per month (Binny's will pick all 10 or more at a time).  

[Old Dusty]

15 minutes ago, jvd99 said:

Talked to a FR rep this week, he said they're only doing 6 private picks a month which is a severe curtailment of the private selection program.  I didn't think to ask at the time if that was 6 barrels or six stores per month (Binny's will pick all 10 or more at a time).  

At the end of 2016 they were low on available barrels. We had 6 rolled out w several duplicate recipes. And we were only allowed one barrel. A friend was there the next day w another retailer and they had our five leftovers and one "new" barrel to choose from. Compare that to the end of 2015 and we had 10 to choose from and could have bought all ten if we wanted. I'm guessing your contact meant only 6 selection groups per month. And likely w a limited number of barrels to choose from. The days of all ten recipes being available are history. And so is the quality of the cohort. The floor on age was lowered from 9 to 8 years just to keep the program going. 

[HoustonNit]

Just read this about the baseball card industry. Skip to the last three paragraphs it seems oddly familiar to the current state of bourbon.

https://www.si.com/vault/2009/08/24/105849124/the-last-iconic-baseball-card

[Old Dusty]

He still has some old Pappy near the register. I ask him what he does with them.

 

"I don't even do a hundred a month in straight bourbon now.  So if someone spends $25 on flavored whiskey I give them one"

[HoustonNit]

3 hours ago, Old Dusty said:

He still has some old Pappy near the register. I ask him what he does with them.

 

"I don't even do a hundred a month in straight bourbon now.  So if someone spends $25 on flavored whiskey I give them one"

 

Ha may not get to that state but I definitely feel bourbon is in the current spot that baseball card industry was in the about 1992.

 

Below is the section of the story that appears to be where bourbon is right now.

 

He incorporated as Win Lose or Draw in '95 but had already given up on cards a year earlier, around the time of the baseball strike, a tipping point for the card industry. "My sales from '88 to '92 were $10,000 to $13,000 a month, and the cost of goods was only $1,000 to $2,000 a month," Gershenoff says. "Then they started putting out so much product, raising the price on packs and putting in chase cards that caused people to stop trying to make sets. Kids ran away. Hobbyists got aggravated because they couldn't afford everything, and speculators backed off because of over-saturation. By '94 my sales were $3,000 a month, and new products were up to $5,000 a month. I had to get out."

He still has some old packs near the cash register. I ask what he does with them.

"I don't even do a hundred a month in cards now," Gershenoff says, "so if somebody comes in and spends $25, I give them a 50-cent pack: '88 Score, '91 Fleer. If they spend $50, I give them a dollar pack: '91 Stadium Club, '91 Upper Deck. A lot of people say, 'I don't want them.' I'll ask, 'Maybe you have a neighbor who's been a good kid?' And sometimes they'll say, 'O.K., I've got a nephew or some Jack I can give them to,' but a lot of times it's just, 'No thanks. I've got a ton sitting at home and nothing to do with them.'"

[Old Dusty]

30 minutes ago, HoustonNit said:

 

Ha may not get to that state but I definitely feel bourbon is in the current spot that baseball card industry was in the about 1992.

 

Below is the section of the story that appears to be where bourbon is right now.

 

He incorporated as Win Lose or Draw in '95 but had already given up on cards a year earlier, around the time of the baseball strike, a tipping point for the card industry. "My sales from '88 to '92 were $10,000 to $13,000 a month, and the cost of goods was only $1,000 to $2,000 a month," Gershenoff says. "Then they started putting out so much product, raising the price on packs and putting in chase cards that caused people to stop trying to make sets. Kids ran away. Hobbyists got aggravated because they couldn't afford everything, and speculators backed off because of over-saturation. By '94 my sales were $3,000 a month, and new products were up to $5,000 a month. I had to get out."

He still has some old packs near the cash register. I ask what he does with them.

"I don't even do a hundred a month in cards now," Gershenoff says, "so if somebody comes in and spends $25, I give them a 50-cent pack: '88 Score, '91 Fleer. If they spend $50, I give them a dollar pack: '91 Stadium Club, '91 Upper Deck. A lot of people say, 'I don't want them.' I'll ask, 'Maybe you have a neighbor who's been a good kid?' And sometimes they'll say, 'O.K., I've got a nephew or some Jack I can give them to,' but a lot of times it's just, 'No thanks. I've got a ton sitting at home and nothing to do with them.'"

Yep, I read it and thought it was appropriate fodder for this thread. I just took it a step further with my edits for (small) humor value.