What is BT Thinking?

[flahute]

2 hours ago, Jazz June said:

Also, this thread could be answered with, the Lawrenceburg man is the most content man in bourbonia.

Do not give away our secrets!

[berto]

Drive up hype, keep prices low so the hype feels attainable, make noise about doing something about secondary when they know they can't (nor do they want to given that's where the hype grows most), stack bills.  Bubble ain't gonna pop.  These are the good ol' days. 

[Phil T]

Ummmm....ok, ok, ok, ok,ok.

[GeeTen]

4 minutes ago, Phil T said:

Ummmm....ok, ok, ok, ok,ok.

 

Sorry, trying to delete duplicate posts as we speak!  Dang new software.  Mea culpa, mea culpa, mea maxima culpa.  

 

Edited January 4, 2021 by GeeTen

[Phil T]

1 minute ago, GeeTen said:

 

Sorry, trying to delete duplicate posts as we speak!  Dang new software.  Mea culpa, mea culpa, mea maxima culpa.  

 

[Double C's]

12 hours ago, fishnbowljoe said:

Ain’t the three tier system just a wonderful thing? Sadder yet is to contemplate just how crazy things might be without the three tier system. .  What’s a mother to do?

 

Biba! Joe

Well, with the passing Kentucky passing the house bill 415 last year and a few other states falling in line with this, the 3-tier system is taking a blow. I have mixed feelings about this. I think that it is both good and bad depending on which angle you look at it from. The good, is that a Kentucky resident will now be able to buy direct from the producer(distillery/winery/brewery) which "should" make it easier for someone to obtain products they want to drink that may have been previously not easily purchased due to the 3-tier system games. The bad, is that due to the fact certain brands have a demand on the secondary market I can see people buying up/hoarding all they can of those bottles directly from the distillery now to try and sell on the secondary, thus further limiting the supply that is available to get distributed to the rest of the country. My area is struggling right now to get BT products and with the demand for them being so strong I don't see the availability getting better anytime soon.

[AlfaLarreo]

27 minutes ago, Double C's said:

Well, with the passing Kentucky passing the house bill 415 last year and a few other states falling in line with this, the 3-tier system is taking a blow. I have mixed feelings about this. I think that it is both good and bad depending on which angle you look at it from. The good, is that a Kentucky resident will now be able to buy direct from the producer(distillery/winery/brewery) which "should" make it easier for someone to obtain products they want to drink that may have been previously not easily purchased due to the 3-tier system games. The bad, is that due to the fact certain brands have a demand on the secondary market I can see people buying up/hoarding all they can of those bottles directly from the distillery now to try and sell on the secondary, thus further limiting the supply that is available to get distributed to the rest of the country. My area is struggling right now to get BT products and with the demand for them being so strong I don't see the availability getting better anytime soon.

The distilleries track and limit personal purchases already.  However, people just bring friends in to get extra bottles.

[dad-proof]

I have no personal insight, at all, but what I find fascinating is the impact of contract distillation agreements and how they have affected both BT and FR, although in very different ways. Will make an interesting business school case studies one day. 

 

BT gets a huge brand awareness/hype bump for it's distillation of VW and Age International brands, which as mentioned that they don't exclusively control or own. How does the benefits of distilling these "prestige" products balance against the (presumably negative) impacts to the distillation capacity, prime warehouse locations, aging stock constraints, allocation headaches, and of course underlying inability to meet consumer demand for their own products? If BT got rid of their AI and VW relationships, they would gain some capacity, but surely they would lose some of their current cache, right? They make good whiskey, and BTAC would still drive their brand reputation overall, I am sure. Still, interesting to ponder where the Weller and Maker's Mark brands would be if Pappy came from aged stocks of Maker's Mark, and Blantons/RHF/ETL came from Old Forester. From the outside looking in their strategy seems to be hold on to the prestige that these partnerships bring them while managing the current boom as best as possible until capacity catches up, and at the same time hold their pricing where they think it will remain sustainable long-term. There is nothing about such a strategy that I could fault.

 

It's seems almost reversed for FR. The Bulleit contract was a major financial boon that sustained the 4R distillery and kept it viable through sale after sale at a time the 4R portfolio we know in the US today didn't exist. I imagine the financial success of the contract gave Rutledge the space and resources needed to revive the FR brand in the US and grow it into it's own powerhouse. At the same time, publicly the association with Bulleit was treated as some unspoken double-secret probation, and it certainly didn't add prestige to 4R among the enthusiast/tater (it's a fine line haha) communities. It seems like the moment 4R could confidently stand on its own they were happy to unburden themselves from the Bulleit contract to improve their own stock and supply. 

[fishnbowljoe]

9 hours ago, GeeTen said:

 

Sorry, trying to delete duplicate posts as we speak!  Dang new software.  Mea culpa, mea culpa, mea maxima culpa.  

 

I already took care of most of them for you Frank. I have a  line, but......

 

Biba! Joe

[Old Hippie]

For what it's worth, I work for a SC Spirits Distributor. For the most part Distributors do not put exorbitant mark ups on allocated items. Our pricing is agreed to with the distillery and we are not going to risk harming that relationship for a few bucks. Distilleries sell these items to us at a price that when we sell them the retailer can hit the distilleries' desired MSRP via a standard mark up. Of course MSRP rarely happens with the unicorns. It does get tricky deciding which accounts get how much (if any) of these products. Say for example we get 50 6-packs of Birthday Bourbon a year. There are about 1400 spirits retailers in the state and we could easily sell 5000 cases in a matter of days. It is against federal laws to leverage these cases of Birthday Bourbon to boost other items' depletions. We are not going to risk our license for that. We do, however, allocate these cases on total Old Forester Volume the accounts have done over the past year. The most any account gets is 3 bottles and there are some that get 1.

I do hear in the market of other distributors holding these cases ransom for more sales of related items, but this is more of a sales person/manager thing versus accepted practice by the distributor. 

So now it gets down to the retailer deciding who gets the rights to purchase these bottles. Most it seems, do a lottery. Many of these only extend the lottery chances to their regular customers. Kudos to them for that. Then the purchase price will be all over the board. Welcome to the world of supply and demand. I do not fault the retailers for jacking up the prices on these items. I would do the same.

Many salient points have been made about about the distillers and whether or not they are keeping supply tight. I think the answer to that is yes and no. Some items (again I will use Birthday Bourbon as an example) are made and will continue to be made in limited quantities. There are 8 other SKUs with this brand that are readily available so it is fine to have some limited, special items.

You have to consider that there is only so many, fermenters, stills, barrels and warehouse space available to these distilleries. Over the past few years, most of the big folks and greatly increased these capacities but it will be a few more years for these new capacities to come to the market. It will be interesting to see what happens then.

I do not the the bourbon boon will end any time in the foreseeable future. I cut my teeth on the wine business and that industry hit a similar boon to quality wine two decades ago and it still goes strong today.

[fishnbowljoe]

Thanks for the insightful post Old Hippie. Much appreciated. I guess I’m a bit jaded living in Illinois. It’s the land of taxes and crooked politicians, and as I’ve said numerous times before here, “Where our former governors make our license plates.”  

 

Biba! Joe

[fishnbowljoe]

The problems and/or irregularities of the bourbon industry can’t be attributed to one distillery. Each and every distillery out there has had their share of problems. Pretty much all of them have  been undergoing expansions in recent years in one form or another, and they’re all  doing the best that they can. Some are coping better than others.

 

I remember heading out to MM back in 2009 and seeing a couple of  new rickhouses being built on the north(?) side of Loretto. There was also a new still going in at the distillery. Last year(oops 2019) the land where those rickhouses were being built was completely full of rickhouse, and  there were more and larger ones being built across the road. I still can’t figure out if MM got lucky, or if they had an inkling that a boom was coming and had planned accordingly. But oops., their calculations my have been just a tad off. Y’all remember the s**tstorm that happened a number of years ago when they decided to lower the proof of MM because they were running low on aged stocks and didn’t want to run out or have to charge more? This turned out to be a temporary glitch that they were able to overcome in a very short time. Fast forward, and now they have the MM 46 “cave”, tasting area, and special stave private selections of MM 46. MMCS and MM 101 have been introduced and are quite popular. They are one of the BSO’s of the bourbon industry now. (Bright Shiny Object) It appears that the ten’s if not hundreds of millions of dollars they spent were well worth it. 

[AlfaLarreo]

1 hour ago, Old Hippie said:

For what it's worth, I work for a SC Spirits Distributor. For the most part Distributors do not put exorbitant mark ups on allocated items. Our pricing is agreed to with the distillery and we are not going to risk harming that relationship for a few bucks. Distilleries sell these items to us at a price that when we sell them the retailer can hit the distilleries' desired MSRP via a standard mark up. Of course MSRP rarely happens with the unicorns. It does get tricky deciding which accounts get how much (if any) of these products. Say for example we get 50 6-packs of Birthday Bourbon a year. There are about 1400 spirits retailers in the state and we could easily sell 5000 cases in a matter of days. It is against federal laws to leverage these cases of Birthday Bourbon to boost other items' depletions. We are not going to risk our license for that. We do, however, allocate these cases on total Old Forester Volume the accounts have done over the past year. The most any account gets is 3 bottles and there are some that get 1.

I do hear in the market of other distributors holding these cases ransom for more sales of related items, but this is more of a sales person/manager thing versus accepted practice by the distributor. 

So now it gets down to the retailer deciding who gets the rights to purchase these bottles. Most it seems, do a lottery. Many of these only extend the lottery chances to their regular customers. Kudos to them for that. Then the purchase price will be all over the board. Welcome to the world of supply and demand. I do not fault the retailers for jacking up the prices on these items. I would do the same.

Many salient points have been made about about the distillers and whether or not they are keeping supply tight. I think the answer to that is yes and no. Some items (again I will use Birthday Bourbon as an example) are made and will continue to be made in limited quantities. There are 8 other SKUs with this brand that are readily available so it is fine to have some limited, special items.

You have to consider that there is only so many, fermenters, stills, barrels and warehouse space available to these distilleries. Over the past few years, most of the big folks and greatly increased these capacities but it will be a few more years for these new capacities to come to the market. It will be interesting to see what happens then.

I do not the the bourbon boon will end any time in the foreseeable future. I cut my teeth on the wine business and that industry hit a similar boon to quality wine two decades ago and it still goes strong today.

Great information, thank you!    I would certainly expect distributors to reward good retailers with allocated bottles.  I always thought it was the retailer that was responsible for the large markups.  Most retailers that do this sell general supply above typical market cost and sell less in general, and therefore, get very few allocated bottles.  Unless it’s a grocery store chain that has a lot of outlets that depend on the convenience sale.  One large regional grocery store in my area is rumored to keep all allocated bottles for the family’s private functions.
 

Two of the three largest liquor stores in my area do lotteries and sell at or close to MSRP, so I’m grateful for that.  However, I’m not wild about the way they do the regular customer thing, because it is based on total sales, not just bourbon or whiskey sales.  I really can’t compete with big wine drinkers that can go through several bottles a week.

 

I did very well in the lotteries based on bourbon purchases and stand in line/pull ticket type.  I have yet to win one based on total sales, but I spent a lot at TW this year, so fingers crossed.

[flahute]

1 hour ago, AlfaLarreo said:

 I always thought it was the retailer that was responsible for the large markups.  

Not always. Earlier this year my local managed to snag some old stock of Al Young's 50th. He didn't realize until he had it in the store that the price was 4x the original price.

[0895]

5 minutes ago, flahute said:

Not always. Earlier this year my local managed to snag some old stock of Al Young's 50th. He didn't realize until he had it in the store that the price was 4x the original price.

 

Worth it!

[PhantomLamb]

18 hours ago, dad-proof said:

 

 

It's seems almost reversed for FR. The Bulleit contract was a major financial boon that sustained the 4R distillery and kept it viable through sale after sale at a time the 4R portfolio we know in the US today didn't exist. I imagine the financial success of the contract gave Rutledge the space and resources needed to revive the FR brand in the US and grow it into it's own powerhouse. At the same time, publicly the association with Bulleit was treated as some unspoken double-secret probation, and it certainly didn't add prestige to 4R among the enthusiast/tater (it's a fine line haha) communities. It seems like the moment 4R could confidently stand on its own they were happy to unburden themselves from the Bulleit contract to improve their own stock and supply. 

Stupid question, is Bulleit still using FR distillate then or are they producing their own?  

[flahute]

58 minutes ago, PhantomLamb said:

Stupid question, is Bulleit still using FR distillate then or are they producing their own?  

Both. Bulleit is distilling their own but none of it is ready yet.

They are still using 4R but the contract ended about 5 years ago or so. 4R is still in the pipeline but they have less with each passing year.

[dad-proof]

Just re-read my post - sorry for the nearly incoherent grammar. Between work, family, and contractor interruptions me post was a cobbled together mess. I'll blame the fumes from the spray foam in the basement! 

[AlfaLarreo]

36 minutes ago, flahute said:

Both. Bulleit is distilling their own but none of it is ready yet.

They are still using 4R but the contract ended about 5 years ago or so. 4R is still in the pipeline but they have less with each passing year.

Willett does the same with HH and maybe others.  Don’t know when they’ll cut off outside juice, but it’s probably close.  They have always been protective of their sources and do not even like people calling it sourced.

[PhantomLamb]

10 minutes ago, AlfaLarreo said:

Willett does the same with HH and maybe others.  Don’t know when they’ll cut off outside juice, but it’s probably close.  They have always been protective of their sources and do not even like people calling it sourced.

Cool thanks @flahute and @AlfaLarreo.  I knew that about Willet but wasn't sure if 4R was cut off yet.

[Bob_Loblaw]

On 1/3/2021 at 3:37 PM, AlfaLarreo said:

  I’d like to know what people think BT is really doing.

 

 

On 1/3/2021 at 8:30 PM, AlfaLarreo said:

I personally think they’ve kept prices too low for the demand, which doesn’t make a lot of sense to me. 

 

My two cents.  I think BT is producing generally fantastic whiskey across the board at very reasonable SRP pricing.  They get a lot of hate and scrutiny because all of their lineup is allocated and they are introducing new products even when they are unable to keep up with demand for the current line.   I disagree with that hate.

 

1 - Not BT's fault the world has decided everything in their portfolio is ambrosia and taters are willing to pay 3-5x MSRP.

2 - Massive 1.2B expansion in the works for future demand.  So they are clearly addressing the shortage.  As others have noted, it takes time.  We are in what? Year 4 or 5?  That means the bourbon from the very first new rickhouse is still over a year away from being ready for say WSR.  The supply momentum will also build over the years.

3 - Bourbon is booming and we are seeing product line extensions all over the place as distillers try to capture more market share.  So BT is supposed to just crank out WSR and W107 only in order to meet current demand?  Seems unfair to expect that.   Expanding the product line keeps them relevant in the marketing/bourbon buzz.  It gives older drinkers and collectors something new to chase and compare to the current offerings and it also causes most of us to purchase (or be willing to purchase) MORE BT products.  

4 - As for pricing, I think they are actually doing it right.  I do not think BT is going for the short term boom money grab, but rather positioning themselves to capture a huge future market share.  The demand will be there for years as supply starts to catch up.  I have already seen so much more WSR on shelves (vs back room)  in the past 12 months then the previous 2 years.  I think it will be very hard for crafts and other's who have been pricing higher during this boom to compete down the road with their $70 plus bottles.   

 

For Pappy/BTAC I tend to think that one mistake the bourbon community makes is to assume that there will be a linear relationship between the ongoing expansion and availability of Pappy.  Meaning if BT ends up tripling their Wheated Mash capacity I do not think it will translate to 3x amount of Pappy every year.  BT does benefit greatly from the scarcity and hype surrounding those bottles.  I would hope that quality continues to improve as more barrels to choose from should result in more exceptional barrels.  

 

 

[flahute]

1 hour ago, AlfaLarreo said:

Willett does the same with HH and maybe others.  Don’t know when they’ll cut off outside juice, but it’s probably close.  They have always been protective of their sources and do not even like people calling it sourced.

See my State of the State post. All of the KBD brands are now Willett distilled. They still have some sourced barrels but those are reserved for the occasional single barrel release. The majority of the WFE single barrels are also Willett distilled at this point.

[AlfaLarreo]

6 minutes ago, flahute said:

See my State of the State post. All of the KBD brands are now Willett distilled. They still have some sourced barrels but those are reserved for the occasional single barrel release. The majority of the WFE single barrels are also Willett distilled at this point.

In that case I feel justified not buying Noah’s Mill.  I don’t see how they can possibly meet the profile of the old 15 year age statement by blending 2 to 7 year old juice.  There was an intermediate step when they removed the age statement and were mixing older stock with younger and then I assume younger Willett distilled juice.  That leads me to believe they will never capture that old profile.

 

That’s really a shame to me, because the original Noah’s Mill is one of my favorite bourbons ever.  I noticed the difference when they first removed the age statement (I think it was around 7 years ago?) and when I tasted it a couple of years ago at Willett it just wasn’t the same bourbon.

[fishnbowljoe]

4 hours ago, Bob_Loblaw said:

 

My two cents.  I think BT is producing generally fantastic whiskey across the board at very reasonable SRP pricing.  They get a lot of hate and scrutiny because all of their lineup is allocated and they are introducing new products even when they are unable to keep up with demand for the current line.   I disagree with that hate.

 

1 - Not BT's fault the world has decided everything in their portfolio is ambrosia and taters are willing to pay 3-5x MSRP.

2 - Massive 1.2B expansion in the works for future demand.  So they are clearly addressing the shortage.  As others have noted, it takes time.  We are in what? Year 4 or 5?  That means the bourbon from the very first new rickhouse is still over a year away from being ready for say WSR.  The supply momentum will also build over the years.

3 - Bourbon is booming and we are seeing product line extensions all over the place as distillers try to capture more market share.  So BT is supposed to just crank out WSR and W107 only in order to meet current demand?  Seems unfair to expect that.   Expanding the product line keeps them relevant in the marketing/bourbon buzz.  It gives older drinkers and collectors something new to chase and compare to the current offerings and it also causes most of us to purchase (or be willing to purchase) MORE BT products.  

4 - As for pricing, I think they are actually doing it right.  I do not think BT is going for the short term boom money grab, but rather positioning themselves to capture a huge future market share.  The demand will be there for years as supply starts to catch up.  I have already seen so much more WSR on shelves (vs back room)  in the past 12 months then the previous 2 years.  I think it will be very hard for crafts and other's who have been pricing higher during this boom to compete down the road with their $70 plus bottles.   

 

For Pappy/BTAC I tend to think that one mistake the bourbon community makes is to assume that there will be a linear relationship between the ongoing expansion and availability of Pappy.  Meaning if BT ends up tripling their Wheated Mash capacity I do not think it will translate to 3x amount of Pappy every year.  BT does benefit greatly from the scarcity and hype surrounding those bottles.  I would hope that quality continues to improve as more barrels to choose from should result in more exceptional barrels.  

 

 

You are my hero Ben. Thank you so much for this post, and your truly unbiased viewpoint. 
 

Biba! Joe

[AlfaLarreo]

6 hours ago, Bob_Loblaw said:

 

My two cents.  I think BT is producing generally fantastic whiskey across the board at very reasonable SRP pricing.  They get a lot of hate and scrutiny because all of their lineup is allocated and they are introducing new products even when they are unable to keep up with demand for the current line.   I disagree with that hate.

 

1 - Not BT's fault the world has decided everything in their portfolio is ambrosia and taters are willing to pay 3-5x MSRP.

2 - Massive 1.2B expansion in the works for future demand.  So they are clearly addressing the shortage.  As others have noted, it takes time.  We are in what? Year 4 or 5?  That means the bourbon from the very first new rickhouse is still over a year away from being ready for say WSR.  The supply momentum will also build over the years.

3 - Bourbon is booming and we are seeing product line extensions all over the place as distillers try to capture more market share.  So BT is supposed to just crank out WSR and W107 only in order to meet current demand?  Seems unfair to expect that.   Expanding the product line keeps them relevant in the marketing/bourbon buzz.  It gives older drinkers and collectors something new to chase and compare to the current offerings and it also causes most of us to purchase (or be willing to purchase) MORE BT products.  

4 - As for pricing, I think they are actually doing it right.  I do not think BT is going for the short term boom money grab, but rather positioning themselves to capture a huge future market share.  The demand will be there for years as supply starts to catch up.  I have already seen so much more WSR on shelves (vs back room)  in the past 12 months then the previous 2 years.  I think it will be very hard for crafts and other's who have been pricing higher during this boom to compete down the road with their $70 plus bottles.   

 

For Pappy/BTAC I tend to think that one mistake the bourbon community makes is to assume that there will be a linear relationship between the ongoing expansion and availability of Pappy.  Meaning if BT ends up tripling their Wheated Mash capacity I do not think it will translate to 3x amount of Pappy every year.  BT does benefit greatly from the scarcity and hype surrounding those bottles.  I would hope that quality continues to improve as more barrels to choose from should result in more exceptional barrels.  

 

 

I certainly have no grudge against BT and I think they make good bourbons.  When their stuff was available here I bought it periodically.  I think their a great brand and offer a great distillery experience.  I just don’t think there products (other then BTAC) are better than many other distilleries to justify time to hunt them or pay secondary market prices.   Taste is what you pay for, not reputation.  
 

I can tell you for a fact that before Blanton’s and ER were allocated everywhere they couldn’t be found in Missouri.  I could go to Illinois or Kansas at the time and see it on the shelf, but I couldn’t get it here.  I understand they are a business and have to make choices, just like we are consumers and have to make choices.  So I don’t fault BT for their decisions and a don’t fault anyone here for their’s.  People are merely expressing an opinion and there is no right or wrong.

 

My original post was just just trying to solicit opinions and I got some good ones, like yours.