The Golden Age of Whisky?

I've heard more than a few industry people recently refer to our current time as the "golden age" for whisky and they weren't talking about quality – they were literally talking about gold.  It's no secret to anyone that brown booze equals big business right now, however, I'm getting the feeling that some producers feel they've been giving away their product for too little.  Capitalism allows whisky companies to charge whatever they feel their product is worth. More than ever before we're seeing big prices for whiskies that don't seem all that special.  However, if people begin to actually pay these crazy fees, it will only reinforce the producer's belief that the asking price was appropriate.  Scarcity isn't helping.  The planet is drinking so much whisky right now that stocks are draining faster than ever, leading to shortages, only driving prices higher due to the laws of supply and demand.

I was perusing a message board yesterday when I noticed a thread with my name in it.  People were concerned that the Vintage 17 Bourbon was going away and I was used as the source of the news.  As far as I know, it is in fact true that the Willetts are completely out of older stock.  We bought their last 20+ year old cask exclusively for the store (arriving this week), which will mark the end of any older single barrel releases, as well as the demise of the Vintage 17.  As soon as KBD announced that the Vintage 17 was leaving the building, the price shot up more than $10 a bottle wholesale.  If they were going to lose one of their most popular whiskies, they were going to try and make a few extra bucks in the process.  It's completely understandable, but still troubling for the dedicated spirits consumer.  Stores that don't normally buy deep quantities of booze are going to have to begin doing so if they want to keep pricing competitive (hence why you'll still find a few other stores with the old Vintage 17 price - grab it if you see it for less, by the way).

This past Winter I told as many people as I could to stock up on Elijah Craig 18.  Not only because it was drying up, but because there will surely be a price increase when it returns.  Heaven Hill has been underselling that whiskey at $50 for the two past years, but you can bet that will all end soon.  Older Bourbon has been hit hardest by the whiskey boom, but single malt is beginning to feel the heat too.  Independent bottlers have been practically cut off by the distilleries they once dealt with freely.  Diageo doesn't even have enough whisky for itself, so how can it possibly provide left overs for guys like us?  Independents are facing the same problem us retailers are - you had to buy big over the last few years to sustain your supply.  Like bears needing to store fat for the long, cold winter, independents are hoping just to tread water until the supply catches up and the industry once again produces a surplus.

In the meantime, however, some companies are trying to milk the current demand.  Prices for single casks have never been higher, with some producers demanding insane prices for whiskies that normally would sell for significantly less.  Normally is no longer a relevant word though.  David and I have been in negotiations for the past few weeks, since returning from our trip to Scotland, and a few of our talks have reached an impass.  There were several casks we really had hoped to bring home that now appear to be out of play.  Not because they aren't available to us, but because the prices are very, very high.  We have to ask ourselves: are people really going to buy these single malts for what we would have to sell them for?  There's no doubt that we could sell them, it's more about do we want to sell them?  For the first time ever I'm beginning to believe that a bubble could be forming.  Like the housing market that incorrectly believed people could afford to keep going higher, some whisky companies may be overplaying their hand.

There's a difference, however, between simply charging more money because people can afford to pay it and asking for more money because you're almost out of booze.  The former is a brazen attempt to make more money, while the latter is simply the effect of supply and demand.  The problem here is the role reversal.  For years, independent bottlers have offered significantly lower prices than those of the actual distilleries.  A Port Ellen whisky from Signatory has always been far less expensive than the official Diageo release.  What would happen however if a private cask of Bunnahabhain 30 year went up $200 to $350 a bottle?  What would happen if a barrel of Glenlivet 15 went from $75 to $115 per bottle?  Are these whiskies still worth the money at those prices?

As a retailer worried about his customers, these are the type of questions that keep me up at night.  This very issue caused me to toss and turn from two to four AM this morning.  With so many distilleries still offering value for quality booze, it doesn't make sense to overpay – yet.  Whether it will ever make sense to pay 20-30% more per bottle is up to the consumer.  If people want something badly enough they'll pay for it.  In this new "golden age" of whisky, the gold depends on how badly we want it.

-David Driscoll

David Driscoll