Three Gifts of the Magi -- Part II

Yesterday, just days before Christmas, three wise men rode into the parking lot of the K&L storage warehouse, guided there by a bright light in the sky. They had heard about a shortage of great whiskey on our shelves and had ridden thousands of miles to bring gifts for one retailer; one they had heard would save mankind from its Bourbon drought. There would be no frankincense, gold, or myrrh in these gifts – los regalos de los tres Magos. Instead, three barrels of incredible Bourbon from one of the best distilleries in the world: Four Roses. The gifts of the Magi will not last long. They can only feed so many mouths, unlike the loaves and fish.  

I thought we were done for the holiday season with new alerts, but the guys in Kentucky really got things done quickly after our visit this past October. That’s why we’re about to repeat our (now annual?) “Three Gifts of the Magi” –three fantastic new barrels that have arrived just in time for Xmas!

Three barrels of Four Roses have arrived, tasted by our spirits department at the distillery, directly from the Cox warehouse facility with Jim Rutledge himself. To make matters confusing, we ended up picking three fantastic barrels of the same Four Roses formula (OBSO), when there were ten different recipes to choose from. We couldn't help it--our palates were simply drawn to the bold, woody flavors of that whiskey.

Four Roses K&L Exclusive Single Barrel OBSO (BN 4-1H) Cask Strength Bourbon $59.99 - This eleven year, one month old barrel--being the oldest--is the richest and sweetest of the three. It brings the sweet vanilla and the baking spices in waves. A solid cask that should sell quickly given the provenance, age, and the quality. Really good stuff. 

Four Roses K&L Exclusive Single Barrel OBSO (US 55-1P) Cask Strength Bourbon $59.99 - This nine year, eleven month old cask managed to proof itself down to a respectable 53.5 percent and starts off with a red-fruited flavor before immediately headed into the more herbaceous and peppery realm. Pencil shavings and old fashioned Bourbon goodness on the finish bring the experience to satisfying climax. This is a punchy little whiskey that sticks to the tried and tested flavors of American Bourbon and does it very, very well. 

Four Roses K&L Exclusive Single Barrel OBSO (US 59-6M) Cask Strength Bourbon $59.99 - This 10 year old (on the nose) cask of Four Roses bursts right off the bat with high-toned cinnamon and baking spices, before moving into more of a rye-based flavor. The high proof overpowers a bit of the nuance on the finish, so make sure to add a drop of water. On the nose, there are aromas of heavily toasted oak and pencil shavings. This whiskey was simply made for ice cubes or high-end Manhattans.

-David Driscoll


Letters to the Editor

Here's a great letter from Spirits Blog reader David Knopfler (not of Dire Straits) out in North Carolina in response to yesterday's post about whisky profiteering:


Thanks for the thought provoking blog post today.  I've seen any number of articles, blog posts, and comments on forums expressing rage at the rise in prices, accusations of gouging etc.  What I haven't seen is a clear eyed analysis of the whisky business balance sheet to determine what is in fact reasonable pricing to ensure a sustained profit, and the capital necessary to expand to meet the burgeoning global demand.  We are comparing the current rising prices with those that were set at a time the trade was attempting to purge a glut of product before it went over the hill.  A time when the industry still suffered a hangover from almost two decades of declining demand.  Certainly that is not a reasonable pricing baseline for a healthy business.  You've used your industry contacts to provide great insight into the nuance of the products you carry.  It would be interesting if your could do the same to illuminate the business side of things since that has become such a hot topic for everyone.

Thanks and best regards,

Dave Knopfler

David makes a great point that I'm not sure today's generation of drinkers really understands: the prices we were used to paying for whisky (pre-spirits boom) were based on low demand and high inventory. The industry was sitting on a large amount of mature casks (at one point the Laing brothers dumped a 30 year Brora cask into a cheap blend because they didn't know what else to do with it) and the prices reflected that. Many producers were happy just to break even after investing so much capital into supply. Now that their product is back in demand again, however, they can now start to profit from that extra inventory--if they still have any left. I think that's an important fact to keep in mind, especially when trying to find an answer for David's request: taking into account expenses and cost projections, what is actually a fair price for a bottle of whisky?

I'm not sure that many producers would be willing to open up their accounting books to someone like me, but there's something else you have to keep in mind when looking at today's newer distilleries: production overhead. Some distilleries are including loan payments and debt into their bottle price, while others have long paid off any outstanding investment fees. That's part of the reason why Armagnac is so reasonably priced for what you're getting: these guys are producing on farms handed down for generations, with backstock that was paid for decades ago. Any sale is pure profit at this point. Craft distilleries, on the otherhand, have to work quickly to pay off the loans, and if they've taken money from investors, to make sure those investors are getting a return on their money. These investment expenses are definitely factored into the price of each bottle sold, after taking into account supplies, labor, maturation, etc.

Nevertheless, you've got me thinking, David! Thanks for the letter. Hopefully I can get back to you about this subject with some sense of accuracy.

-David Driscoll



I woke up a bit ago, checked my email, and saw a note from Bladnoch distillery's Hazel Barnes (behind every operation there's always a very smart woman running things):

Hi David

I am pleased to let you know that your order was shipped out yesterday, I hope you have every success with your first Bladnoch order.

Have a great Christmas!


What fantastic news. Last March we weren't sure if this deal was going to happen, but we did everything in our power to make it so. We helped the distillery find 750ml bottles, we designed new labels, we printed the labels, and we helped them find an importer who would walk them through federal registration. We were so excited about becoming the first American retailer to carry distillery-direct single malt from Bladnoch that there was practically nothing we wouldn't do to make this happen.

We also really enjoyed our time with Colin Armstrong while visiting the distillery and have continued to enjoy his emails since. He's such a funny guy with a very direct and old school manner of speaking his mind. Raymond Armstrong and I have also shared some poignant emails and I'm hoping we can do a podcast one day that describes the hard work that turned what was supposed to be a real estate venture into the renaissance of Scotland's true Lowland distillery.

All in good time. Look for three official Bladnoch selections at K&L this coming February!

-David Driscoll


2013: Money Changes Everything

Since we're all taking turns on the whisky blogosphere exchanging summaries and rehashing the year that was, let me add my own observation to the mix. For me, the big story of 2013 was that whisky producers began to realize how much their product was actually worth. It was also the year that whisky enthusiasts realized whisky companies don't produce whisky for the fun of it, but rather with the intention of making money. If people were willing to pay more money for their product, then why would they offer it for less? With the exception of a few old-school producers, any company with whisky to sell probably sat down, had a meeting, and explored the idea that they could all be making a lot more coin than they were currently earning. Prices had been creeping up for the past two years, but 2013 was the moment that everyone realized this whole whiskey explosion wasn't a bubble--prices were here to stay, so long as the inventory remained low.

Money has a strange way of affecting the way we think as humans. When the profits begin to roll in there's a certain complacency that tends to take over--a laziness that eventually ruins those who allow it to consume them.  I won't lie. There were moments in 2013 where David OG and I tasted casks, looked at the price, and said, "we could sell this for double what we paid and no one would care." There were moments in 2013 where we began to think about profit projections and total gross sales rather than how we could find something new and exciting. But thank God we quickly came back down to earth. There isn't a retailer out there who didn't experience a huge boost in spirits sales during 2013--the world is simply rediscovering its love affair with liquor and they've got no choice but to buy it from a licensed retailer. But if you let those dollars cloud your judgement, ruin your customer service skills, and trick you into thinking your customers need you more than you need them, you're headed for certain doom. For this reason, David and I made sure never to mark any product up more than our standard margin, no matter how much more we could have sold it for, and we upped our customer service hours to make sure we were communicating directly with this new influx of customers.

Nevertheless, there were plenty of producers, distributors, importers, and retailers who saw the potential cash grab available to them in 2013 and decided they were going to milk this baby for everything it was worth. I won't name names (because ultimately I still have to do business with all of these people), but you know who they are. They're the companies who abandoned any devotion to their core constituency and began catering to those who were willing to pay. Who's to say that a company shouldn't look out for its shareholders? And who's to say what any one company can or cannot sell their products for? As consumers we can simply choose not to buy them. Nevertheless, the idea of selling whisky for large sums of money made some people very upset. When those high-priced bottles actually sold out those people were even more incredulous. Why? Because it confirmed what they didn't want to admit was the case--there actually was a market for $350 bottles of Bourbon and $2000 bottles of Scotch. And if there's a market for something there will always be someone out there to profit from it.

Money changes everything, and change tends to scare people into mad fits of bitter rage. We're seeing it here in the Bay Area right now with the anger being directed towards the tech industry. Rents are going up. But who's actually raising them? Not the tech workers, but the landlords renting to them. Why are they raising them? Because they know they can get more money. Housing prices are going up. People who bought in for $200,000 are cashing out for a million. Why? Because they can. Whisky collectors are choosing to send their beloved bottles of Pappy to the auction houses. Why? Because who doesn't want a $3000 check when you've got extra bottles laying around unopened? Money, money, money, money, money!!! Who can say no when it's being thrown right there at your feet? 2013 was the year when many producers simply said, "If you can't beat 'em, join 'em." Even the "fiercely independent."

But you know who could have cashed in and didn't? The Van Winkles. There are people out there paying $500 for a bottle of Pappy 20 on the black market, yet Sazerac sold us our allocation for about the same price as they usually do. And we sold our bottles at K&L for $120 -- about 1/4 of what we could have sold it for. The Van Winkles could have tripled the price and millions of people would have gladly paid it. We had plenty of email offers from customers willing to shell out if we would forgo the raffle and sell directly to them. In fact, most of Kentucky kept their pricing relatively the same despite a shortage of product. We got the vibe this past October that there was a sense of pride among producers in remaining traditional and creating a product for the working class. The numbers show that customers responded to this philosophy by increasing their business with these companies, but you don't need to check the stats to know that more people are crossing over to Bourbon than ever before. While there is a bit of anger about decreased availability and the rise of trophy-hunting consumers, there are still more than thirty quality selections of Kentucky whiskey on our shelves at K&L for less than $30 a bottle.

Normally when prices rise it creates the opportunity for new companies to come in and undercut the margin to win over new consumers. The craft whiskey industry, however, used 2013 to prove they were completely inept in their ability to offer consumers a better value. We mostly just got whiskey that was actually more expensive and tasted worse. Whoops! But some of it sold nonetheless and that's the real message we were confronted with in 2013 here at K&L: vendors repeatedly telling us that quality was less important than potential profit. How many times did I hear: "But David, you and I both know you can sell this! People will buy it!" And that's when I would shake my head, shrug my shoulders, and say, "You really have no idea what's going on at this store, do you?" We know what we could sell, but at what cost? At the cost of our reputation for selecting quality products? At the cost of ruining the rapport we have with customers who trust our advice and council?

"Uhhh......yes. You want to make money, right?"

And that's when I think of the old mantra made famous by our former president George W. Bush:

"Fool me once, shame If you fool me you can't get fooled again."

2013 was the year that many a whisky producer were able to sell their exclusive, old, rare, mature, once-in-a-lifetime bottles for record prices. But, the question is, will the public return again to buy another in 2014? Maybe we were the ones being fooled into thinking whisky should be less expensive than it is. As long as the customer feels like they got their money's worth, who can really argue? I get ridiculed every now and again for hyperbolic statements concerning my excitement for good whiskey, but ultimately our customers return again, and again, and again, and again. Why? Because the booze is good, well-priced, and it meets our customers' expectations.

How many new whiskies in 2014 will meet those three criteria? We'll have to wait and see.

-David Driscoll


SMWS Comes to K&L

Remember when your favorite superheroes would team up together–like when Batman and Superman worked side by side, or when the Harlem Globetrotters helped Scooby Doo and the gang solve the mystery? Teamwork has been the new name of the game in the booze industry and the beer guys were actually the ones to start us off, collaborating to make multi-branded ales in the name of bearded fantasies across the country. Why shouldn't K&L team up with another crew in the name of bringing good booze to the masses? Why couldn't we team up with other well-respected establishments in the whisky industry?

Earlier this year the Scotch Malt Whisky Society reached out to us (and three other retailers) asking if we would carry exclusive casks on behalf of the organization. We wouldn't have a choice as to which ones, but since they were the ones supplying the hooch we figured beggers couldn't be choosers. Our cask for K&L finally showed up today with the secret code: 35.100. The label reads: "Cool and refreshing as a waterfall." I popped a bottle, poured a glass, and took it all in: fruity, hints of wood spice, and sweet barley on the nose. The palate is classic unsherried Speyside: fresh fruit, melon (canteloupe?), and soft malty notes with a bit of pepper on the finish. Overall, a very enjoyable little cask in the vein of the Arran cask strength whiskies. Distilled in 2003, weighing in at 57.1%, and running $115.99 on the till. 

The distillery? If you want to figure it out yourself based on the code then stop reading now. If you want me to ruin it for you then read David OG's description below:

SMWS 35.100 (Glen Moray) "Rare Release" Single Barrel Cask Strength Single Malt Whisky $115.99 -- The illustrious Scotch Malt Whisky Society finally comes to a retail store. Do not fret if you're already a member, the amount of whisky being released to the public is a tiny drop in the bucket, just a taste to show the world what the Society has for those who are not aware. We were lucky enough to be selected as one of the four retailers to carry SMWS, along with a few key on-premise accounts, and will be your only source for SMWS bottlings for non-members. This outstanding cask is highly collectable not simply because it's the 100th cask from this little distillery to be bottled by the Society, but also because it's one of the best whiskies I've had all year. Glen Moray is not a well known distillery in the states, but I think the utter freshness of this whisky will shock even those who know it well. Vibrant and brimming with life, it spent 10 years in a fresh bourbon barrel. The Society's stringent cask selection system is on display here, so it will certainly be sought out by SMWS members who pride themselves on procuring special casks like this one. Get yours now or wait and lose out on one of our most interesting casks of the year. SMWS tasting notes, "Fruity and Fresh, the nose has lime pastilles, apple sours and Midori, coriander leaf, flowers and rhubarb tart - refreshing as a waterfall. The palate has lime, orange sherbet, apple turnover and kiwi - wood shavings, pepper and chilli provide a punchy finish."

-David Driscoll