No More Ebay Booze Auctions

I've received a few emails over the past few days about this topic, so I thought I'd type up some quick thoughts here.  I've posted a few things here and there on various websites to help people understand what's been going on, but I might as well do it here too.  As of a few days ago, the craziness that was the Ebay liquor auction world has been shut down. Many are blaming the hysteria surrounding a 20/20 news story about a kid who was able to purchase vodka via the website. That may have sparked the attention of the TTB, but underage drinking is not the reason these auctions were eventually halted. I'm not 100% sure of this, but I'm going to put myself out there and say that these auctions were stopped because selling alcohol without a license is entirely illegal.  Not only is selling alcohol illegal for private parties, so is shipping it!  Regular people cannot sell alcohol without a license. Regular people cannot ship alcohol without a license.  If you walk into FedEx, UPS, or the post office and tell them you're shipping alcohol, they will not do it for you.  If someone out there knows otherwise then please send me an email, but I'm pretty sure that's how it works. Then there's the huge minefield that is state law.  Some states allow booze to be shipped in.  Others do not.  There is enough obscurity in these laws to feed a small legal firm for the next ten years, so it's really difficult to understand all the ins and outs. However, California law is pretty clear:

Given that only licensees may engage in activities for which a license is required, all sales transactions involving Third Party Providers must ultimately be conducted by and under the control of a licensee. This includes decisions concerning the selection of alcoholic beverages to advertise or offer for sale, the pricing of those beverages, and the ultimate acceptance and fulfillment of the sales transaction.

Now that these auctions have been shut down, what does that mean for demand? Since scalpers were purchasing these bottles, looking for a return on their investment, what will happen now that their main forum has been closed?

I don't know to tell you the truth. Most of the people I talk to are drinking their Pappy or giving it to friends, but I don't really know what actually happens once they leave the store. I don't think it's going to end the demand, however.  People still want these bottles like nothing else.  The poor Van Winkles can't win no matter what happens.  First, people were upset that the sky-high prices on Ebay were keeping everyday consumers priced out.  Now, people are complaining that Ebay was the only way to actually get a bottle.  No matter what happens, you can't please everyone.

I'd expect this madness to continue. Trophy hunting is more about bragging than profiting, isn't it?

-David Driscoll


Bordeaux Writing Today

I'm over at the K&L Wine Blog today, if you want to meet me for a drink.

-David Driscoll


K&L to Donate Profit from Jefferson's Ocean

Ohhhhhhh, you gotta love the whisky blogosphere! People are out there on their computers being passionate about whiskey, voicing their opinions, talking about the state of the market, and chiming in on the issues we all face as certified whiskey fanatics.

Like this thread, for example, on the always entertaining message board - Straight Bourbon.

What happened here?  Let me tell you. The demand for the impossible-to-find, incredibly-sought-after Jefferson's Ocean Aged Bourbon was out of control. I was personally getting over twenty emails a day from customers all over the country looking to score a bottle of this elixer, not to mention the voicemail and the forwarded messages from our customer service department. I spent more time returning emails about the Jefferson's Ocean Bourbon than I did ordering products for the K&L chain of retail outlets. It consumed much of my freetime for weeks. All of this work, tons of typing, loads of explaining, for a whiskey we had yet to get and might not ever actually obtain.

Finally the news came. We were going to get one bottle of Jefferson's Ocean Bourbon. One whole bottle. I had responded to at least four hundred emails from new, virgin K&L customers, telling them we were planning on holding a raffle for our bottles. Now that "bottles" had become one bottle, a raffle of over 1,000 people seemed ridiculous. Because, you see, we already have a huge list of loyal K&L customers.  When you add on the newcomers who simply wanted the Jefferson's Ocean, you're talking about a gigantic pool of consumers. It would mean multiple days worth of work between myself and David OG to organize, instigate, and manage a fair raffle with this much consumer interest. I don't think anyone, neither our customers, nor the most stingy whisky geeks on the blogosphere, could argue that K&L drop everything - all of our orders for regularly stocked booze items, our importation of exclusive single malts, our negotiations for more interesting spirits, our time to help customers make smart booze decisions - just to make sure that one bottle of Bourbon is distributed in the fairest of possible means.

David OG and I talked a few times and decided we wanted to try an experiment. We're always testing the technology to find the easiest and nicest way to decide who gets things like Pappy Van Winkle or George T. Stagg.  We've done email notifications. We've done online-only sales (hackers crashed the entire server). We've done raffles.  We've done first-come, first-served.  Few customers have ever been entirely happy with the result (except for those who get the bottles, of course!).  We have gone out of our way to let everyone have a chance, not wanting to simply hook up our best friends. "Let's try the auction," we said. We had a point to make. We wanted to show people what would happen if we left the distribution of rare whiskey up to pure, unadulterated capitalism.

People didn't like it. Neither did we, however. A process that excludes many customers is never fulfilling. We had been previously worrying ourselves sick, spending hours if not days, deciding which measures would most fairly distribute our strictly-allocated products, only to see those same bottles pop up on Ebay minutes later. If the highest bidder was going to decide the final ownership of these hard-to-find whiskies, why not just facilitate the process ourselves?  As we all know now, the Jefferson's Ocean sold for over $1,000 on the K&L auction site.  That message was heard loud and clear across the whisky world.  As my friend SKU would later go on to say,

Everyone mark this moment when an independently bottled bourbon originally listed for $90 sold for over $1,000. This, more than any single event, marks the end of the golden age of whiskey and portends the crash.

Most of our customers have no idea how crazy this whiskey game is getting. We try and let everyone know that we appreciate their business, but that we simply cannot accommodate every request for the rarest of the rare.  We wish we could!  We can't. The Jefferson's auction, however, was the perfect way to illustrate exactly what is happening to the Bourbon industry. I knew it would take $1,000 to secure that bottle. I wasn't surprised in the slightest.  In fact, I thought it would go for even more.

So what now?  Is K&L just a money hungry company looking to exploit the market?  Come on. You know us better than that.  The extra money we made on that auction is not going into the company coffer.  It's going to a good cause.  We'll be cutting a check this week for a local charity that will receive the extra $900 we made from the Jefferson's auction. We never planned on keeping it, however, it did provide some important research for our auction department that has been looking into spirits development (booze = big bucks). I never thought we needed to actually tell people what our plans were, but it seems like that information might help ease some minds.

We're moving on. We're sticking with a raffle for the upcoming Pappy products as well as the Buffalo Trace Antique Collection bottles.  However, we're hoping people are paying attention.  We've got customers willing to pay over $1,000 for a whiskey originally scheduled to retail at $90. That's the demand we're facing. Until the hype dies down, it's only going to get tougher for whiskey fans to get these precious bottles. I'm still hoping to find the best and fairest way to distribute them to our wonderful customers, but in the meantime, I'm happy that one local charity will have close to a thousand dollars to work with for a worthwhile cause. If we can't make the stakes even, we'll at least make them worthwhile.

-David Driscoll


Ardbeg Land Girls?

Louis Vuitton Moet Hennessey never ceases to amaze me. I can't help but love working with them because of their marketing team. A giant rocket on a flatbed? Sure. A traveling pink trailor that gives out free Ruinart Champagne and fancy french cookies? Why not? We've had more than our fair share of over-the-top promotional events at K&L in the last few months. The staff just smiles and tries to get in on the fun. Tonight we've got the newest incarnation of the LVMH brain trust - the Ardbeg Land Girls. I'm not sure what this has to do with Ardbeg, but I'm sure we'll find out later this evening! Come and enjoy free pours of Ardbeg single malt at our Redwood City store from 5 PM until 6:30. I'll make sure the Galileo is part of the line up. See you there!

-David Driscoll


What's New This Week?

Back at work today. Lots to taste. Lots of new stuff to think about.

While I was entertained by all of the talk on the Whisky Advocate blog this week about super high-end whiskies, I'm not too worried about those prices. I'm worried about the prices on whisky that I can afford, or maybe I should say could once afford. Another week of placing orders has been met with more hikes on the brands you all know so well. It's not noticeable to most consumers because K&L isn't going to change their price every week, nor is any other retailer. That's not a feasible business model. Nevertheless, my invoices keep showing up with prices $1.25, $2.00 higher per bottle than previously. Jesus, freakin' Mount Gay Rum went up $5 per bottle this week!  Their wholesale cost is now higher than our previous retail! It's getting out of hand.

When we see Laphroaig 10 go from $29.99, to $32.99, to $36.99, and eventually to $42.99 (yes, that's coming soon) within the span of six months, something crazy must be going on. There are shortages that are driving prices, but the market has yet to balk at any increase so far. Whisky companies have yet to experience their Netflix moment. Until that happens, get ready to start spending more money for the products you love. Macallan is scheduled for their second increase of 2012 in October.  Buffalo Trace, I've heard, will take an increase company-wide by the end of the year. In some cases, it's just the natural course of inflation that most markets experience over time. In others, its a blatent attempt to keep profits consistent despite a shortage of physical product to sell.

Here are some things I tasted earlier today that I'm pretty excited about:

With Oktoberfest ready to begin next week, now is the perfect time to reintroduce one of Germany's top distillers back to K&L.  They've switched distributors and the pricing is now lower than it was before (a welcome relief after a week of price increases). I really enjoyed all four of these products, so much so that I've invited them to pour in our Redwood City store next week.  We'll be having our own little Oktoberfest next Wednesday to celebrate the long tradition of German fruit distillation. For all the Clear Creeks, St. Georges, and Old World Spirits, we have to remember that most American producers were inspired by the German/Austrian producers we rarely see in the states. The Schladerer family has been distilling since 1844, passing down the knowledge from generation to generation. We'll be bringing in the kirschwasser and himbeergeist (cherry and raspberry eau de vies) which are filling in a serious hole for us at K&L.  We haven't had any true German schnapps available for years. The kirsch and himbeer liqueurs are also quite stunning.  The liqueurs will be $30 for a full 750ml, while the brandies will come in at $38 for the himbeergeist and $44 for the kirschwasser. Please come next Wednesday if you can make it. I'm very excited to start featuring more booze aus der Schwarzwald. Ich kann mich nicht daran erinnern, als ich so begeistert war! Ja wohl! 

Sullivans Cove. A small single malt distillery in Tasmania that has been quietly making outstanding whisky since 1994. I say "outstanding" having only read the reviews from guys like Jim Murray, who have been rating their whisky very highly for years. JVS has finally reached a deal to bring their products into the U.S. and I was very excited to taste them today. All three expressions are eleven years of age, which gives us in the states a chance to peer into the future at what our own craft distillation boom might eventually offer. Much like Kilchoman or any other small producer, their prices are not inexpensive. Couple that with the importation costs of shipping from Australia and the extra decade their malts have over most other American craft distillers and you're talking some serious cash.  Are the whiskies worth it? That's not something I can answer for others, but I don't think they're outrageously priced. Not when there's so much crap on the market at comparable levels. I like all three, but the Doublewood (aged in both American and French oak - ex-Bourbon and ex-Port) is very nice, almost like an unsherried version of Linkwood. It's bottled at 40% and will come in around $90. The American and French Oak batches are bottled at cask strength 47.5% and are far more intense. The American Oak whisky is a spicier version of the Doublewood, while the French Oak is darker, richer, and almost sherry-like.  The flavors are familiar, yet new and exciting at the same time. I'll be bringing in all three expressions for those who are interested in what's been going on down under.

David OG should have an email for all of you on the insider list tomorrow. Lots of new Bourbons to discuss, plus a few other knick-knacks.  See you then!

-David Driscoll