$100 is All We Know

"When I was your age, whisky used to cost a nickel. My mother would send me down to the store to fill up the family jug and, if I lost that nickel along the way, there was whoopin' a waitin' for me when I got home."

Sure, Grandpa. Whatever you say.

Things are changing faster these days. I love those new cable TV commercials where the kids can move the TV into the other room, while a ten year old talks about the old days before wireless DVRs. Some people like to reminisce about the old days, while others just like to whine. For many of us, the "old days" of whisk(e)y values were just a few years ago, which makes the transition even harder. However, I'm wondering if the talk about a whisk(e)y bubble is beginning to sound like those grumpy old men who aren't ready to deal with the new age of modern consumerism. I'm included in this group, so don't shoot the messenger. I'm just positing some ideas that we may want to think about. We might like to comfort ourselves with talk of "when all this hype dies down and I can find George T Stagg again," but I don't think we're ever going back to that. That's what people say who wish things were otherwise, but aren't.

An economic bubble is defined as "trade in high volumes at prices that are considerably at variance with intrinsic values." They occur when the value of something is inflated beyond what it's actually worth and will pop when prices rise so high that they can no longer be sustained – either because the current economy won't allow it or because people simply refuse to pay. The sub-prime mortgage crisis hit after banks issued huge loans based on inflated housing prices to folks who didn't have the money to pay them back. Netflix, on the other hand, saw its customers simply balk at the rising cost of service. They were forced to lower prices after customers started canceling their accounts en masse. Neither of these scenarios are about to happen with the $50-$300 whisk(e)y bracket that I'm focusing on.

Wikipedia's profile of the term economic bubble has this to say:

Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect, when a sudden drop in prices appears. Such a drop is known as a crash or a bubble burst. Both the boom and the burst phases of the bubble are examples of a positive feedback mechanism, in contrast to the negative feedback mechanism that determines the equilibrium price under normal market circumstances. Prices in an economic bubble can fluctuate erratically, and become impossible to predict from supply and demand alone.

It's interesting to actually look up what some of the key characteristics of a bubble are in order to help determine whether we're actually going through one or not. I had a lot of people tell me I was wrong about the Bordeaux analogy, but that's not necessarily my opinion. I'm just throwing ideas out there. That being said, I still think the Bordeaux comparison is totally legit, mainly because of the generational divide that has taken place between myself and the older guard at K&L. I look at Cos de Estournal and think, "Wow, that's good wine. Maybe I'll splurge." Ralph looks at Cos de Estournal and says, "$150! Are you kidding? I used to get that for less than $20!" I don't remember a time when Cos was below $100, so it doesn't seem outrageous, much like a new generation of whisk(e)y drinkers out there doesn't know that Macallan 18 used to be $80. They don't know that in 2010 you could find a multitude of 15+ year old Bourbons for way under $100. They're new to the game and they have a totally different frame of mind. They're fine with the current status quo because it's all they know. To them, prices are high, but acceptable and Pappy is always impossible to find.

Now I'm basing the above statements off of what I see in the store every day. It may be a California phenomenon, but national sales numbers would say otherwise. The main people I hear who are worried about whisk(e)y pricing are the people who have been at this a few years or more. It's not a common theme among the younger clientele I serve. Bourbon is a better example of this current craze than single malt, so we can't blame everything on the Asian Scotch whisky market that's getting overly excited. For the past week I've had dozens of people drop by the store in search of "nice" Bourbon – meaning expensive. Unfortunately, there's nothing really all that expensive to be had because it's all sold out. I try and send them home with a bottle of Four Roses Single Barrel or maybe a Blanton's Single Barrel, but even $50 to them seems cheap.

"Don't you have anything that costs more than $100? You know....something......nice?"

There are new customers coming to me on a daily basis who don't want to spend under $100 for anything and it's not just because whisk(e)y is trendy. I don't think we're simply going through a whisk(e)y fad, where it's cool to drink whisk(e)y now, but won't be in another few years. Ten years ago people thought Thai food was a fad, but it was merely something new. Now we're eating South East Asian food everywhere and Pho has become a daily thing for many westerners. People hadn't been avoiding Thai food because it wasn't hip, they simply didn't know anything about it. Now it's ubiquitous and normal and generations of American kids grow up eating it every week. It's not some strange, mystical experience anymore because there's more information out there and a greater variety of experiences. Whisk(e)y is the same for many people. They're discovering a level of quality that goes beyond Jack Daniels or Dewar's and they're finding that they like it. Now that they like it, they're willing to pay a little extra to get it. The same thing happened with designer jeans ten years ago. $100 for a pair of jeans? That's crazy! Wow, these actually really fit well. Maybe it isn't so crazy.

$100 is becoming the new floor for many spirits customers. Despite what you may think, it's not just a group of mis-informed, trendy, or foolish people throwing their money away on overpriced whisk(e)y. People are willing to pay more for good spirits if that's what good spirits cost. A bottle of wine lasts just a few days, but a bottle of booze can last for years. People think about that when they throw down $100 on a single malt whisky, after finding that the wine they wanted costs nearly the same. What we may be witnessing is not necessarily a bubble, but rather a market that has realized they've been underpricing their product.

If a new generation of whisk(e)y drinkers is fine with paying $100 a bottle, why would you ever go back as a producer? Sure, there's a whole group of drinkers that will bitch and moan and complain about the way things used to be, but they're no longer relevant, are they? Forget perceived shortages, or scarcity, or any of that stuff. If the price of good whisk(e)y becomes $100, then that's what it costs regardless of any rational justification. No amount of blogging, writing, complaining, or reminiscing will ever change that trajectory. Didn't we learn that when we rolled our eyes at our grandparents?

Sure, grandpa, gas used to cost a penny and you had to walk ten miles to school in the snow. I get it.

-David Driscoll


K&L Awards 2012: Most Underrated Distillery - Caol Ila

I think I was more impressed by Caol Ila than any other distillery we visited in Scotland this year. They had the nicest staff. They had the most beautiful views. They had a fantastic tour. And they had the best tasting whisky. If I had to make a quick list of the top peated whiskies I tasted in 2012, at least four of them would be from Caol Ila (not necessarily official distillery bottles, but Caol Ila whisky in some form). Caol Ila was also the main component of one of my other favorite releases this year – the Compass Box Flaming Heart. What stood out in 2012? We had a 30 year old cask from Sovereign that we imported this January that blew our customers' minds. We also just imported another 15 year old expression that is a total fruit slut, while giving you all the peat you can handle. Absolutely delicious stuff. The best whisky I tasted this year in Scotland was the most-recent Caol Ila 18 year old, which is now unavailable in the states. It's aged entirely in Bourbon wood and, in my personal opinion, destroys the last few Port Ellen releases I've tasted. Magical.

If Caol Ila is making so much great whisky, then why is it always lumped on the bottom with Bunnahabhain for "Least Favorite Islay whisky" among most single malt fans? People go crazy for Ardbeg, have a passion for Laphroaig, consider Lagavulin a classic, and would follow Bruichladdich to the grave. Caol Ila, on the other hand, is seen as a commercial giant – a monstrous factory pumping out JW Black juice at a frantic pace. While it is a huge facility run electronically by a few local workers, Diageo continues to make great whisky at the Port Askaig distillery. The fat-necked stills create a supple and fruity malt and the peat smoke adds spice and character. What's not to love? True, there's very little romance in the idea of Caol Ila for most people, but I think a trip to the distillery might change many minds. It changed my mind, at least.

If you've never had Caol Ila, you owe it to yourself to get a bottle of the standard 12 year. You can also find the Moscatel-finished distiller's edition right now. If you're feeling up to it, you can also splurge for our 15 year old single barrel cask strength expression. All of them are dynamite for the price.

-David Driscoll


Listen to Us!

I did an interview with Bay Area radio host Larry Olson this past week. It's going to air on AM 960 this Sunday at 5 PM, but you can listen to the interview here before hand right now. He's also got Todd Carmichael from the Travel Channel who does what we do, but with coffee. I had a fun time.

Also, my good friends Lance and Dave from St. George did a session with the Commonwealth Club last week for their distillery's 30th anniversary. It's a great interview and you can listen to that here. The player is in the top right-hand corner.

-David Driscoll


K&L Awards 2012: Best All Around - Compass Box


I have a feeling that the 2012 K&L Spirits Awards are going to end up like the back of your old high school yearbook before we're all said and done. Most Talented. Best Dressed. Who's going to be "Most Popular?" Actually, that one's pretty easy now that I think about it. That Mr. Van Winkle could probably take the crown easily.

In any case, let's focus on what I thought was the best all-around booze label in the business this year: John Glaser's Compass Box Whisky Company.

Asyla. Oak Cross. Two lighter-styled whiskies that most people seem to take for granted (I say that because we don't sell through them very fast). Yet, these are two whiskies that I always have on hand because they're exactly what I like about Scotch. They're delicate, interesting, subtle, and easily drinkable (meaning I don't have to really think too much about why I like them). The Asyla is a blended whisky, the Oak Cross a blended single malt. The Oak Cross, along with the Spice Tree, shows Glaser's dedication to great cooperage. For the Oak Cross he was able to source French Oak from one of France's finest small wood mills. The Spice Tree saw the addition of toasted staves into the actual barrel during maturation. In both cases, the results were delicious and the quality has only improved over the last year, in my opinion (I think the Whisky Advocate also recently noted how the new Oak Cross was better than before).

Then you've got the fantastic addition of Great King Steet to the portfolio, the value-focused blended whisky that only got more interesting with the addition of a special New York edition (which we cannot get, but is available on the East Coast). I have both of these whiskies open at my house and drink them regularly. They're outstanding.

Perhaps the most popular of the standard Compass Box expressions is the Peat Monster, a wildly smoky, yet enticingly rich blended single malt that doesn't get anywhere near its due. I'd take the Peat Monster over Lagavulin 16, Caol Ila 12, and Ardbeg 10 any day of the week. The balance that John achieves between peat and sweet is right in my wheelhouse. The polar opposite of the Peat Monster is the Hedonism - a 100% grain whisky made from older expressions of Carsebridge, Cambus, and Cameronbridge between 14 and 29 years of age. The delicacy of flavor is astounding. It's as elegant as the Peat Monster is expressive.

All of this goodness and we haven't even talked about the crown jewel of John's collection - the Flaming Heart, a whisky that is easily one of the best I've tasted all year. Peated, yet supple and round, the Flaming Heart is what showcases Glaser's ability as a blender. The combination of Caol Ila, Tobermory, and Clynelish is magical and captivating. I treasure every release of this whisky.

Why not throw on the Orangerie for good measure? The whisky that might finally get my wife into drinking single malt with its additional flavor from maceration of citrus and spice. Not at all sweet like a liqueur, it's an acknowledgement of whisky's potential as a serious base ingredient.

Is there any other whisky company with a portfolio as strong, serious, affordable, interesting, and delicious? I don't think so. I don't think it's even close. The range of expressions runs the complete Scotch whisky gambit and throws in a few new ideas for good measure. Maybe Buffalo Trace could compete for this award? That being said, there are a few clunkers in the BT lineup. John Glaser hasn't released anything even mediocre that I've tasted.

And he's a nice guy, to boot. Easy winner.

-David Driscoll 


K&L Awards 2012: Best Person Ever - Jim Rutledge

Welcome to the K&L year end awards. A place where there will be no best Bourbon or best single malt. No best gin. No top tequila. There will be praise, but only praise that you can use and put to work. No talk about the best whiskies you can't get. No retrospective about the Pappy 15 Boilermaker with a Westvleteren base we enjoyed at our recent K&L party (by the way, we had 5,000 calls for this beer today - made Pappy look like a walk in the park). No photo montage of me pouring Weller Larue down Kyle's pants while he dumps Sazerac 18 into David OG's mouth. That would be sick and twisted.

Would that really be very helpful? To rub our excessive behavior in your face? To talk proudly and loudly about bottles you can no longer get? To make you wish you would have acted faster? No, that's not what we're looking to do.

Nevertheless, we still want to celebrate the year that was 2012. We want to leave a statement that helps to summarize the last 365 days of booze business.

Want to know who the best, most passionate, friendliest, most talented, amazing, inspiring person in the booze business is for 2012? Jim Rutledge.

This guy did a detailed and informative K&L podcast. He talked candidly about the midwest drought. He told us how good the 2012 Small Batch would be and it actually exceeded his hype. He hosted a group of K&L customers at the drop of a hat, coming in on his day off to personally offer a tour of the distillery for people he had never met. He continues to email K&L customers who have Bourbon questions, not only about his whiskies, but also about other distilleries. He is patient. Helpful. Passionate. Humble. Determined. Skillful. Amazing.

If you've never given the Four Roses Bourbons a chance, you might want to do so. The Yellow Label, Small Batch, and Single Barrel are among the finest American whiskies available and Jim continues to openly discuss the specifics of each one. There are no tricks with Jim Rutledge. No condescension. No pedantry. Only openness and humility.

I don't know anyone who is this committed. I like to think that I'm pretty accessible, but I'm just a retail spirits buyer, not a famous whiskey distiller. Jim Rutledge is the coolest, most experienced, friendliest, and down-to-earth person I have ever met in this industry. You want to know where your money is going when you purchase a Four Roses whiskey? It's going to this man and his amazing empire that is starting unfold before us - one based on respect for the craft and for the customer.

Make no mistake. Four Roses will be the best Bourbon in America before 2013 comes to an end and Jim Rutledge will have made that happen.

He's that good. He's that amazing. He deserves high praise and all of the admiration we can give him. Best person in the industry for 2012 is good ole JR.

-David Driscoll