Sweetheart Deals Mean Less For Us

[Sweetmeats]

"All these brands are owned by the Sazerac Co. headquartered in New Orleans, La., which has been actively promoting the single-barrel program since 2005. Other American whiskey brands like Evan Williams, Bulleit, and Jack Daniel's offer full-barrel bottlings, and some other brands offer private bottlings for VIP customers, but whiskeys from the Sazerac Co. come with a bonus: Buy the barrel, and get more access to limited products like Sazerac 18-year-old rye.

The recent popularity of bourbon and rye whiskey have led to a scarcity of product, so spirits companies reserve their aged whiskeys for specific markets.

"We didn't get enough of the allocation for the California market. The people who wanted the allocated bourbons came to us and said, 'What do we have to do to get them?' " said Bill Hart, a regional sales manager for Sazerac Co. Sazerac sold 71 single barrels last year in Northern California alone, Hart said. (Another option was to buy cases of Rain vodka, which you may now find as the well vodka in more venues than usual.)"

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/09/07/WIFCRUH6T.DTL

[mozilla]

Wow, I didn't know Bourbon barrels grew as they were shipped across the ocean. So, its 200 bottles here and 600 there. Must be the metric system???

[Rughi]

This competition for the allocation certainly does make things more difficult for small independents, stores that aren't savvy about American whiskey, and worst of all, for enthusiasts who are asking disinterested liquor stores to order in some BT product.

Is it less good for consumers? In the larger sense I would say probably yes. But in the personal sense I'd say, Mark, that Bevmo may be the most aggressive retailer in California in negotiating these deals. I would guess there's one close to you.

Roger

[Sweetmeats]

Bevmo was great two years ago for BTAC but not last year. I didn't see any on my own and ended up reserving them from Hitime which was more expensive but at least I got them. I don't hold up much hope for Bevmo anymore.

[cowdery]

I think Mark just intended his subject line to be provocative, so I won't jump down his throat for it, but the SF Gate article is full of holes and that conclusion is fallacious.

Some examples of the just plain wrong statements in the article.

"In the past few years, the master blender has had slightly less work to do, as single-barrel bottlings have become popular."

Hardly. It takes just as much work, if not more, to select a candidate for single barrel bottling.

"Restaurants that have participated in full-barrel programs for several years have access to a more elite selection of whiskey."

Nonsense. Just not true.

"...whiskeys from the Sazerac Co. come with a bonus: Buy the barrel, and get more access to limited products like Sazerac 18-year-old rye."

I guess one might object to it, but using something desirable that has limited availability to leverage additional sales of standard product is a common business practice, considered ethical by most business people. The reality is, what's really difficult to get? Stagg maybe, but not Sazerac Rye 18.

"...larger Scotch barrels can yield nearly 600 bottles as opposed to around 200 of bourbon."

Simple ignorance, but it undercuts the credibility of the whole article. The reporter as parrot, merely repeating what he thinks he heard. I'm anxious to see one of those 150 gallon scotch barrels, though.

"Jack Daniel's may be the only brand promoting full-barrel bottlings directly to the consumer, though for legal reasons the bottles must be shipped to a distributor first."

Just wrong. Consumers can buy a barrel of Jack, Evan Williams Single Barrel Vintage, Woodford Reserve and many others, including virtually any product Buffalo Trace sells.

"White also purchased whiskey futures from an American whiskey start-up, so he now owns two barrels of whisky he may or may not ever drink."

This, of course, is fantasy. What "American whiskey start-up"? In the United States, the only people who can legally buy whiskey futures from an American whiskey producer are other licensed producers or licensed distributors.

The truth is, these exclusive single-barrel bottlings are good for everyone. They are good for the producer, good for the retailer, and good for the consumer. It's win/win, not zero sum, as the subject line implies.

[Sweetmeats]

It was intended to be a little provocative...sorry.

It's nice to have you "fisk" an article to show us what's wrong in it.

Reading the article gave me the impression that it would be harder to get the already hard Antique Collection though. If I'm wrong on that, then I'm glad to be.

[cowdery]

No problem. You presented it in the right spirit, as something to talk about, and I'm glad you pointed me to the SF Gate article. I posted a comment there too.

I won't deny that producers and retailers play a lot of games, in terms of "if you want this you got to buy that," and maybe somebody in SF can speak to actual availability of stuff there, I can't. But in the markets with which I am familiar, about the only BTAC bottling that can be a challenge to acquire is Stagg and, otherwise, only things like the Jimmy Russell and Booker tributes, and some other very limited releases, have been nearly impossible to find, and those weren't even mentioned.

If San Francisco is as hot an American whiskey market as this article implies, that's wonderful. Good for everybody.

[Sweetmeats]

In Southern California, Stagg is much easier to come by then Sazerac 18. Hitimes Wine even charged about 10-15 dollars more a bottle for it than Stagg if I remember right.

[cowdery]

The industry needs to figure out some kind of intra-retailer exchange program, so bottles languishing on the shelf in Illinois (or wherever) can be transferred to California (or wherever) where there is unmet demand.

[kpendle]

For myself the sweetheart deals in my part of the Bay Area are a real benefit. To the tune of in the past 6 months I have gotten the following:

Weller Centennial for $24.99

ORVW 15/107 for $35.99

PVW 15/107 for $34-$37 depending on the store

Eagle Rare single barrels $23

ETL for $22.99

And all the barrel selections were very good to excellent.

I will say that it may be a negative impact on some of the smaller retailers. But of those retailers the selection is pretty poor to begin with for many and they are not realistically interested in anything good for the most part. Not saying this to be true for all but my experience it is the case many times.

For the places I frequent on a regular basis just the opposite. They usually already have a good selection and they have used barrel purchases as an opportunity to pass on some good deals. I still pick up an occasional ORVW 15/107 barrel purchase bottle for $36 because I know with the screw cap squat bottle the cork will not be a problem years from now because there isn't one. Without that barrel purchase they would not have it and if they did it almost certainly would cost more. And that particular bottle is still easy to get most likely because for the same price the more impressive looking PVW 15 barrel purchase is right next to it on the shelf.

I rarely if ever buy anything from BevMo either preferring to frequent non-chain liquor stores. Currently the only deal at BevMo that has been enticing is the recent Ca. intro of Buffalo Trace for $21.99. But even then I still chose to pay $24.99 at another place because they maintain an overall better selection and actually have helpful staff.

I did see the article found it interesting on the restaraunts in the Bay Area which were buying barrels. As Chuck pointed out overall the article was just not real accurate but if you did not know any better it did sound believable.

Ken

[AVB]

It isn't too often anyone can make a case to disagree with you but some scotch is stored in a European Oak Butts at 500 liters capacity which would produce 714 70cl bottles if there was no loss and could produce 600 bottles if a young whisky was bottled.

In general though I have to agree that the article was misleading at best.

I think Mark just intended his subject line to be provocative, so I won't jump down his throat for it, but the SF Gate article is full of holes and that conclusion is fallacious.

Some examples of the just plain wrong statements in the article.

"...larger Scotch barrels can yield nearly 600 bottles as opposed to around 200 of bourbon."

Simple ignorance, but it undercuts the credibility of the whole article. The reporter as parrot, merely repeating what he thinks he heard. I'm anxious to see one of those 150 gallon scotch barrels, though.

[ILLfarmboy]

"...whiskeys from the Sazerac Co. come with a bonus: Buy the barrel, and get more access to limited products like Sazerac 18-year-old rye."

I guess one might object to it, but using something desirable that has limited availability to leverage additional sales of standard product is a common business practice, considered ethical by most business people. The reality is, what's really difficult to get? Stagg maybe, but not Sazerac Rye 18.

The lack of understanding on the part of many people about how business works is appalling. If I throw a lot of business someones way you're darn right I expect preferential treatment. Just like when buying whiskey or wine buy the case, I expect a discount. That's a no brainer. "Leveraging additional sales" is just the other side of the coin, so to speak.

[cowdery]

The Scotch Whisky Act allows barrels up to 700 liters but considering the extensive use in Scotland of used bourbon barrels, that has to be pretty uncommon. I also suspect the big boys are used for aging grain whisky, not single malts. I do know that when bourbon barrels are reassembled a few extra staves are added to make them a little bigger, to fit the racks in most Scottish warehouses.

From the World Cocktail Club: "Today, the word ‘barrel’ is the generic title for all wooden containers, but specific barrels will have specific names according to their capacity. However, the standard cask used for aging spirits holds 200 litres and is simply known as a ‘barrel’. A ‘hogshead’ holds 250 litres while a ‘butt’ is twice that size with a capacity of 500 litres. Distilleries sometimes use other sizes like the 450 litre 'puncheon’ as well, but the large majority of the casks are still barrels, hogsheads and butts.

[AVB]

It seems that the independent bottlers use the big boys more as it is easy to find something along the lines of "matured in a sherry butt" from Signatory or Ian Mcleod, at least in my experience.

[Pharaoh]

I'd say something but I damn near was be-headed (politely though amongst fellow whiskey enthusiasts I should say, lol) last time I suggested the California allocation was being controlled more so than people apparently understood or were aware of.

Chuck pointed out some of the more glaring bullet holes in the story, but it isn't all false - at least not in theme. Take it from someone who has seen the process first hand. My miscalculation was that what has been transpiring locally over the last few years was the norm (elsewhere).

For instance, some of you locally as well as a few out-of-towners who have been in a select store in SF know that based on it being a bread, eggs and lottery ticket type mom & pops corner market, it's appear mysteriously out of balance with shelves currently (as we speak) holding bottles of 2004, 2005 & 2006 Stagg and Sazerac Rye 18. There's also still Eagle Rare 17 from 2006 on the shelf. He definitely didn't get those bottles on the shelf based on Buffalo Trace or the CA Sazerac representative making a glaring miscalculation the last 3 or 4 years.

[cowdery]

If retailers are being leveraged it's the distributor, not the producer, doing the leveraging, although I'm not suggesting BT doesn't know about it.

I have gotten reports, beyond what was in the Gate, that California retailers are being forced to buy big stacks of Rain Vodka if they want any BTAC. This isn't illegal and, generally speaking, not unethical, although it can rub people the wrong way. You can't always get what you want.

On the bright side, I'm glad to see bourbon is so hot in California.

[Pharaoh]

If retailers are being leveraged it's the distributor, not the producer, doing the leveraging, although I'm not suggesting BT doesn't know about it.

I have gotten reports, beyond what was in the Gate, that California retailers are being forced to buy big stacks of Rain Vodka if they want any BTAC. This isn't illegal and, generally speaking, not unethical, although it can rub people the wrong way. You can't always get what you want.

On the bright side, I'm glad to see bourbon is so hot in California.

Chuck,

Your insight is always outstanding. In your account you mentioned the distiller / producer, the distributor, the retailer & the consumer / customer whereas something such as the barrel purchase program is actually a good thing for each that wishes to participate.

I think each individual component (maker, distributor, retailer, consumer) are leveraging for their own position in their respective interests. However there's a person that the article Mr. Meats referenced, fingers which your thinking didn't appear to take into account.

Rain... Taaka - those get you in good with BT as well as the distributor. But how does the invisible man you neglected to account for, make his mark and "leverage" what was it - 70 something barrels sold in California this year?

Let me ask a hypothetical question. Which do you feel is more of a motivational piece... Threatening to withhold Taaka and Rain from retailers unless they participate in the program or threatening to withold BTAC if retailers don't participate in the program?

The other hypothetical question:

Does Rain and Taaka earn one better commissions than entire barrels of aged whiskey moved in one swift motion?

Of course this is just me thinking out of my hypothetical rear - here.:cool:

[cowdery]

Interesting, but I don't think anyone has to be "forced" to take the single barrel program. That seems to be good for everybody but it doesn't put more money into BT's pocket. The benefits to BT are more intangible. Using something rare and desirable to leverage a commodity or near-commodity is the usual practice, since the theory is that whatever vodka you put in a stacking on deal is going to move, so take mine instead of the other guy's.

This is similar to what agents do in Hollywood. To get big hot star, you have to cast these other three clients of mine too.

[cowdery]

Well, you never know what you don't know. In this case, I didn't pay close enough attention to the Gate story. Bill Hart, a regional sales manager for Sazerac Co., says right there that they are leveraging the scarcity of the BTAC to get people to buy barrels who otherwise would not, as well as leveraging more commodified products such as vodka.

The essence of sales promotion (which is how I made my living for many years) is to get people to buy more than they normally would or sooner than they normally would, which often means the same thing. It's called "stocking the pantry." The people who can be finagled into buying a barrel when they normally would buy that brand by the case are people who will sell it eventually but normally wouldn't buy that much at once.

Nobody likes being leveraged but that's the game. I can certainly see both sides. I don't, however, see a downside for the consumer. The same amount of BTAC reaches the public regardless of which retailers get it.

Again, the real upside is that people in Northern California are going nuts for good bourbon.

[Sweetmeats]

Costco suddenly started carrying Blanton's.

I wonder if that means a special set of BTAC bottles exclusively for Costco is coming?