Smooth Ambler halts Barrel Selections for remainder of 2017

[The Black Tot]

From SA Facebook page:

 

An update on Wheated Bourbon and Custom Barrels:

 

Smooth Ambler Wheated Bourbon

At long last a bit of our homemade wheated bourbon is finally ready. Andrew has chosen the best of our mature (5-6 YO) barrels and mingled them together to allow the married whiskey time to mellow and become balanced. As most of you know, we’ve struggled over the years as to when was the right time to release it. Every Fall for the last few years we’ve tasted it, become tempted to release it, and ultimately resigned ourselves to the impatient truth that it would just get better if we waited. And as good as it is today, it would only get better if we decided to wait again. But we’re not going to. We’re ready to drink a little. We don’t have much of it, though, so the rollout will be slow and careful and initially we’re only going to make it available in the gift shop and through West Virginia retailers. Some of this decision has to do with the small quantity we have and some of it, frankly, has to do with the notion that we feel like it’s a chance to say thanks to the folks in WV who’ve hung in there with us from day one. We’ll announce soon when it becomes available for sale. Retail price at the GS will be $54.99.

Custom Barrels

In the face of a constantly dwindling supply of older whiskey, and despite our best efforts to acquire more at reasonable prices, we have to make some additional tough decisions and harsh realities as we move forward. Principle among these issues is that we simply cannot continue to sell at our current pace whiskey we don’t have much of and have no guarantee of replacing. With this in mind we are suspending production on ALL custom barrel projects. There will not be a 2017 list of customers in line for or waiting for custom bottlings. We have always been and remain immensely appreciative of the surge in our business the custom program has been for us but we simply can’t sustain it until we secure more whiskey. If and when that day comes, or we dream up something else that will suffice, we will take steps to reintroduce a hand selected, custom whiskey bottling for ourselves and our customers. We do not have the whiskey to satisfy all of the current, standing orders for custom barrels on the list as it exists today. As much as it pains us, this means some people are going to miss out - irrespective of their position on the list or the length of their wait. We just can’t fill the orders, y’all. Every day we strive to find more whiskey we can make sense of procuring. Every day we look for inspiration on something new and fun and fresh we can make available to our fans. As uncomfortable and disappointing as we know this is, we hope you’ll hang in there with us as we diligently search for a solution. As a side note, I want to stress that this is NOT a result of our new NBV/Pernod partnership. The Chicken Little’s of the whiskey world can try and call bullshit on that all they want but this is a decision made from Maxwelton, WV. Plain and simple. If anything, having our new partner on board will help ensure that we have the means to expand our in-house production, and better enable our ability to buy great whiskey when we find it, and try keep this from happening again in the future. While we ramp up, though, we need to take a break and catch up. We’re looking at this as just that: a break.

 

-----------------

 

That's a drag. I was going to try and pick one this year. Would have done so last year had it not been for the oil downturn.

[The Black Tot]

I don't understand some of the above comments on not being able to buy enough whiskey.

 

I thought MGP would have had SA covered for replenishing both whiskey AND rye.

 

I know MGP is probably slammed right now by every new distillery and their dog trying to buy bulk whiskey, but I thought they also had the capacity to handle that, and besides, one would think they'd look after their longstanding customers first, which SA certainly is.

 

There is some language in here which indicates that whiskey may be available, but not at an acceptable price. Has MGP jacked prices through the roof?

 

One would think many of the recently opened small distilleries should only be a year or two from having their own young products starting to come online. Won't MGPs volume tank when that transition happens?

 

All I know is I was comforting myself with the fact that at least SA was refilling their rackhouses with fresh MGP bourbons and rye. But this announcement kind of knocks the wind out of that faith.

 

I guess it's harder to order bulk whiskey than I realized. Would love more comment on this by someone who knows.

[Conquistador]

1 hour ago, The Black Tot said:

From SA Facebook page:

 

An update on Wheated Bourbon and Custom Barrels:

 

Smooth Ambler Wheated Bourbon

... Every Fall for the last few years we’ve tasted it, become tempted to release it, and ultimately resigned ourselves to the impatient truth that it would just get better if we waited. And as good as it is today, it would only get better if we decided to wait again. But we’re not going to. ...

 

Ugh! I hope I'm wrong, but this statement from SA sounds to me like the corporate wonks at Pernod Ricard (who recently purchased a controlling interest in SA) are pushing Jon Little and the SA team to reap profits instead of focusing on bringing their true vision to market.

[beasled]

Thinking about the barrel programme being axed, it seems like a way to spread out stock. Rather than a store getting a whole barrel, it's split with a number of stores more evenly. That's how I read it. And I'm cool with that. I like their SB's and the majority I've had have not been store picks, just single barrels. 

 

 

[Whiskey Dick]

well it didnt say they were stopping production, it said they were stopping the barrel selection process.

 

I'm more bothered by the 2-years-ago decision to stop putting out aged mgp ryes.

 

I still hold high hopes for this company

[The Black Tot]

24 minutes ago, Whiskey Dick said:

well it didnt say they were stopping production, it said they were stopping the barrel selection process.

 

I'm more bothered by the 2-years-ago decision to stop putting out aged mgp ryes.

 

I still hold high hopes for this company

 

It says they're stopping it because they can't buy it in the quantities they need to replenish their stocks at the prices they are comfortable with.

 

The rye decision will be based on the same limitation.

 

I just don't understand how such a limitation exists given the fact that I expected MGP to have enough capacity to fill SA's rackhouses with ease.

 

I thought the bottleneck would be SA not having enough rackhouse space, not having nobody to sell them enough bulk distillation!

[tanstaafl2]

I would guess that the little NDPs and distilleries that buy MGP whiskey are a drop in the bucket compared to what Diageo must be buying for Bulleit and perhaps to a lesser degree Dickel rye. SA probably originally bought what they thought was a boatload of whiskey (and perhaps as much as they had the capital to buy at the time thinking it would be more than enough to supply for a long time). That projection proved to be wrong and they either could not or did not commit to tying up capital to buy more. In addition the demand must have influenced MGP to raise prices at least some over the past few years. I sure as heck would have.

 

My understanding, based largely on random conversations with people in or close to the industry, is that MGP does still have a good bit of whiskey (but not an unending supply and probably a good bit less now than perhaps 5-6 years ago) in their warehouses but all of it is committed to someone and much of what they are making right now is also already spoken for by someone else. SA may have some of that whiskey but perhaps not a lot of it and it may be relatively young at this point. I presume they would rather not negatively impact their reputation by releasing younger and younger whiskey, as others have done. If so then good on them I suppose.

[The Black Tot]

30 minutes ago, beasled said:

Thinking about the barrel programme being axed, it seems like a way to spread out stock. Rather than a store getting a whole barrel, it's split with a number of stores more evenly. That's how I read it. And I'm cool with that. I like their SB's and the majority I've had have not been store picks, just single barrels. 

 

 

 

What difference does it make if your store sells 240 bottles by ordering a barrel once or by ordering a 12 case 20 times?

 

The bottles I've adored from SA have ALL been picks, so I am definitely NOT cool with it. But I'm not mad at SA, I'm as frustrated as they are about not being able to get what they need to keep doing the awesome things that they do.

[beasled]

6 minutes ago, The Black Tot said:

What difference does it make if your store sells 240 bottles by ordering a barrel once or by ordering a 12 case 20 times?

 

None at all, assuming that stores are allowed to continue to buy 12 cases at a time, but it doesn't sound like is the case. 

[The Black Tot]

1 minute ago, tanstaafl2 said:

I would guess that the little NDPs and distilleries that buy MGP whiskey are a drop in the bucket compared to what Diageo must be buying for Bulleit and perhaps to a lesser degree Dickel rye. SA probably originally bought what they thought was a boatload of whiskey (and perhaps as much as they had the capital to buy at the time thinking it would be more than enough to supply for a long time). That projection proved to be wrong and they either could not or did not commit to tying up capital to buy more. In addition the demand must have influenced MGP to raise prices at least some over the past few years. I sure as heck would have.

 

My understanding, based largely on random conversations with people in or close to the industry, is that MGP does still have a good bit of whiskey (but not an unending supply and probably a good bit less now than perhaps 5-6 years ago) in their warehouses but all of it is committed to someone and much of what they are making right now is also already spoken for by someone else. SA may have some of that whiskey but perhaps not a lot of it and it may be relatively young at this point. I presume they would rather not negatively impact their reputation by releasing younger and younger whiskey, as others have done. If so then good on them I suppose.

 

Yeah, it depends on whether SA's strategy depends on their bulk whiskeys arriving in Maxwelton with ~4yrs+ of age already on them or not.

 

I had it figured that by now SA was ordering white dog by the giant tanker truck and ageing from zero. Which is why I figured it was odd that they should have a hard time getting that, since it's the easiest form of bulk whiskey to purchase.

 

Maybe they'll need to add another warehouse in order to have enough space to age from zero and still get barrels to 10yrs+ in quantity. It would be great if the Pernod investment could make that kind of capital expenditure happen for them so that eventually they can come out from under this rackhouse demand pressure.

 

Reading between the lines, and never having been to their facility, I suppose this means their own still doesn't have the capacity to keep up with the rate at which they're selling barrels.

 

Maybe they could deal with 4 Roses - they upgraded their still capacity before their new rackhouses were complete. I'm sure they don't need me to think of this. I'm just riffing because I'd love to know what the story is.

 

You're probably right about Diageo. Is that Bulleit still built yet? When it is that should make a serious change in MGP bulk availability. I'd imagine D will be taking over Bulleit rye production there, too. Suddenly I'm rooting for Diageo's success

[tanstaafl2]

1 minute ago, beasled said:

 

None at all, assuming that stores are allowed to continue to buy 12 cases at a time, but it doesn't sound like is the case. 

 

If there is one thing I have learned about liquor distributors, at least in Georgia, it is that nothing they do seems to make sense. Distribution is, at its very best, uneven and bears no relationship to any logical process!

[beasled]

2 minutes ago, tanstaafl2 said:

 

If there is one thing I have learned about liquor distributors, at least in Georgia, it is that nothing they do seems to make sense. Distribution is, at its very best, uneven and bears no relationship to any logical process!

 

That seems to be the case everywhere!

[tanstaafl2]

2 minutes ago, The Black Tot said:

You're probably right about Diageo. Is that Bulleit still built yet? When it is that should make a serious change in MGP bulk availability. I'd imagine D will be taking over Bulleit rye production there, too. Suddenly I'm rooting for Diageo's success

 

Last I remember it was due to be completed towards the end of 2016 but I have not heard of any report that they are distilling yet. With the big increase in building distilleries of late it well may be behind schedule.

[flahute]

9 minutes ago, The Black Tot said:

 

Yeah, it depends on whether SA's strategy depends on their bulk whiskeys arriving in Maxwelton with ~4yrs+ of age already on them or not.

 

I had it figured that by now SA was ordering white dog by the giant tanker truck and ageing from zero. Which is why I figured it was odd that they should have a hard time getting that, since it's the easiest form of bulk whiskey to purchase.

 

Maybe they'll need to add another warehouse in order to have enough space to age from zero and still get barrels to 10yrs+ in quantity. It would be great if the Pernod investment could make that kind of capital expenditure happen for them so that eventually they can come out from under this rackhouse demand pressure.

 

Reading between the lines, and never having been to their facility, I suppose this means their own still doesn't have the capacity to keep up with the rate at which they're selling barrels.

 

Maybe they could deal with 4 Roses - they upgraded their still capacity before their new rackhouses were complete. I'm sure they don't need me to think of this. I'm just riffing because I'd love to know what the story is.

 

You're probably right about Diageo. Is that Bulleit still built yet? When it is that should make a serious change in MGP bulk availability. I'd imagine D will be taking over Bulleit rye production there, too. Suddenly I'm rooting for Diageo's success

Bulleitt's still is nowhere near big enough to meet their demand. Even when it's up and running they will still be major players for MGP whiskey.  

[The Black Tot]

1 minute ago, flahute said:

Bulleitt's still is nowhere near big enough to meet their demand. Even when it's up and running they will still be major players for MGP whiskey.  

 

True but if it's capacity is enough to fill SA's warehouses then MGP will have enough newly unallocated production to fix SA's short term problems.

 

I think I remember Chuck saying something about the Bulleit still being pretty big, that it was one of the more significant new ones along with the Michter's still.

 

Still, Bulleit seems to be on a major brand push lately. As Bruce has said somewhere else recently that I read, it's found its way onto the menu of nearly every US bar I've been in in the last while. AND they're edging up the pricing, particularly on the rye.

[tanstaafl2]

17 minutes ago, The Black Tot said:

 

True but if it's capacity is enough to fill SA's warehouses then MGP will have enough newly unallocated production to fix SA's short term problems.

 

I think I remember Chuck saying something about the Bulleit still being pretty big, that it was one of the more significant new ones along with the Michter's still.

 

Still, Bulleit seems to be on a major brand push lately. As Bruce has said somewhere else recently that I read, it's found its way onto the menu of nearly every US bar I've been in in the last while. AND they're edging up the pricing, particularly on the rye.

 

A couple of the original announcements about the Diageo distillery.

 

http://chuckcowdery.blogspot.com/2014/05/diageo-announces-new-115m-kentucky.html

 

http://whiskyadvocate.com/2014/05/29/diageo-building-a-new-distillery-in-kentucky/

 

http://www.fredminnick.com/2014/05/29/breaking-news-diageo-build-115-million-distillery-kentucky/

 

They are all pretty similar as is often the case with this type of thing.

[The Black Tot]

Thanks.

 

Most notably from Chuck's article:

 

"At 1.8-million-gallons, Diageo's new distillery will be the smallest major producer distillery in Kentucky. It will have about the same capacity as the Charles Medley Distillery in Owensboro, which was recently acquired by Terrasentia. "

 

That's an odd choice to choose a smaller size production for lines like they are going to have to supply. Even the smaller distillers are advised to put a larger still in than they think they need to account for what might be required later.

 

Maybe Diageo is forecasting the burst of the bubble

[jvd99]

I haven't seen a SA store pick in Chicagoland for at least a year now, so this is not very surprising.  

[flahute]

16 minutes ago, The Black Tot said:

Thanks.

 

Most notably from Chuck's article:

 

"At 1.8-million-gallons, Diageo's new distillery will be the smallest major producer distillery in Kentucky. It will have about the same capacity as the Charles Medley Distillery in Owensboro, which was recently acquired by Terrasentia. "

 

That's an odd choice to choose a smaller size production for lines like they are going to have to supply. Even the smaller distillers are advised to put a larger still in than they think they need to account for what might be required later.

 

Maybe Diageo is forecasting the burst of the bubble

I was talking to Jim Rutledge about this last summer and given that he's someone who knows intimately how much whiskey Bulleit was sourcing from 4R I too thought it odd that they would build a still that didn't even meet half the demand for their bourbon alone.

This tells us that they will still buy all of their rye from MGP. Their bourbon is now a frankenstein product so their new distillate will go into all of their currently sourced products.

[JoeTerp]

I took the statement to mean that MGP had raised it's price on aged product to the point where it no longer made sense for SA to use them and keep their profit margins.

 

It's a pretty big gamble by the company to de-emphasize all of the OS lines given that the products they're most known for are a straight rye, a relatively high rye bourbon (21%), and a higher rye bourbon (36%).  And they all had 7+ years of age on them.  Now their own distillate will be a wheated bourbon that's younger (and in cases of the 10's or many single barrels significantly younger.

[The Black Tot]

4 minutes ago, JoeTerp said:

I took the statement to mean that MGP had raised it's price on aged product to the point where it no longer made sense for SA to use them and keep their profit margins.

 

Yes, that's one of the ways I read it as well. Of course these days you can just slap another tenner on your prices and everyone just thinks you're "more premium". Can MGP's pricing really have gone up more than a tenner per bottle for white dog?

[flahute]

6 minutes ago, The Black Tot said:

 

Yes, that's one of the ways I read it as well. Of course these days you can just slap another tenner on your prices and everyone just thinks you're "more premium". Can MGP's pricing really have gone up more than a tenner per bottle for white dog?

I've heard that prices for all bulk whiskey has gone up quite a bit. Lot of competition for it now and supplies are strained.

[musekatcher]

4 hours ago, The Black Tot said:

 

Yes, that's one of the ways I read it as well. Of course these days you can just slap another tenner on your prices and everyone just thinks you're "more premium". Can MGP's pricing really have gone up more than a tenner per bottle for white dog?

 

My leading indicator is OFS.  Its gone up 30% in just a couple years...it was my automatic, robotic subconscious selection, until it jumped $20, haven't bought a bottle since. I think this mad increase in prices for established brands will backfire, as they challenge brand loyalty, in favor of commodity economics.  After the glut, there will be winners and losers.  There will be lots of producers and whiskey to mop up when it all busts.

[JoeTerp]

6 hours ago, The Black Tot said:

 

Yes, that's one of the ways I read it as well. Of course these days you can just slap another tenner on your prices and everyone just thinks you're "more premium". Can MGP's pricing really have gone up more than a tenner per bottle for white dog?

Are they aging white dog?  I would have thought they were buying aged stock given that all their sources product is released at 7+ years. 

[Artful Drinker]

Can I play?

In no particular order, here's what I hope will be some clarification.  Young whiskey, barreled new make essentially, IS available (at least to us) and we are currently buying some.  The real crux of our issue is that what we lack is mid-range aged whiskey.  We have a little of the older stock left, and we have quite a bit in the less than 2 year category, and not much in the middle.  From what we see in the marketplace, good bourbon aged in that 4-6 year range, a ton of which would allow us to continue uninterrupted - when you can find it - is being marketed at significantly higher prices than our original buys, and that cost is the most compelling factor in the retail prices of OS that you see.  So just as an oversimplified example, if we were even able to buy a bunch of that whiskey, which is itself questionable, to sell it profitably we'd have to ask folks to pay dramatically more for it at retail than we currently do.  Same whiskey, same proof.  Higher priced one day than it was the day before.  Would a lot of people be happy paying that?  We think it's unlikely.

So the choices for us are pretty simple.  We further allocate the whiskey we have so we don't run out while we wait for the young whiskey to get older and continue to diligently look for additional, suitable barrels, OR we change nothing and risk running completely out, OR we pay exorbitant prices for whiskey and ask you to do the same. We felt like Door #1 was the only responsible thing to do and while it's painful, it's the option we could most look you straight in the eye about.

As fun and salacious as it is to assume that we've all be fitted with mind-control computer chips by our new corporate slavemasters it's just not the truth. Trust me when I tell you if we had a ton of delicious, properly aged, properly priced whiskey, NBV would be leading the charge for us to sell it.  Not holding us back.

JF

Edited January 18, 2017 by Artful Drinker