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Saul_cooperstein

What Would Change?

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Saul_cooperstein

In many threads on state of industry I have pointed out the challenges and implications posed by the very tight regulations on sale of American whiskey - from three tier distribution system to almost no legal secondary market for selling to challenges and timelines of getting new distilleries entitled and built. While wine is still burdened by the three tier system, many if not most of the USA ‘cult’ and ‘highly limited and sought after’ bottles are mailing list direct to consumer. Most on this thread would be high up on the PVW/BTAC mailing lists if USA whiskey functioned like that 15 years ago. In addition wine is more freely tradable/sellable with restaurants able to buy private collections and individuals able to move on from bottles or acquire older bottles when their tastes change without breaking the law. So the question is, if American whiskey had the same regulatory limits as wine, how would things change. If individual to individual sales were legal, would this board have a section? Who would change their mind on secondary market purchases / sales, particularly when tastes change or trying to find something very specific and not currently sold retail (1980’s WT?)? How would pricing and availability of LE bottles be impacted? 

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kevinbrink

Fair question(s), if there was a legal and more effective solution for moving bottles I would certainly take advantage of it as I stated in one of the other threads recently. If I had to guess, and really that is all I am doing as I have no real basis for this, I would think that the truly limited stuff would stay about the same price wise or maybe even go up assuming it reaches a wider base. I think that some of the "harder to get" bottles like ETL, Weller, RHF, etc that seem to pop up on the secondary would see the price paid come down as there would be a flood of bottles available. 

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graftonbc1

If they relaxed some of the secondary market laws, I believe you would see even more hoarding and the prices would probably soar. In addition, you would probably see even more fraudulent offerings out there.

 

I will give you a real life example, which I think runs parallel  I served aboard submarines, and I would say about 75% of my shipmates smoked . We would go out for roughly 2 months, hatch to hatch. some experienced and enterprising non-smokers would bring a few cartons of cigarettes.  As we got towards the end of the patrol, smokers would run out  The non-smokers would start to sell their stock. They could fetch a buck a ciggy, sometimes more. At first, smokers resisted the market, but eventually they all started to cave. Enterprising smokers, then decided they would get in on the action, and started selling half-smoked for half the market price. Supply and demand principles came into play, driving the market.

 

I think the same drivers would apply here. Whether people love and respect the bourbon, if there is money to be made, they will invest. They will also drive and  pollute the market. Its just the way it is.

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berto

Legalize the black market and in theory more bottles become available but there are more buyers too.  Right now things are limited to people willing to engage in risky behavior to make money or get their fix.  How many potential sellers don't sell over legality?  How many buyers can't find the market or are unwilling to break the law?  Imagine the guy no longer worried about legality who stumbles upon cases of whatever at Costco and decides making $5/bottle on whatever is his new hobby.  The liquor store owner with BTAC on the shelf at 2x secondary hoping for a sucker can now just sell secondary.  The fakers will show up in force.  Frankly the legality issue is the smallest hurdle and removing it opens a wild west to scammers and unsophisticated buyers.  The chances of getting caught buying or selling and then actually facing serious consequences are pretty small. Greed will always find a way.   The only upside might be the estate sale market.  Right now a lot of folks who run estate sales dump bottles because they can't sell them.

 

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Saul_cooperstein

In CA estate sales are one of only a small number of exceptions to allow licensed purchasers (restaurants etc) to purchase liquor from someone other than a Distributer. The only other I know is from a bank or financial institution where the liquor was taken through foreclosure or to settle collateral on a loan. Just need an ok from the regional ABC which I think is pretty proforma. Only exception is that if the estate held a liquor license then can’t purchase as above..as such, .if anyone runs into an estate sale in Ca with lots of great booze where the folks doing the sale won’t sell, let me know as I’d want to try to get the abc approval and buy (for a licensed restaurant) 

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mbroo5880i

I am not certain whether estate sales are legal in Indiana.  I have always been interested but I wouldn't even know how to find an estate sale where alcohol is available.

 

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BottledInBond

Kentucky will be somewhat of a test of some of this stuff now. It isn’t full wild-west as it is still limited to stores selling to consumers, but individuals can sell their collections to a store now and that store can turn around and sell the bottles to consumers. We’ll see. 

 

By the way, another goofy liquor law where I live that is inconsistent is with wine. If you buy a bottle at a restaurant and haven’t finished it when you’re ready to go home, they can stick the cork back in it and you take it home legally. I don’t think that concept applies legally to beer or spirits. Not that it’s a big deal, I just always wonder about those inconsistencies between different types of alcohol

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PaulO
10 hours ago, mbroo5880i said:

I am not certain whether estate sales are legal in Indiana.  I have always been interested but I wouldn't even know how to find an estate sale where alcohol is available.

 

Estate sales are often listed in the classified section of the newspaper, or talk to some auctioneers that routinely do the sales.  My father in law (an auctioneer) once sold cases and cases of full JB decanters.  This was before I met him.  I think in most estate sales, it's more like a few odds and ends.

 

When the topic of alternatives to the three tier system comes up, I think of pre-prohibition practices.  It used to be, people could mail order directly from the distillery.  On delivery, the mailman just had to have an adult sign for the package.  Couldn't we do this today? 

 

Overall, when it comes to questionable or unknown provenance of bottles, I'm wary of fraud.  I stay away from the black market. 

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Richnimrod

I really do not have an opinion about whether 'opening up' the market would result in benefits that outweigh the negative consequences; but, I'll  say this:

Without regulation of some sort (which would necessarily add cost and headaches, and be unpopular for many folx) the percentage of the market containing fraudulent offerings will almost certainly get larger... probably quite a lot larger.    Human greed is a very strong force, and unregulated markets for highly sought after goods will pretty much guarantee abuses, probably on a mammoth scale... and likely prices even worse than the secondary market we now have on many of the expected unicorns and even regionally rare brands of current vintage. 

I am not a bit good at prognostication, and will freely admit such; but these observations seem very likely to me.

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fishnbowljoe

Yet something else that could possibly relate to the “bourbon conundrum”  I posted about in another thread. I agree with Rich in that easing of regulations probably wouldn’t be a good thing. Hell, IMHO, things have been screwed up enough over the last few years with the rules and regulations that were, or are now in place. 

 

Joe

 

 

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The Black Tot

Now that we discuss this I remember sometime around 2014 I think it was that 4R used to allow you to show up at the distillery and put your name on a list for the annual single barrel limited.

 

When they released it, they called you, you paid, and you could pick it up anytime within the year. Direct sale from the gift shop.

 

One bottle per person, who showed up at the distillery with an ID.

 

That was a good idea. I started to think about how this might work with BTAC/PVW.

 

Most importantly, it would mean one bottle per person, and the distillery gets the whole markup to MSRP. The customers get an honest bottle for making the effort.

 

I thought about how that would get abused (because every program in whiskey eventually gets abused). The basic idea would be a flipper would have to round up a bus of people to sign their names for product, and then bring the people back again to pick up their busload of bottles.

 

So then I thought - what if in order to sign your name on the list, they gave you a basic bourbon quiz?  Things like "how old is WLW?", "Which two BTAC bottles are ryes?", "What is William Weller's middle name?", "Which BTAC bottle has a wheated mashbill?". In other words, simple questions that people who know BT's bourbons would all know, and people you round up on a bus could not be bothered to get right.

 

If BT did this, they could do the whole allocation at the gift shop, get the full MSRP for themselves, and every single bottle would go to a real person who cared enough about their product to know what it is.

 

...could be worse. I mean, it currently IS worse. It beats people following the truck and asking for "Pappy 10yr"

 

 

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Saul_cooperstein

I think the ability for whiskey to be sold like wine would be a benefit to smaller ‘craft’ producers who look promising without all that much benefit to larger producers who need to rely on distribution system to move millions of cases. 

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BottledInBond
1 hour ago, Saul_cooperstein said:

I think the ability for whiskey to be sold like wine would be a benefit to smaller ‘craft’ producers who look promising without all that much benefit to larger producers who need to rely on distribution system to move millions of cases. 

I think this is right. Because if the distillery sold all their LE product directly to consumers, they would have to alienate the liquor stores who are used to getting this stuff currently. And the distributors wouldn’t be able to do the stuff they do currently where they coerce owners into carrying a bunch of stuff from their portfolio to be able to get some of the LEs. 

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The Black Tot
2 hours ago, BottledInBond said:

I think this is right. Because if the distillery sold all their LE product directly to consumers, they would have to alienate the liquor stores who are used to getting this stuff currently. 

 

You mean the ones who offer me a GTS for $400-800 like they're doing me a favor?

 

My heart would truly bleed if they felt alienated.

 

I used to be "used to" buying BTAC for $80 retail. What about OUR alienation as consumers?

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jvd99
18 hours ago, BottledInBond said:

I think this is right. Because if the distillery sold all their LE product directly to consumers, they would have to alienate the liquor stores who are used to getting this stuff currently. And the distributors wouldn’t be able to do the stuff they do currently where they coerce owners into carrying a bunch of stuff from their portfolio to be able to get some of the LEs. 

The liquor stores may be relieved not to be held hostage by the distributor making them take cases of crappy vodka for every bottle of PVW.  Liquor stores would also welcome not having to field hundreds or thousands of calls and rando walkins asking about LEs.  I for one wouldn’t change my behavior at all which is not to participate in the secondary market because there is absolutely no way to determine whether or not you’re buying a genuine bottle or an empty bottle that was listed on eBay last week and then filled with Beam.  Just not gonna risk it when the only thing between the real thing and a fake is a 5 cent piece of plastic or foil.  

 

As for Illinois, estate sales cannot peddle liquor officially, but some do on the side.  It’s like forming a relationship with an LS, fundvthe right person and build the relationship.  

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