I had to completely get out of the booze world this past weekend. After a week of projecting my emotions into a series of what I'm hoping were entertaining and informative posts, I had to just walk away from the industry for a few days. While I often use humor in these articles, I take this stuff very seriously - booze, that is. That's not to say that I'm not enjoying myself when I write, because I am, but it's almost eliminated the enjoyment I feel from drinking itself. Drinking booze is supposed to be fun. We're supposed to drink it because it makes us feel good. However, as one of my best customers pointed out in an email:
"Right now, it seems to me that you’re a little too wrapped up in your job. I’m hoping this is not your entire life."
Uhhh.......well, it is.
Lately booze has been my entire life, but it's not the actual imbibing that has consumed me. It's everything else.
My wife and I ate dinner with another K&L couple last week and the two spouses bonded over their mutual hatred for wine-related dinners. It's a common theme amongst those married to booze professionals. At our annual store holiday party the employees exalt the quality of each bottle, while our other halves roll their eyes and try to enjoy themselves through food and actual conversation - the kind where you talk about current events and pop culture rather than acidity levels and tannin structure. In the end, isn't that the actual point of drinking wine? To accompany a fine meal and to fuel interesting dialogue unrelated to the actual details of the wine itself? You wouldn't think so by attending a K&L dinner function, with staff members bickering over which vintage of Bordeaux is showing better while swirling, smelling, savoring, and spitting. Sometimes I feel like we've lost our ability to simply enjoy a fine glass of alcohol. We over-analyze every single drop. We're always working.
As I sunk deep into my leather couch Saturday night, I stared almost catatonic at the television screen with a cold beer in my hand and a blank expression adorning my face.
"I need to have fun this weekend," I told my wife.
"Do you remember how?" she asked.
"No," I mumbled, as I sipped my beer slowly.
I used to enjoy coming home from my teaching job, opening a bottle of wine, and cooking dinner while listening to the radio. Those were always the few hours in my day that I could count on for relaxation and genuine pleasure. I wasn't drinking anything of the quality that I consume nowadays, but it seemed like it was more enjoyable. Over the past few years those hours have evolved into a few minutes of frantic microwave preparation, where the booze is fancier, but my enjoyment is diminished. The drinking of alcohol has become a task rather than a pleasure. It's a task that I'm motivated to do, but it has an entirely different meaning now. It's part of who I am, or at least how I see myself.
"I need to taste these for work," I say as I pour four separate glasses of Bourbon. I sit at the table taking notes, typing away on the computer, while my wife watches television alone. I swallow, but my mouth is so fatigued from high-proof spirits that I can barely taste at this point. In this moment, I am beyond any sense of enjoyment. I am simply a routine. I am drinking because it's what I do. I am drinking because I don't know what else to do. I am drinking because drinking is fun, but am I really having fun or am I being blinded by the bitter irony?
I haven't been having fun lately - as a whole. What did I used to do in my leisure time before it became filled with tasting notes and blog articles? I needed to re-learn how to have fun in general, let alone with booze. Instead of waking up early Sunday morning to type a new Spirits Journal post, I slept in. Instead of Grape Nuts with Starbucks Instant coffee for breakfast, we went out. Instead of running errands, we walked the city streets - Valencia, Fillmore, and Market. In the afternoon, I cooked. I never once checked my phone, my email, or the whisky blogosphere. We went to Four Barrel coffee - a wonderfully designed cafe in the vibrant Mission District, cool and chic in its vibe. We sat down to talk and sip our beverages while the couples around us stared at their computer screens. One young hipster had two works of fiction displayed prominently on the table, yet his focus was downward, towards the glow of a smartphone hidden discretely between his legs. It's not just me, I thought. There are many others too distracted to enjoy the moment.
After the name of the distillery, just past the words "limited edition" and "cask strength," and a bit beyond rarity and price, is the actual flavor of a whisky. It's the part of whisky that we're supposed to be enjoying, right? You hear this all the time - the best whiskies are the ones that taste best to you. What does that mean anymore? Drink what you most enjoy? Many of us are far too worried about other issues to enjoy what we're drinking. In fact, I can't enjoy what I'm drinking because I'm not focused on actually enjoying it - I am distracted by the other important tasks at hand. I need to ascertain quality, nuance, and depth. I need to think about what makes this whisky special and therefore what makes me special by drinking it. It's become a race, a contest - who can try the most limited edition whiskies off of this "must-have" list first? ME! I can! Here's a photo of me doing it! I'm having fun! Can't you see how much fun I'm having? Why can't you see?!
Has anyone seen the above commercial? I think it's the worst commercial I've ever seen. At the same time, it's incredibly poignant because of its unbelievable lack of subtlety and tact. It describes perfectly what I'm talking about. I'm boring? Really? How about now? Am I still boring with all of these things that I've bought with money? Yes, you're still boring and now you're also a giant tool as well. I knew people like this in high school and college who looked at music the same way. It wasn't about listening to the album or artist as much as it was about proving something to others. They had record collections based off of the "Top 100 Albums of All Time" list on Pitchfork, rather than their own actual interests. They didn't know how to enjoy the music, nor did they know what enjoyment meant in general. Life was a checklist. Being cool meant studying the list, doing what the list said, and following the rules. That's not cool, however, and it definitely isn't fun.
Now we're back to that statement again - drink what you like. I don't disagree with that, but that means you have to like drinking whisky to begin with. Even if you drink Pappy 20, Brora, and Port Ellen every night of the week, you can still be the most boring person in the world. Having fun isn't just about what you're drinking, but rather what you do while you're drinking. If you sat across from someone in dead silence for an hour drinking amazing whisky, would that still be fun? It wouldn't be for me. Right now, however, my inability to think outside of the spirits world and engage in everyday fun is making me very uninteresting, and no amount of Alicia Keys concerts, Giada food classes or bottles of George T. Stagg can change that. Better, more expensive whisky will not help either. That's why that girl broke up with you, dude. Even in situations that are supposed to be fun, you still don't know what to do. That's a complete turn off.
I mentioned in a previous article that my favorite part about this job is the interaction with customers. I have met so many interesting people through our mutual appreciation for booze and I am so thankful for it. One of those people is Marc Andreessen. Marc and I email each other periodically and this week he sent me his review of the new Johnnie Walker Platinum. Marc loves some of the Walker whiskies and I asked him this morning what keeps bringing him back to the blends, even though he has access to many of the best single malts available. With someone of Marc's stature, I am very cautious about privacy issues and I would never write anything publicly without his personal approval, but he wrote me the following with permission to post it here:
I like really good blends... same reason I like McDonald's french fries... what's better than a product specifically engineered for you to love it?
Also I have a soft spot for Black... my partner Ben and I had a chance to drink for six hours one night with Christopher Hitchens, a couple years before he died -- having read about his prodigious drinking capability (e.g. he wrote the forward to the most recent reissue of Kingsley Amis's book "On Drinking"), I brought a couple of bottles of great single malt. He refused to touch them, explaining that he only drank JW Black. I said, why only JW Black? He said, "I've travelled all over the world to all of the worst (places) to interview all of the really nasty dictators and warlords, and no matter how godawful the place, they always have JW Black, because that's what the dictators and warlords drink."
What an amazing association (both for Marc and Hitchens himself)! He sat and talked with one of the great writers and philosophical minds of our era and drank Walker Black. That must have been a wonderful evening. Many pleasures in life are often related to nostalgia and memory. Personally, I enjoy drinking blended whisky for the same reasons Marc does: it reminds me of special moments in my life and it just tastes good. In some circles it's not cool to like blended whisky, but I associate it with having fun. It reminds me of staying up all night in college, smoking packs of cigarettes, and discussing what at the time were deep philosophical issues. It reminds me of what booze is supposed to be about: enjoyment and relaxation. I don't analyze it, I don't think about it, I just drink and enjoy myself. And he's right about McDonald's french fries. Who doesn't like those fries? People who are no fun, that's who!
I would have loved to have met Christopher Hitchens. I would have loved to share a drink with him. We have a question we ask all the K&L staff members in our monthly "Getting to Know You" section, that ponders: if you could invite any person in history to dinner, who would it be and what would you drink? My answer to that is simple. I would put a bunch of booze on the table and let my favorite historical figures drink whatever the heck they wanted. If I could invite anyone from history over to my house, why in the heck would I worry about which vintage of wine to open? That's the least of my concerns! What's more important is not running out of it! After a few drinks, do you really think the quality of the booze would make or break that evening? I'd say that an anal-retentive, obsessive-compulsive booze snob would be more of an impediment to an enjoyable time.
All of the great moments in my life have been completely unrelated to the quality of the booze I had within them. Yet, I seem hellbent on making sure I'm always drinking the right thing at the right time, in fear of not maximizing the experience. It doesn't make any sense. I've got nothing to prove. It usually never lives up to the hype, anyway. We've all brought great booze to a party and experienced the disappointment that followed when no one appreciated it. We were so excited to share our enthusiasm with others, but for some reason they didn't react like we expected. You know why? It's not because they have "unsophisticated palates." It's because most parties are for socializing, not analyzing booze (that's for your Thursday night tasting group). I cringe when I hear people say, "I would bring something nice to the party, but the people there wouldn't understand it." It may be true, but since you're there to drink and have fun, what does it matter?
I need to loosen up. I need to unwind. I need to refocus. I'm so wrapped up in the details and the process of whisky that I'm missing the point of its actual existence - and perhaps mine as well. That's no fun. No fun at all.
Pretend you own your own whisky company. Business is booming. Your product is flying out the door. In fact, your product is so popular that you can't make enough of it - literally. You're looking at the numbers from last year: one million bottles sold for thirty dollars a piece = $30 million. It's been a pretty successful operation, but now there's a problem. You're running out of whisky to sell. Looking at the projections for the coming year, you notice that you've only got about 500,000 bottles of whisky to offer. That means you're only going to make $15 million this year.
"Hold on there!" says one of your investors. "We're one of the most popular whisky companies in the world! How is it that we're going to only make half of what we did last year? We should be making more, capitalizing on a successful year!"
From a marketing perspective, he's completely right. You've spent the past few years promoting your brand, traveling all over the world, busting your behind to put these bottles into the hands of whisky drinkers everywhere. It would be a shame to lose all the momentum you've built up. However, the whisky industry is a tricky business. You needed to prepare for this new-found success a decade ago when you were actually making the whisky, laying down the barrels to mature the product you're currently selling. Unfortunately, no one at your company thought 2012 was going to be such a successful year.
You're now in a pickle. You own the hottest product on the market, but you don't have enough of it.
"Sir? Did you hear what I said? We should be capitalizing on our success!"
You clear your throat and address the board room.
"We've got a problem, gentlemen. We only have half as much inventory as we did last year. We're going to have to make some tough decisions."
What are your options? As far as I can tell, you've got three choices:
1) Take the hit, try and prepare for the following year. Your investors aren't going to like this option, however. You also risk losing your place in the market. If your product isn't visible, people might forget about it and move on to a different brand. That would be terrible!
2) Raise your prices. Simple supply and demand. There's less product, it should cost more. Your customers aren't going to like this, however. Consumers flocked to your whisky because it offered quality at an affordable price. Forcing them to cover the holes in your budget might upset what has been, up to this point, an incredibly loyal following.
3) Bottle a younger product. You've got whisky, it's just not nearly as mature as what you've been selling. Would it be better to sell an inferior product than nothing at all? Maybe no one will notice the difference. However, if people do notice the difference then your product's reputation is in the toilet.
What do you do? Your investors are waiting to hear from you.
Lots of feedback via email after yesterday's post! Thanks to all of you who offered up support and varying points of view. I really enjoyed reading through them and I learned a great deal about what's on the mind of customers all over the country. I'd like to take a few minutes to address some of the concerns reflected in these emails:
You can't fight the rising cost of things.
This is entirely true. Gas is more expensive than it was last year. Concert tickets for the Rolling Stones cost me $60 in 1994 (and that was for the 3rd row center at the Oakland Coliseum), but now they sell for thousands. A bottle of Chateau Latour was $25 in the early 80's, yet the 2009 sold for $1500 on pre-arrival. Believe me, I'm not some curmudgeon who is trying to fight inflation. I'm also well schooled on supply and demand.
That being said, no whiskey has had more demand and less supply than Pappy Van Winkle Bourbon. Yet, the last time I looked, the price for each expression has been roughly the same each year (maybe a few dollars more here and there). The Buffalo Trace Antique Collection bottles are all the same price as last year. The new Flaming Heart is the same price it was two years ago. Ardbeg continues to sell like crazy, yet I haven't changed the prices in years. In fact, the last time I changed the price on Ardbeg was to lower it. I'm totally fine with a whisky adjusting its price tag to fit in with the market, hence why the recent increase on Laphroaig 10 isn't that big of a deal.
That being said, small market adjustments are not what we're seeing in all cases. Some whiskies are looking to exploit the market. They're looking to cash in while the market is hot. Remember when a house in Modesto was selling for $600,000 a few years ago? That house was never worth $600,000 but realtors had some people believing it was. With so many brands keeping their prices consistent, why do some companies believe their whisky is worth more now? Is it actually worth more, or are they just trying to convince us that it is? I knew people who sold their houses in Modesto for ridiculous prices just to see if they could. Are some whisky companies doing the same?
As someone who works with whisky, am I not cashing in on this as well?
I'm not looking to work at K&L for a few years, make a ton of money by jacking up the price of whisky, and then cash out before the market crashes. Even if that were a realistic option (which it isn't), David and I have worked too hard over the past three years to build this department into what it is now. If companies continue to drive prices higher and customers eventually decide to get out of the single malt game, that affects me. If we are indeed inflating a bubble and that bubble pops, then we here at K&L pop with it. I don't want that to happen! I'm passionate about keeping whisky affordable, not because of some idealistic socialist belief that everyone should be able to afford every whisky, but because my livelihood depends on it. Plus, I love putting great bottles in our customers' hands and hearing about how much they enjoyed them. I'm definitely a big tent kind of guy. I want everyone to come to the party. When I hear customers say "I feel like I'm being priced out by my favorite whisky company," that's disconcerting. It should be disconcerting to whisky companies as well.
Don't worry about the big brands, keep up your single barrel program!
I wish it were that easy! Do you know how many barrels we had to pass on this year? Many, and it was because of their price tags. The independent, single cask market is completely connected to the brand market and an overall increase in price will inevitably affect our ability to go to Scotland and find great whisky. If the retail price of Macallan 18 hits $200 a bottle (which it most definitely will within the next few months), then why shouldn't a 21 year old, single barrel, cask strength Linkwood cost $200? Obviously, we're selling our 21 year old Linkwood for $125 right now, but I have a terrible feeling that next year's trip to Scotland is going to yield this kind of response. Two years ago we sold a 1974 Ladyburn from Signatory for $300 a bottle. They wanted $900 per bottle wholesale for the same whisky this time around. That's a 300% increase in less than a year.
Whaa! Whaa! Cry, Cry, Cry! That's the market, so live with it.
Hey man! I'm just looking out for you. If you want to pay $600 for the new Lagavulin 21, that's your choice. $1000 for the Jefferson's Ocean? Yes, you heard me, $1000. We made $900 of extra profit on that bottle (which we then donated to charity). If the prices keep going up, I'm certain that some people will keep paying them. However, I don't love my job because of the salary. I think about my job in the morning, while I'm here at K&L, while I'm driving home, while I'm eating dinner, while I'm sleeping (I dreamt last night that I had to deliver a booze order and I couldn't find it!), and again when I wake up. I love my job because I like helping people. That's the same reason I loved being a teacher in Chinatown. I loved helping little kids learn how to read, spell, and add. Once all of the everyday people get priced out, I'm really just a stock broker at that point. I'm not as interested in doing that.
Since we're talking about rising whisky prices, I've written a new, three-part dialogue for your perusal. The last piece I wrote that included typed conversation seems to have gone over well, so I'm adding a follow-up here to help illustrate more important issues facing the whisky industry right now.
The first part is titled: In the spirits section at K&L
David is seen stocking the shelves, a customer enters from stage left
David: Hello sir. Welcome to K&L. Let me know if I can help you find anything.
Customer: Actually, I'm looking for a bottle of ______. Can you tell me where it is?
David: Certainly, it's right over there on the left, second from the end, on the bottom shelf.
Customer: Wow. $52.99? I can get this at MevBo for $42.
David: Unfortunately the price has gone up recently, so we had to raise our price as a result.
Customer: So you can't match MevBo's?
David: Normally, if it's just a matter of different pricing, I'd be happy to. In this case, however, $42 is less than my wholesale cost. MevBo is offering that price because they haven't bought in since the increase in cost. It's not only that their price is lower than ours, it's that their current wholesale cost reflects a purchase from many months ago when they bought volume at the old price. While I can't match their price, I'd be happy to call the MevBo down the street, however, and have them hold you a bottle.
Customer: I'd rather buy it from you. Can't you just match the price?
David: Well, if I do that I'm actually losing money. It's one thing to make less profit, which I am happy to do in the name of customer service, but I can't actually lose money on each sale. I can offer you a discount, but I can't match that price. You see, when liquor companies raise their prices there are some stores that still have inventory with a retail tag that reflects the old wholesale price. We move through our inventory faster, so we have to change our prices first. Unfortunately, in times of transition like this, that means we have to be the store with the higher sticker.
Customer: So MevBo has better deals than you, huh?
David: In this case, yes. It just so happens that they haven't had to repurchase the item at the new wholesale cost. Eventually, they'll have to raise their price as well. All of these whisky companies are raising their prices right now and it's really a pain. My margins keep getting thinner because I want to keep my prices consistent and avoid situations like this.
Customer: Wow, what a bummer. I guess I'll have to go to MevBo.
David: I'm sorry about that, really. It's not us raising the price. We're simply reacting to the increase ourselves.
Customer: I don't understand anything you just said. All I know is that MevBo has better prices than you. I'll just go there first next time.
Wow, that was intense! I was wondering what was going to happen the entire time! Was David going to lower his prices and take the hit? Was the customer going to be sympathetic to the changes of the market? Riveting stuff!
OK - now for the second part, titled: What the F?!
A retail store manager is seen sitting at his desk. He is talking on the phone to a brand manager, whose voice we can hear through a speaker.
Manager: Listen, all I know is that I've had customers calling all day, wondering if we'll price match the ______ whisky with K&L. I can't match that price! What the F is going on? Did you guys cut them some kind of a deal?
Brand Manager: Not that I know of! They must be choosing to make less money per unit and move volume instead.
Manager: This is total bullshit. There's no way that any retailer can sell the ________ for $77.99 and make any money. That's practically what that whisky costs wholesale! I can't even pay my electric bill with $1 per bottle profit margins! You must have cut them a backdoor deal and now you're just trying to cover your ass!
Brand Manager: I promise you, we didn't! They paid the exact same price as you did!
Manager: Well I'm not matching that price, but if K&L has it for $77.99, then just how the F am I supposed to sell it for $100! Everyone will think that I'm overcharging them when in reality they're just offering ridiculous pricing. I'm just going to close it out and get rid of it. I can't compete on this anymore.
Brand Manager: Let me see what I can find out. I really don't want you to have to stop carrying the product. Just give me few days to see what's going on.
Jeez. This is a really intense story so far. I wonder what's going to happen next! Let's find out in part three, called: Now You Know How I Feel
David is shown sitting at his desk, eating a sandwich when the phone rings. He picks up and we hear the brand manager greet him through the speaker.
David: Hi, this is David.
Brand Manager: David, it's Larry over at _________. How's it goin'?
David: Hi Larry, it's going fine. What's up?
Brand Manager: Well.....not so good. We've got a problem and it pertains to your price for _______. You're selling that for $77.99 and that's a little lower than we're comfortable with. We've been getting complaints from other stores all day and they're threating to drop the product if you don't change your price.
David: Wow, that's a problem. You know what else is a problem? My price for _______. I'm at $52.99 but other stores are still offering that product for $42. People think I'm overcharging them for the bottle because there are still a bunch of stores nationwide with the old price. I've been getting complaints all day as well.
Brand Manager: David, you know that we raised the price for everyone, not just you.
David: That's true, Larry. However, I'm still a smaller retailer who can't afford to buy in before the increase like other huge chains can do. While they're still sitting on older inventory with hundreds of cases, I'm moving through my inventory faster and I'm forced to raise my prices first. The problem is that customers don't understand this, so they think I'm just charging them more.
Brand Manager: But eventually, the other stores will sell through and raise their prices as well.
David: True, but with so many increases happening across the board, there are always going to be whiskies that I simply am not competitive with because someone, somewhere, will have a deeper inventory than me. We're getting national attention now and I have to be able to compete with Chicago and New York, too. But that's OK because I've figured out a way to balance that all out.
Brand Manager: What's that?
David: For every product that goes up in price, I'll pick a product from the same company and lower it.
Brand Manager: How is that going to even out your profits?
David: Oh, I didn't mean financially. I meant it would even out the amount of complaints we would both have to hear. You see, producers never take any flack from customers. The retailers do. But now, for every complaint about price increases I hear from customers, you'll have to hear a complaint from another retailer. So we'll be even! What do ya say?
Brand Manager: I think you've lost your mind. This is the craziest thing I've ever heard.
David: Maybe to you it is. However, my customers are sick of the same whisky they bought last week costing ten dollars more this week. It's frustrating, so I'm going to stick up for them and offer some relief.
Brand Manager: I understand your frustration, but isn't there anything else we can work out?
David: Sure. The next time you lower the price on a product, I'll respond by raising the price on one of mine. Like the ______ whisky that's causing so much trouble right now. Just lower the price on something and I'll bring it back up again. That way we'll always have balance. Balance is important. So is regularity. If you eat a balanced diet it helps to keep you regular.
Brand Manager: I think you need to take a break, David. You sound like you're losing it.
David: Nice talking to you, Larry!
Wow! What's going to happen now? Stay tuned for more exciting dialogues to find out!