A Bourbon Conundrum?

[smokinjoe]

4 hours ago, Surtur said:

 

In the here and now yes, but big picture? The market becomes flooded with limiteds beyond prices most people will pay, and those consumers find out there’s a lot to drink in the $20-$50 range. The urge to hunt for Pappy will die down when more and more newer drinkers see them in stores for $1000 plus a bottle and just write them off as unattainable. Let’s not forget the role social media had in this boom, and how quickly gossip spreads nowadays

Just so I understand, can you confirm that your idea of the “bourbon boom”, and any discussion on whether it has peaked or is continuing, is based entirely on the market activity of Pappy, BTAC, LEs, etc., somewhere in California?  Am I right on this?  

[FacePlant]

4 hours ago, Surtur said:

 

In the here and now yes, but big picture? The market becomes flooded with limiteds beyond prices most people will pay, and those consumers find out there’s a lot to drink in the $20-$50 range. The urge to hunt for Pappy will die down when more and more newer drinkers see them in stores for $1000 plus a bottle and just write them off as unattainable. Let’s not forget the role social media had in this boom, and how quickly gossip spreads nowadays

The hunt for Pappy will die down when everyone's had some. Then some more. The more "unattainable" (either price or rarity-both) the more desirable. 

[El Vino]

42 minutes ago, FacePlant said:

The hunt for Pappy will die down when everyone's had some. Then some more. The more "unattainable" (either price or rarity-both) the more desirable. 

Interesting question.  While it would be hard to “saturate” the market with bottles of Pappy (and othe LEs), if enough bars get inventory such that it becomes possible for folks to scratch that itch, would that be sufficient to take some steam out of the market for limiteds?  Observationally, I think it’s working the other way - as gauged by the crowds at auctions.  They’re that good.  At secondary market prices, most buyers balk but at or near MSRP they assemble in crowds.  Would love to know the number of bottles that pass throug the secondary market on an annual basis.

[elmossle]

13 hours ago, El Vino said:

Interesting question.  While it would be hard to “saturate” the market with bottles of Pappy (and othe LEs), if enough bars get inventory such that it becomes possible for folks to scratch that itch, would that be sufficient to take some steam out of the market for limiteds?  Observationally, I think it’s working the other way - as gauged by the crowds at auctions.  They’re that good.  At secondary market prices, most buyers balk but at or near MSRP they assemble in crowds.  Would love to know the number of bottles that pass throug the secondary market on an annual basis.

 

Because Bars/Restaurants get so few of these bottles (although they are getting more and more each year), they resort to filling the empty bottles with something far less expensive and still sell pours at $75-$100 a pour and make money hand over fist. Someone who is just excited to try it for the first time thinks its great because it is so expensive and now must have some. The vicious cycle just keeps going and will get worse before it gets better. 

[El Vino]

I meant lotteries not auctions.

[El Vino]

3 minutes ago, elmossle said:

 

Because Bars/Restaurants get so few of these bottles (although they are getting more and more each year), they resort to filling the empty bottles with something far less expensive and still sell pours at $75-$100 a pour and make money hand over fist. Someone who is just excited to try it for the first time thinks its great because it is so expensive and now must have some. The vicious cycle just keeps going and will get worse before it gets better. 

I’m cynical enough to believe that it’s true,  but I sure as hell wish that it wasn’t true.

[Surtur]

15 hours ago, smokinjoe said:

Just so I understand, can you confirm that your idea of the “bourbon boom”, and any discussion on whether it has peaked or is continuing, is based entirely on the market activity of Pappy, BTAC, LEs, etc., somewhere in California?  Am I right on this?  

 

Measuring from the top down, yes and your condescending attitude is of zero use.

[Paddy]

1 hour ago, elmossle said:

 

Because Bars/Restaurants get so few of these bottles (although they are getting more and more each year), they resort to filling the empty bottles with something far less expensive and still sell pours at $75-$100 a pour and make money hand over fist. Someone who is just excited to try it for the first time thinks its great because it is so expensive and now must have some. The vicious cycle just keeps going and will get worse before it gets better. 

I would like to hear more of your experience with this criminal behavior, as my experience is quite the opposite.  Most finer establishments get quite a nice allocation, much of which used to go to folks like me.  I've purchased limited pours in many of these businesses, and never suspected that I've been duped.  Several that I frequent even get replacement bottles (they are somewhat more limited on certain brands than others, but monthly allocations from the distributors are not uncommon). 

 

I'm not saying that it (filling empties with something other than what the label indicates) doesn't occur, but I do feel that you paint this picture with a very broad brush. 

[flahute]

22 hours ago, Surtur said:

 

In the here and now yes, but big picture? The market becomes flooded with limiteds beyond prices most people will pay, and those consumers find out there’s a lot to drink in the $20-$50 range. The urge to hunt for Pappy will die down when more and more newer drinkers see them in stores for $1000 plus a bottle and just write them off as unattainable. Let’s not forget the role social media had in this boom, and how quickly gossip spreads nowadays

The market is nowhere near flooded with limiteds beyond prices are most are willing to pay. Those who wish to pay secondary know where to go. And they pay it. Often. Your example is more the exception.

Regarding social media: it's still the reason that the secondary market is going strong.

[Richnimrod]

11 hours ago, elmossle said:

 

Because Bars/Restaurants get so few of these bottles (although they are getting more and more each year), they resort to filling the empty bottles with something far less expensive and still sell pours at $75-$100 a pour and make money hand over fist. Someone who is just excited to try it for the first time thinks its great because it is so expensive and now must have some. The vicious cycle just keeps going and will get worse before it gets better. 

Although I'm certain this practice happens occasionally, in some number of establishments, and over the year(s) possibly not a small number, I doubt it is a "common" occurrence.   ...At least I hope it isn't.

The profit motive will always tempt those with a limited attachment to moral values to bend and break accepted standards of behavior, and even written laws; but, I like to assume the best in folx, at least until actual evidence is presented to the contrary.    Have you any such evidence you're able to share?

[smokinjoe]

13 hours ago, Surtur said:

 

Measuring from the top down, yes and your condescending attitude is of zero use.

I just wanted to understand from where you’re coming in this discussion.  It seems to me that for most of your points in this conversation (and other similar threads) on the condition of the bourbon market on a macro level, you have attempted to support your opinions by offering your experiences on very micro levels in both geographic regions and a specific very ultra premium market segment.  A bit of a disconnect from my viewpoint that I asked you to clarify.  It’s unfortunate that you thought I was being condescending, as that was not my intent.  

Edited December 28, 2018 by smokinjoe

[BDanner]

On 12/22/2018 at 11:16 PM, elmossle said:

...

 

2. The economy takes a turn for the worse and people no longer can spend during the year to keep relationships with store owners for LE's, or people have to choose between keeping the lights on or buying the latest batch of ECBP. 

 

...

I can drink ECBP in the dark...

[JTaylor]

On 12/22/2018 at 10:46 PM, fishnbowljoe said:

This is something that has been gnawing at me for quite some time now. What do y'all think is going on?  Is it just me, or does anyone else have a theory? Have we reached the peak of the bourbon boom? Just what's up with price increases, shortages, products on allocation, rolling shortages yada, yada, yada, etc....,etc..., etc.... ?

 

Does anyone else besides me think that the cycle we seem to be in now may be perpetuated by the flippers, liquor store owners and distributors that might be a bit late to the party, or who are just now, or still trying to make a buck off past inadequacies in the market?  What about the fact that there's a spreading out of the wealth so to speak whereas many bars and restaurants are now getting more limited allocation items? 

 

One example: A local liquor store that I know of orders "abc" bourbon a case at a time. And they get it too. Three bottles a week at a time for a month. No case discount that way. Greedy distributors? Hmmmm? 

 

Second example: "Yeah I had some, but I already sold it all to some of my regular customers." My ass! This just screams of selling to customers willing to pay semi-inflated market prices, and/or who are flippers themselves that are willing to pay x number of dollars above msrp so they can still sell stuff at yet even more inflated prices on private websites. Disclaimer: I have no proof of this, but I will say that I've heard things from more than one source that indicates that this may be the case.

 

Third example: Weller 12 this time around a year ago. "Yeah, we have some, but it's not for sale. The owner is saving them all for his best customers, and for his family as Xmas gifts. Hold on a minute.....  Okay, I just called the owner. He'd be willing to part with a bottle for $100.00." Again, my ass.

 

Fourth example: Private selection Weller SR for $40.00 a bottle, and private selection Blanton's for $90.00 a bottle. Private selection bottlings? Hmmmm.  It seems to me that IIRC, buying a whole barrel is a bit cheaper than buying less than such. Am I wrong here? 

 

Fifth example: As Vosgar posted about recently, a local restaurant/bar owner in our area has a collection of Pappy and BTAC that would make pretty much anybody envious. Nope, I ain't gonna say it.......

 

IMHO, I believe that the bourbon boom has peaked. There are flippers, distributors, bar and restaurant owners, numerous liquor stores owners/managers and others that appear to me to be perpetuating the myth that it hasn't just so they can still make a buck.  That's my theory/story, and I'm sticking to it. 

 

Biba! Joe

 

 

Probably some of all of the above Joe, but not all LS owners / managers are complicit in the insanity, and not all purchasers of the allocated / hard to find stuff are flippers. I've been fortunate enough to have developed a "relationship" with a LS manager many years ago prior to all the madness and routinely get emails that he's holding a box of X, Y, and Z for me of limited / allocated stuff I like and it is ALWAYS at retail... Unfortunately I believe that I may be in a shrinking minority as more people (including me) are willing to pay the stupid prices and more LS owners / managers AND DISTILLERS are realizing this... This year I received NO PVW or BTAC as they're holding it all for the grand opening of their new store. As they get into the raffle craze it'll be interesting to see if they still offer them at retail. 

 

I have to believe that the growing (booming) popularity of bourbon has simply caused a major tilt in supply and demand and the scarcity of some select labels has caused a pricing jump and buying frenzy across all brands. Used to be I could keep an ETL, a Blanton's, and a RHF all open on my bar and just replace them when they became empty. Now they don't see the LS shelf and they're some of the ones I get emails about.  I now have multiples of each on hand because of the fear of unavailability... Just see all the "Show us your Stash" photos as a testimonial to that fear. 

 

I think another contributing factor that you didn't mention is the number of distillers  getting in on the PVW scarcity / exorbitant pricing model. When the Booker's 30th, 4R Al Young, PHC, WTMK, et. al. sell for north of $150 per bottle RETAIL and many times that on secondary the $60, $70, $80 per bottle pricing for "ordinary" stuff becomes more palatable to a lot of people and becomes the new norm. The new "Normal" pricing further legitimizes the $150 - $200 premium bottle... This cycle will continue to self perpetuate until that breaking point is found. When Beam announced Booker's MSRP was going to $100 I went out and bought 4 bottles at $55 and proclaimed that if they raise prices those four would be the last Booker's I'd ever buy. Now I'm excited to go pick up my Booker's 30th anniversary which even at retail is at a price point I once vowed to NEVER pay! How many of us "normal" bourbon drinkers are out here contributing to the madness right alongside the flippers and the crooks?? Happily I don't have to buy much at these higher prices because fortunately my bunker is quite full!

 

The only upside I see at this point in time is that all booms are followed by busts... and with the aging component of bourbon there should be quite a glut when that happens and prices should drop to more respectable levels. Sadly I probably won't be able to buy much at the lower prices because unfortunately my bunker is quite full!

 

Cheers!

 

 

[smokinjoe]

55 minutes ago, BDanner said:

I can drink ECBP in the dark...

Heehee!  SB posters are finishing the year on a roll.  

[Jazzhead]

What is happening now is high prices for age statements and "special editions".   But there is still great bourbon to be had at almost half the price of "ordinary" single malt scotch.    Such as Beam Distillers Cut at less than $25 bucks a bottle.  Or good ol' Wild Turkey 101.

Edited December 28, 2018 by Jazzhead

[mbroo5880i]

The real bourbon conundrum is what I am going to drink when I get home.  I suppose I will find something.

[dad-proof]

I don't access social media, so I am very thankful to have no visibility into the secondary market. As for the legal market, continued volume or sales growth and bubble conditions are not necessarily mutually exclusive. More people in general can be turning to whiskey as a category, and that may be a sustainable long-term trend. At the same time, a subset of FOMO band-wagoners, hobbyists with disposable time and money, rich collectors, and worried hoarders can be wildly distorting the super-premium tier of that category. That distortion is not sustainable. On the supply side, everything I have read here indicates that in the next 3-5 years we will have much more product. So while no one ever knows the true top of a market until looking back, I feel comfortable saying we are close enough to the peek, or at minimum a plateau. 

[Saul_cooperstein]

A think a good part of conundrum in bourbon market is regulatory. Both in how the 3-tier system allocates product, licensing and challenges/costs getting new distillaeriws up and running as well as the illiquidity of whiskey in the it can not be sold legally in secondary market except in very limited circumstances. 

[elmossle]

23 hours ago, Paddy said:

I would like to hear more of your experience with this criminal behavior, as my experience is quite the opposite.  Most finer establishments get quite a nice allocation, much of which used to go to folks like me.  I've purchased limited pours in many of these businesses, and never suspected that I've been duped.  Several that I frequent even get replacement bottles (they are somewhat more limited on certain brands than others, but monthly allocations from the distributors are not uncommon). 

 

I'm not saying that it (filling empties with something other than what the label indicates) doesn't occur, but I do feel that you paint this picture with a very broad brush. 

 

Paddy, I will admit this is painting with a fairly broad brush, but I think we are all being naive if we assuming this is not happening more than we think. You are correct, most FINER establishments are getting some allocation and do not resort to these tactics. However, even some of the nicer bars and restaurants have more demand and run out of supply. 

 

Personally, I do not order bourbon when I am out much. Most of the time it is priced way too high and I have better drinking options at home. That doesn't stop me from looking and asking questions. Example, went out to eat with the wife last month and saw WLW on the menu. $25 a pour is more than I would like to pay, but for something I didn't get a bottle of this year, sure. Server says she needs to check and make sure they still have some. Comes back and says yes they have Weller. I ask to see the bottle to confirm it was WLW. As it turns out, it was WSR not WLW that they wanted me to charge me $25 for a pour. I have been in other establishments where you see LE's 9 or 10 months past distribution still on the shelf and not outrageously priced for a 2oz pour. Maybe it is just me, but I don't know many places that will still have pours available of "Lot B" 10 months later with it reasonably priced for a pour. I'm not saying it couldn't be legit, but I think that is suspicious.

 

Again, do I think this is wide spread and happening at your better bars and restaurants? No. You have many places that do it right or have reputations to uphold like the Silver Dollar in Louisville for example. They have too much supply to do this in the first place, but they would never recover if they refilled old bottles. But I would bet good money this is happening in more places than we think it is. 

[PaulO]

The refilling of bottles issue,

we have had some legitimate cases of people caught doing this posted on this site.

Both cases were secondary market.

One was a guy (I think in KY) refilling LE bourbon bottles to sell via social media.

The more recent case was a link to BBC News.  A laboratory used Carbon 14 dating to determine many high priced dusty Scotch in auctions are fake.

[Jazzhead]

12 hours ago, mbroo5880i said:

The real bourbon conundrum is what I am going to drink when I get home.  I suppose I will find something.

It is a most happy conundrum.

  

[Richnimrod]

8 hours ago, PaulO said:

The refilling of bottles issue,

we have had some legitimate cases of people caught doing this posted on this site.

Both cases were secondary market.

One was a guy (I think in KY) refilling LE bourbon bottles to sell via social media.

The more recent case was a link to BBC News.  A laboratory used Carbon 14 dating to determine many high priced dusty Scotch in auctions are fake.

There was also some 'news-media-reported' issue(s) several years ago (5?) in the East (New York? New Jersey?) about a commercial establishment(s?) caught doing it... tavern(s?) I believe. 

My memory has receded in much the same way as my hairline, and I can't recall; but, do believe there was some discussion of it here, as well.

[flahute]

14 hours ago, elmossle said:

I have been in other establishments where you see LE's 9 or 10 months past distribution still on the shelf and not outrageously priced for a 2oz pour. Maybe it is just me, but I don't know many places that will still have pours available of "Lot B" 10 months later with it reasonably priced for a pour. I'm not saying it couldn't be legit, but I think that is suspicious.

In the Seattle market the distributors hold back a good portion of the LE's so that they are available to bars and restaurants throughout the year. This sometimes leads to a surprise BTAC drop at some stores when the distributor finally clears out the remaining stock shortly before the new ones come in.

[Vosgar]

7 hours ago, Richnimrod said:

My memory has receded in much the same way as my hairline

I can certainly relate to that, Rich! 

 

Regarding restaurants possibly refilling LE's with other whiskey, that's not an issue for me. I'll usually order BT, WT101 or something similarly priced when out because: a) I've got great stuff to drink at home  b) I'm too cheap to pay crazy prices for a single drink  c) Nobody's going to bother tampering with BT, WT101 etc.

 

I'm sure there's been an exception or two over the years, but as Rich said.....my memory has receded and I don't recall them  

[Saul_cooperstein]

I think refill is very rare occurance in on-premises and risks significantly outweigh benefits - especially with risk of exposure through ex-employees and liquor license being taken (among other liabilities) ...and to extent there is refill, likely happening more with grey goose or tito’s being refilled with well vs LE whiskey. I’ve worked with lots of restaurants / bars and never seen or heard of any refill.