Price gouging and the secondary market

[flahute]

Price gouging as a jerk tax? Who does it really hurt?

 

I came across this post via twitter earlier this week and everything in it rings true from my experience with one caveat: the post is about craft beer. So why post it here? If you substitute the word "beer" with "bourbon", everything still applies (except for one part). (If the mods feel it inappropriate to be here and want to move it, I understand.) This parallels the bourbon market so perfectly I thought that it would be interesting to members here.

 

http://www.beercrunchers.com/blog/price-gouging-the-jerk-customer-tax

[fenderbender4]

I think I might fall into the "Jerk" customer category then.  I've gone to a bunch of liquor stores seeking certain bourbons, especially ones that are far away.  I'm just not willing to drive 45 minutes in a direction I never go and make it my "daily" store.  Also not willing to do it when bottles average about $5 higher than what I can find at something like Total Wine.  Sometimes as much as $10+ higher per bottle.  Maybe that costs me the chance of being a "preferred" customer but that argument can also be turned onto the store owners as well (basically having people pay money to be part of a special club, aka buying friends).

 

That said, maybe breweries/distilleries should start charging more per bottle/case to stores or distributors?  It seems the creators are losing out on money while people who simply resell (albeit with liquor licenses) are making more of the profit.  I don't want to pay $100 for a whiskey, when the distiller planned on selling it for $30.  Now if it was sold for $100, but the distiller was charging the distributor/store like $60 for it, then I still wouldn't spend the money on it, but I'd feel the price is more in line with the work/equity.

[Flyfish]

I have never been gouged on a bottle of bourbon. If I don't like the price, I buy something else and/or wait until I can cross a state line to better prices and selection. 

[Richnimrod]

Hmmmmm, Interesting!   (As Artie Johnson would say, many years ago...If you get that reference; You're OLD, like me.   HA!)

A good deal of logic and sound-marketing-thought in the linked info.

One more thing, I'd add: Retailers who don't mark up at least some pretty good-sized amount will burn through 'limited release' stuff so quickly that they lose out on some pretty effective image-enhancement, just showing they've been allowed to receive the rare stuff from the distributors.    I know in my area (very blue-collar) the few places that do receive even small amounts of the 'limiteds' are well known, and well-though-of.

[Flyfish]

1 hour ago, Richnimrod said:

 

One more thing, I'd add: Retailers who don't mark up at least some pretty good-sized amount will burn through 'limited release' stuff so quickly that they lose out on some pretty effective image-enhancement, just showing they've been allowed to receive the rare stuff from the distributors.    I know in my area (very blue-collar) the few places that do receive even small amounts of the 'limiteds' are well known, and well-though-of.

Your blue-collar area has LEs in small amounts? We in OH are protected against merchants getting LEs in any amount whatsoever. Impossible for them to raise the price outrageously on stuff they have never even heard of. But we are protected against merchants who might want to sell products at a lower price because the state decides what the minimum will be, not the maximum. "Who's lookin' out for you, Babe?" is right there on the state seal. In Latin, of course.

[flahute]

3 hours ago, Richnimrod said:

Hmmmmm, Interesting!   (As Artie Johnson would say, many years ago...If you get that reference; You're OLD, like me.   HA!)

A good deal of logic and sound-marketing-thought in the linked info.

One more thing, I'd add: Retailers who don't mark up at least some pretty good-sized amount will burn through 'limited release' stuff so quickly that they lose out on some pretty effective image-enhancement, just showing they've been allowed to receive the rare stuff from the distributors.    I know in my area (very blue-collar) the few places that do receive even small amounts of the 'limiteds' are well known, and well-though-of.

The same is true at whiskey bars. I hate seeing $40 for a pour of BTAC (and worse) but I also know that if the bar priced it reasonably, they'd burn through it so fast that they would have to reprint all of their menus. (I know of people who when they find a LE at a cheap price will sit at the bar all night and drink half the bottle). The bars and stores are in a tough spot.

 

I stay away from the stores that price gouge and reward the ones that don't and I let them know. The stores that don't gouge know who their loyal customers are and they make sure the LE's get into the right hands.

[PaulO]

Well, I learned a lot about the crazy world of limited craft beer.  In many ways human behavior and emotions are the same accross different categories.   There are a lot more barriers to making bourbon compared to brewing beer.  It would seem that a successful craft brewer could much more easily expand and ramp up production in a short time.  A batch of beer only takes a few weeks to a couple months.

I never pay more for a bottle of anything that is much over MSRP.  I know I'll never spend enough in any place to get that kind of special treatment.  Meanwhile I still find some really nice items now and then.

[ebo]

2 hours ago, Flyfish said:

Your blue-collar area has LEs in small amounts? We in OH are protected against merchants getting LEs in any amount whatsoever. Impossible for them to raise the price outrageously on stuff they have never even heard of. But we are protected against merchants who might want to sell products at a lower price because the state decides what the minimum will be, not the maximum. "Who's lookin' out for you, Babe?" is right there on the state seal. In Latin, of course.

Yes sir!

[Harry in WashDC]

Nice article.  One reason I migrated to bourbon (and cocktails) from beer when I am out and about was, as the article points out, beer prices over the past few years have crept up toward call spirits/cocktail prices, and I didn't think I was getting fair value.  Another reason I switched was the move to IPAs - bitter beers (not to be confused with English "Bitter") got tiresome since that was all that was being offered.  [Aside:  Well, I do hit Victory Pils on occasion.]  The bourbon analogy to IPAs is all the flavored whiskies.  Give me a nice session beer any day.  RE: the stores marking up the LEs, rationalizing that they are just gouging the flippers - I've noticed that their standard prices tend to be a little higher, too.  Hence, I do not go back to them.  If it means I have to buy online from reputable sellers to get an LE I covet or that I will only get one by dumb luck, so be it.  IN SUM - I'll stay in the less than $10/six pack, less than $8 per beer 750, and not more than MSRP (plus shipping) bourbon category.  There's just too much variety out there for me to covet any one offering for too long. 

Edited May 15, 2016 by Harry in WashDC

[garbanzobean]

Great article.  Makes me happy I never got into cellaring or searching for LE beers.  So much good stuff on the shelves.  Ain't nobody got time for that.

 

I personally prefer the stores around here that do raffles to the ones that practice price gouging, but I am starting to lose all sympathy for the consumer when it comes to LE bourbon.  There's been a bit of a drought out this way with respect to new store select and private bottlings, but otherwise I'm very happy with whatever is on the shelves.  Not that I really should even buy anymore bourbon for the next few years anyway, at the reduced rate I've been consuming it.  About the only frustration I have these days is having to drive down to Virginia to pick up Larceny, since it still does not seem to have made it to MD.

Edited May 15, 2016 by garbanzobean

[squire]

You can't gouge the resolute and I refuse to be a mark.

[Harry in WashDC]

1 hour ago, squire said:

You can't gouge the resolute and I refuse to be a mark.

Yep.

[ken_mays]

The beer world has gotten flush with irrational exuberance.  It's a beer fashion show anymore. There are so many new offerings that it's all about "the next new hot thing" to show your friends than it is about just drinking beer for the enjoyment of it.   The more outrageous the ingredients (fair-trade malted blueberry popsicles combined with a hint of Russian winter chili-pepper grapefruit extract, gently aged in a third-generation ouzo cask that has seen 4 seasons and blessed by a Tibetan lama), and the crazier the name ("Gordo's Top Secret Dia los Muertos Extradition Ale"), the more the beerhipsters have to have it.

[GeeTen]

Ha - my SIL and his brother drove up to Vermont to buy a 6-pack of Heady Topper in Burlington.  Drove 3 1/2 hours and still came up empty.  They also had the rare pleasure of almost being laughed out of a bar by friendly locals!   

 

But all was not bad after the laughter subsided - the locals bought several rounds for the poor urban suckers before they retired to the hotel for the night.  Vermonters are very much like Canadians - very polite, eh?   

[GeeTen]

3 hours ago, ken_mays said:

The more outrageous the ingredients (fair-trade malted blueberry popsicles combined with a hint of Russian winter chili-pepper grapefruit extract, gently aged in a third-generation ouzo cask that has seen 4 seasons and blessed by a Tibetan lama), and the crazier the name ("Gordo's Top Secret Dia los Muertos Extradition Ale"), the more the beerhipsters have to have it.

 

Now I don't care who you are, but that there is FUNNY!  

[berto]

I chased one beer because it was easier and cheaper than a flight to Belgium.  It isn't better enough than something very similar and easy to buy.  If in Belgium I'd definitely go but my curiosity has been satisfied.

 

As far as bourbon goes if I don't like the price I won't pay.  It's not gouging, it's taking profit.  I'd rather the distiller get that money than a shop or a flipper but it won't be my money.  There's too much other stuff to drink to spend silly money chasing maybe incrementally better.  It would be easy to crush the secondary market and retailers taking profit.  Sell the limiteds to on premise only.  Then everybody gets to pay secondary but by the oz instead of by the bottle.  Throw a serial number on every bottle and it's easy to figure out who diverts for profit.     

[garbanzobean]

53 minutes ago, berto said:

I chased one beer because it was easier and cheaper than a flight to Belgium.  It isn't better enough than something very similar and easy to buy.  If in Belgium I'd definitely go but my curiosity has been satisfied.

 

As far as bourbon goes if I don't like the price I won't pay.  It's not gouging, it's taking profit.  I'd rather the distiller get that money than a shop or a flipper but it won't be my money.  There's too much other stuff to drink to spend silly money chasing maybe incrementally better.  It would be easy to crush the secondary market and retailers taking profit.  Sell the limiteds to on premise only.  Then everybody gets to pay secondary but by the oz instead of by the bottle.  Throw a serial number on every bottle and it's easy to figure out who diverts for profit.     

I've always wanted to try Westvleteren 12, but am not willing to pay black market prices.  Or feed the black market.  I console myself with St. Bernardus Abt 12.  It is a hard life.

[berto]

18 hours ago, garbanzobean said:

I've always wanted to try Westvleteren 12, but am not willing to pay black market prices.  Or feed the black market.  I console myself with St. Bernardus Abt 12.  It is a hard life.

I did a blind side by side and preferred St. Bernardus by a hair.  Another tasting might yield a different result but they're really close.  I'm happy with St. Bernardus and its easy availability.  

[jsrudd]

I've always wondered how much the secondary market pricing is a result of price gouging and how much is a result of most of the LEs being hoarded by enthusiasts (and thereby increasing scarcity). I'm aware this may just be two sides of the same coin.

 

Does anyone have a rough idea of what percentage of LE releases actually make it to the secondary market? If it's something like 10%, then maybe the inflated prices relative to the retail release make a little more sense.    

[Kyjd75]

David Driscoll has an interesting and I believe relevant discussion about what is going on with his most recent blog entries:

 

http://spiritsjournal.klwines.com

[flahute]

2 hours ago, Kyjd75 said:

David Driscoll has an interesting and I believe relevant discussion about what is going on with his most recent blog entries:

 

http://spiritsjournal.klwines.com

Really good stuff there in both the entries about saturation. 

[DonutsNBourbon]

2 hours ago, Kyjd75 said:

David Driscoll has an interesting and I believe relevant discussion about what is going on with his most recent blog entries:

 

http://spiritsjournal.klwines.com

 

thanks for the link, pretty informative take on the industry.

[Masset1982]

On 17/5/2016 at 2:36 AM, berto said:

I chased one beer because it was easier and cheaper than a flight to Belgium.  It isn't better enough than something very similar and easy to buy.  If in Belgium I'd definitely go but my curiosity has been satisfied.

 

As far as bourbon goes if I don't like the price I won't pay.  It's not gouging, it's taking profit.  I'd rather the distiller get that money than a shop or a flipper but it won't be my money.  There's too much other stuff to drink to spend silly money chasing maybe incrementally better.  It would be easy to crush the secondary market and retailers taking profit.  Sell the limiteds to on premise only.  Then everybody gets to pay secondary but by the oz instead of by the bottle.  Throw a serial number on every bottle and it's easy to figure out who diverts for profit.     

HI, 

 

I'm curious, which beer is famous and hard to find in the US ?

I'm a big fan of "Orval" a trappiste from where i live. 

 

 

[tanstaafl2]

11 hours ago, Masset1982 said:

HI, 

 

I'm curious, which beer is famous and hard to find in the US ?

I'm a big fan of "Orval" a trappiste from where i live. 

 

 

 The only trappist that is particularly hard to find in the US (or at least Atlanta) is Westvleteren. There are certainly plenty of other Belgian and European beers that are hard to find simply because their distribution is limited or they don't cross the pond at all. Cantillon is one I would buy more of if I had regular access but you don't see it much here. In fact I had a pretty hard time finding it in Brussels for that matter.

Edited May 23, 2016 by tanstaafl2

[berto]

11 hours ago, Masset1982 said:

HI, 

 

I'm curious, which beer is famous and hard to find in the US ?

I'm a big fan of "Orval" a trappiste from where i live. 

 

 I was talking about Westvleteren which was released in the US 12/12/12 one day only.  There may be bottles here and there but they're either leftovers from that release or imported back by tourists to be sold at silly prices.  Cantillon is sought after and very hard to find here.  There are all sorts of wonderful beers from your country that aren't imported here or very limited.