Your Ongoing observations for the Upcoming Glut

[flahute]

19 minutes ago, fishnbowljoe said:

I find it interesting that there is a glut of grapes/wine despite all the wild fires in CA two out of the last three years. And yes I know that there are many other areas of the country that have grapes and produce wine.

 

Joe

I seem to recall the vines largely escaped getting burned. 

[fishnbowljoe]

24 minutes ago, flahute said:

I seem to recall the vines largely escaped getting burned. 

I thought that most of the wineries themselves survived pretty much unscathed, but that many acres of vines were burnt.

[flahute]

38 minutes ago, fishnbowljoe said:

I thought that most of the wineries themselves survived pretty much unscathed, but that many acres of vines were burnt.

I think it was the opposite. Vines mostly OK but winery operations buildings damaged.

Clearly we need to research this a bit! And you may be right. There have been two fire seasons recently so maybe I'm remembering one of them and you are remembering the other.

[AndyD]

20 hours ago, Kepler said:

I didn't realize maggies were made in MN.  I appreciate that my arc pre was made there.  Minnesota must be a hotspot for that kind of thing.

yeah it’s maybe 10 miles from my house.  Guy who started it was a 3M engineer I believe.  

[The Black Tot]

9 hours ago, Vosgar said:

So.........since Illinois made weed legal this year, I shouldn't have any problem finding GTS and WLW on the shelf next fall, right? 

 

You see? People are smoking it already!!!

[The Black Tot]

Europe also had it's first good grape grow year in quite a while in 2019, IIRC.

 

So by this fall when those wines mature, there could be some serious competition in wine.

[BrokeCal]

It's hard for me to imagine a glut of bourbon significantly lowering the prices and just sitting on the shelf not selling enough.

 

First let me say I can see how one could imagine that just when all of the expansions begin to produce bourbon that is finally able to be bottled, around that same time the boom could begin to tale off and a glut could ensue.  I can see someone thinking that.

 

Here is the problem, if that happened they would simply reduce the bottlings and keep more bourbon aging longer! This would result in a winning backup plan for the distilleries.  They could still sell all they could, while keeping more bourbon for more years.  So they could then sell older age stated bourbon and ask even more for it down the line.  It isn't what they would want, but it's what they would do.  I see that happening rather than reduced prices and bottles being stacked in liquor stores not selling.

[The Black Tot]

1 hour ago, BrokeCal said:

It's hard for me to imagine a glut of bourbon significantly lowering the prices and just sitting on the shelf not selling enough.

 

First let me say I can see how one could imagine that just when all of the expansions begin to produce bourbon that is finally able to be bottled, around that same time the boom could begin to tale off and a glut could ensue.  I can see someone thinking that.

 

Here is the problem, if that happened they would simply reduce the bottlings and keep more bourbon aging longer! This would result in a winning backup plan for the distilleries.  They could still sell all they could, while keeping more bourbon for more years.  So they could then sell older age stated bourbon and ask even more for it down the line.  It isn't what they would want, but it's what they would do.  I see that happening rather than reduced prices and bottles being stacked in liquor stores not selling.

 

Can you imagine the board meeting?

 

"We've spent 40 million dollars over the last 6 years on expansions - a lot of it debt financed. Now that the bourbon is ready for sale, we're going to leave it sit in the rack houses and pay taxes on it, and interest on the debt, for five more years"

 

There will be intense business pressure to sell the extra bourbon that has been produced. And the first distillery (and there WILL be one who does it first) to reduce prices will leave the others with no choice but to compete, or lose all their market share and brand loyalty/familiarity.

 

You don't have to imagine a glut of bourbon. You can read about it. It's already happened before. For absolute reals. Ask any distillery worker who's been doing this for more than 40 years if this is a cyclical industry. 

 

All those pictures you see around facebook of people clearing shelves, or even buying 2 or 3 bottles of something at a time and putting it away in bunkers (at various stages of development)? The current sales figures have that kind of purchasing entangled in them. 

 

SB.com members may not reflect the nation's bourbon buying habits in general, but there is no question that even if it is only a tiny fraction of bourbon enthusiasts who are hoarding/building bunkers, the national home inventory of bourbon is increasing, even in this time of apparent shortage. And market observers and distillery expansion planners are treating all of it as though it has been/is being consumed. 

 

Even if there had been zero expansion of bourbon production, and everyone who had a bunker suddenly turned to drinking it down, we would probably be in a production balance. Because the bunker builders are the heaviest buyers, particularly of the LEs and "the good stuff." 

 

It only takes one semi-serious hoarder per 100 or even 200 mile radius to hit all the local stores, buy all the BT products and give what is ultimately a false impression of absolute scarcity. All the producers have to do to fix the bubble is to make enough that those heavy buyers (and the heavy buyers in waiting behind them) hit saturation. Contrary to popular belief, I don't think we're too far from that, in the sense of the mid shelf tater bait such as non-BTAC BT and Booker's, McKenna, ECBP, etc. 

 

The rise and expansion of bourbon bunker building is a fairly recent phenomenon.  Most bunkers, apart from the serious early adopters (many of whom we look up to on this board) were started less than 5-7 yrs ago. The rise in prevalence of discussion about "bourbon zen" is proportional to the rise in the number of people who are now realizing (some with the indelicate assistance of their significant others) that they now have so much bourbon in reserve that they don't need to fear shortages anymore. Bunker building is all about fear (and I say that as someone who has spent the last 9yrs building a substantial bunker). It is fun to do as well, but fundamentally it expresses the concern that availability, quality, and price will never be as good as they are right now. There would be no reason to put bottles away if you thought they'd always be there on the shelves for the same good price.

 

Anyway, the bunker building story has an end. A huge bunker (with everyone's definition of huge being subjective), and the decision that "I have enough". So there will be a point at which, maybe 5-10 years after the onset of bunker building culture, that we start to hit the onset of bunker completion culture. A building wave of zen. 

 

Get the BT products and the Booker's back on the shelves regularly through increased supply, then get their prices down through distillery competition, and the fear drops out of it. When the fear drops out of it, we hoarders, now freed of our insecurities, will turn inwards toward the bunker. Double whammy - extra production meets the cessation of purchases by the highest-volume customers. 

 

Glut.

Edited January 13, 2020 by The Black Tot

[GeeTen]

1 hour ago, The Black Tot said:

 

Glut.

 

 

Great post, but you gotta' get some "shore leave" pretty soon - you have waaay too much time on your hands, my friend.   

 

Edited January 13, 2020 by GeeTen

[The Black Tot]

2 minutes ago, GeeTen said:

 

Great post, but you gotta' get some "shore leave" pretty soon - you have waaay too much time on your hands, my friend.   

 

 

You are absolutely right! But it's another 2 weeks at least...

[BigRich]

 
Great post, but you gotta' get some "shore leave" pretty soon - you have waaay too much time on your hands, my friend.   [emoji1787]
 

I was thinking to myself “ya know you can really tell when Paul’s been at sea too long...”

[lcpfratn]

I was thinking to myself “ya know you can really tell when Paul’s been at sea too long...”

LOL...but I can’t disagree with much of what Paul said!

[The Black Tot]

10 minutes ago, BigRich said:

I was thinking to myself “ya know you can really tell when Paul’s been at sea too long...”

In this case it's also been the sort of degree of shit-show factor.

 

All you guys who post pics of the big pour alongside the comment "tough day at work"?

 

That's been my last two months, minus the big pours.

[KyleCBreese]

5 hours ago, The Black Tot said:

When the fear drops out of it, we hoarders, now freed of our insecurities, will turn inwards toward the bunker.

This has already started with me for certain brands. ECBP is easy to find in NJ now and I’ve stopped buying and started drinking down what I have. 

[TehRegion219]

18 hours ago, The Black Tot said:

 

 

Never heard of White Claw. I'm getting the sense that's for the best. 

 

 

[BrokeCal]

8 hours ago, The Black Tot said:

 

Can you imagine the board meeting?

 

"We've spent 40 million dollars over the last 6 years on expansions - a lot of it debt financed. Now that the bourbon is ready for sale, we're going to leave it sit in the rack houses and pay taxes on it, and interest on the debt, for five more years"

 

There will be intense business pressure to sell the extra bourbon that has been produced. And the first distillery (and there WILL be one who does it first) to reduce prices will leave the others with no choice but to compete, or lose all their market share and brand loyalty/familiarity.

 

You don't have to imagine a glut of bourbon. You can read about it. It's already happened before. For absolute reals. Ask any distillery worker who's been doing this for more than 40 years if this is a cyclical industry. 

 

All those pictures you see around facebook of people clearing shelves, or even buying 2 or 3 bottles of something at a time and putting it away in bunkers (at various stages of development)? The current sales figures have that kind of purchasing entangled in them. 

 

SB.com members may not reflect the nation's bourbon buying habits in general, but there is no question that even if it is only a tiny fraction of bourbon enthusiasts who are hoarding/building bunkers, the national home inventory of bourbon is increasing, even in this time of apparent shortage. And market observers and distillery expansion planners are treating all of it as though it has been/is being consumed. 

 

Even if there had been zero expansion of bourbon production, and everyone who had a bunker suddenly turned to drinking it down, we would probably be in a production balance. Because the bunker builders are the heaviest buyers, particularly of the LEs and "the good stuff." 

 

It only takes one semi-serious hoarder per 100 or even 200 mile radius to hit all the local stores, buy all the BT products and give what is ultimately a false impression of absolute scarcity. All the producers have to do to fix the bubble is to make enough that those heavy buyers (and the heavy buyers in waiting behind them) hit saturation. Contrary to popular belief, I don't think we're too far from that, in the sense of the mid shelf tater bait such as non-BTAC BT and Booker's, McKenna, ECBP, etc. 

 

The rise and expansion of bourbon bunker building is a fairly recent phenomenon.  Most bunkers, apart from the serious early adopters (many of whom we look up to on this board) were started less than 5-7 yrs ago. The rise in prevalence of discussion about "bourbon zen" is proportional to the rise in the number of people who are now realizing (some with the indelicate assistance of their significant others) that they now have so much bourbon in reserve that they don't need to fear shortages anymore. Bunker building is all about fear (and I say that as someone who has spent the last 9yrs building a substantial bunker). It is fun to do as well, but fundamentally it expresses the concern that availability, quality, and price will never be as good as they are right now. There would be no reason to put bottles away if you thought they'd always be there on the shelves for the same good price.

 

Anyway, the bunker building story has an end. A huge bunker (with everyone's definition of huge being subjective), and the decision that "I have enough". So there will be a point at which, maybe 5-10 years after the onset of bunker building culture, that we start to hit the onset of bunker completion culture. A building wave of zen. 

 

Get the BT products and the Booker's back on the shelves regularly through increased supply, then get their prices down through distillery competition, and the fear drops out of it. When the fear drops out of it, we hoarders, now freed of our insecurities, will turn inwards toward the bunker. Double whammy - extra production meets the cessation of purchases by the highest-volume customers. 

 

Glut.

I agree with that a lot of that, all I'm saying is if you can't sell what you have, they pretty much have no choice but to continue and let it age.  They can cut prices a bit but with demand falling, in that scenario, they are still going to have stock they can't move.   In fact it is a double edged sword because If they just lower prices with greater supply, the guys who buy everything for their collection or bunker will stop buying in bulk, regardless of price, because it's always there.

 

It might not make the bean counters happy but hey, for us, if it does mean more bourbon can sit in barrels longer, in the end that's fantastic.

[The Black Tot]

8 minutes ago, BrokeCal said:

I agree with that a lot of that, all I'm saying is if you can't sell what you have, they pretty much have no choice but to continue and let it age.  They can cut prices a bit but with demand falling, in that scenario, they are still going to have stock they can't move.   In fact it is a double edged sword because If they just lower prices with greater supply, the guys who buy everything for their collection or bunker will stop buying in bulk, regardless of price, because it's always there.

 

It might not make the bean counters happy but hey, for us, if it does mean more bourbon can sit in barrels longer, in the end that's fantastic.

Oh in a glut there is going to be both - falling prices AND older whiskey.

 

Prices first, though.

[dboland]

7 minutes ago, BrokeCal said:

I agree with that a lot of that, all I'm saying is if you can't sell what you have, they pretty much have no choice but to continue and let it age.  

Is that true? Do they have enough space to store those extra barrels? I honestly don't know and would think that somebody managing operations wouldn't let something continue to age if it is for a certain "expression" and could drastically change the taste. My guess is they would mix it or sell it.

[The Black Tot]

2 minutes ago, dboland said:

Is that true? Do they have enough space to store those extra barrels? I honestly don't know and would think that somebody managing operations wouldn't let something continue to age if it is for a certain "expression" and could drastically change the taste. My guess is they would mix it or sell it.

In the last glut it got blended into bottles of lower age statement.

 

However, in the last glut there wasn't an eager audience trained to pay for higher aged expressions. This time there will be. We will see more 10,12, and 15+ releases as the rack houses support them.

[BrokeCal]

26 minutes ago, The Black Tot said:

In the last glut it got blended into bottles of lower age statement.

 

However, in the last glut there wasn't an eager audience trained to pay for higher aged expressions. This time there will be. We will see more 10,12, and 15+ releases as the rack houses support them.

Yeah, definitely price first.  I'm just in love with the idea of age statements coming back.  Hell I even hate HH taking the measly 6 year age statement off of their stupidly named Fighting Cock.  Stupid name but you get HH juice at 103 proof for just a buck or two more than EWB.  It's always been a bottom shelf hidden gem, but it's not quite the same since it's undoubtedly 4 years old now instead of 6.

[Marekv8]

16 minutes ago, BrokeCal said:

stupidly named Fighting Cock. 

 

You must be kidding…"Fighting Cock Straight Up" is my favorite bar call of all time. 

 

[Harry in WashDC]

12 hours ago, The Black Tot said:

Europe also had it's first good grape grow year in quite a while in 2019, IIRC.

 

So by this fall when those wines mature, there could be some serious competition in wine.

Hhhhmm.  THX.  White Bordeaux.  I haven't bought any since about 2013 (two cases of Ch.Carbonnieux 2012), and all but two bottles are gone.  Any price weakness, and I shall replenish.

[BrokeCal]

1 hour ago, Marekv8 said:

 

You must be kidding…"Fighting Cock Straight Up" is my favorite bar call of all time. 

 

[FacePlant]

I believe we’ve been caught in a perfect storm. For a long period US whiskey and particularly bourbon was a traditional, high quality value product. Except for possibly vodka our bourbon was a less expensive drink. Whether it was the Wine Spectator article about Pappy or drinkers of other libations switching to bourbon suddenly the focus of spirit drinkers fell on bourbon, and in the late 2000s to early 2010s it was suddenly hip to drink bourbon. (I know this group was earlier). The late 2000s was when I switched over from Scotch.

There was the old crowd that grew up on Crown or Jack or Turkey, or any of the other available brands and there was the new crowd that found the taste solid and enjoyable. But the biggest wind of the tempest was a strong developing economy. From the depths of despair of 2008-09 a renewal of growth and prosperity swept the US. The consumer was once again becoming king, and the consumers taste for good old American Bourbon was unquenchable. BOOM! The confluence of appetite, the enthusiasm for good times and the financial ability to reign it in, fell on bourbon. Let the good times roll.

Turn the page a few years and the cult following lead to exploration of new brands, blind tastings, special and rare store pics, and so on. The consumer continued to loosen the purse strings and buy bottles at prices that would have been well out of budget only a few years earlier. And it continued and morphed into the average guy/gal being willing to pay an entire months utility bill and more for a unicorn bottle. And if you’re willing to pay that for a unicorn how much were you willing pay for other “special releases” or even your daily drinker? And if you believed one particular bottle would not stay that price for long maybe you buy a few cases? Yes, and what a smart thing to do.

OMG what if they start making something new that looks like a tulip bulb, well…you got to mortgage the house then? The thing about bubbles is they go on much much longer than most think they could, and soar so much higher than possible, and then whoever wins the greater fool contest is left with their new shiny unicorn of a bottle but no thirst to down it. I think this current boom still has strong legs but every cycle has bust following boom, and the greater the boom the deeper the bust. Maybe someone else's bust could be our boom if we hold true to ZEN?

[TwoFingers]

2 hours ago, Marekv8 said:

 

You must be kidding…"Fighting Cock Straight Up" is my favorite bar call of all time.   

 

That is hilarious.  I'm sure it is a favorite at U South Carolina.  I might order that myself, as I'm a FC fan.