David -- You used to get larger allocations of American whiskies in the past, but lately I've noticed that all limited edition items are being raffled to your insider whiskey email list. Is it just that demand has increased for these products, or are you getting fewer bottles? If you are getting fewer, is that because you're not buying as much from these companies as you once were?
Wow! Not only are those are great questions, they're great questions that I would love to answer in a very public sphere so that others can understand the situation that's going on. It is definitely the case that we're getting smaller limited edition whiskey allocations than we were in the past, yet ironically enough we're probably buying more from Sazerac, Heaven Hill, and other companies than ever in our company's history. The problem isn't that we're doing less business. Here is the problem and it's a multi-faceted one:
1) There is the exact same amount of extra-mature, limited edition whiskey this year (i.e. Pappy, Stagg) as there was last year, despite the fact that demand for these whiskies is higher than it's ever been. The available stock of items like the Buffalo Trace Antique Collection, Pappy Van Winkle, and Parker's Heritage is based on production forecasts from the late 1990s. For example, the available amount of Pappy 15 year is based on whatever Buffalo Trace decided to put aside in 1998 -- and, believe me, Bourbon wasn't that big of a deal back in 1998. Production didn't increase until sales began increasing and that was around 2007 -- meaning we won't see an increase in 10 year old stocks until 2017, and 15 year old stocks until 2022.
2) Since the consumer interest in whiskey has spiked dramatically over the past few years there have been a number of new accounts opened across California -- bars, restaurants, and retailers -- that are catering to this new whiskey-loving consumer.
3) The numerous accounts that already existed, but were never serious customers -- bars, restaurants, and retailers -- have also decided that, even though they were never interested in high-end whiskey before, they're now interested as well. Their customers have been asking for new, exciting whiskies and they now want to cater to these customers.
4) If you're the Sazerac rep in charge of California allocations, you've got the exact same amount of Pappy as you had last year. Let's say it's 500 bottles of each expression. Whereas seven years ago maybe only thirty accounts wanted in on those 500 bottles, now you've got more than 1,000 calling you for their cut. I talked to one of my reps the other day who told he doesn't even have enough product to cover the Bay Area's demand, let alone all the new growth in Sacramento and the Central Valley.
5) With all of the new bars, restaurants, and retailers interested in their share of limited whiskey allocations, it's drastically cut into the amount of whiskey that we get.
Were you interested in the Elijah Craig Barrel Strength whiskey? Well I only got three bottles and they're gone. THREE bottles. Were you interested in one of the new St. George Single Malt Lot 13 whiskies? I only got twelve bottles total. I've had more than 100 people call me about this whiskey in the last 24 hours.
Like the reps that work for these companies, I'm being forced to deal with smaller allocations of limited edition whiskies for a larger number of interested customers. Like the reps that have to decide who gets to have Pappy and who doesn't, I have to decide which of our customers get Pappy and which do not. If we simply release these whiskies on a first-come, first-served basis then we risk selling off our most-prized possessions to customers who might simply be cherry-picking and flipping. If we release the bottles on the internet during the day, then we unfairly penalize the guys who don't work at a computer. If we release the bottles in-store only, then we penalize the guys who don't live locally. No matter what we do, we're always upsetting someone.
It's no fun, believe me. With demand where it is right now, and supply getting tighter, I've never witnessed so much hysteria around the spirits department. And, yes, it is getting worse.