POVs — Part II

Buffalo Trace released this week a very well-crafted response to the internet rumor mill concerning what's going on with their whiskies. Basically, they said this:

-We told you there was going to be a shortage.

-The conspiracists and angry anti-authority people called bullshit.

-But it wasn't a gimmick or a publicity stunt to increase sales.

-Now we're all dealing with the fallout, which is leading to more rumors and conspiracy theories.

I loved their detailed, line-by-line response, which clearly showed their perspective and explained why the situation is where it is. Whisky consumers, by nature, see the situation from their point-of-view: they're pissed off that the Buffalo Trace Bourbons are harder-to-find and more expensive than normal. That's to be expected, so it's nice to a see a distillery lay things out in clear, honest terms.

Since we're talking POVs, however, let's discuss rumor #8: Buffalo Trace's prices have remained relatively unchanged and any mark-ups are at the discretion of the retailer. Let me give you the retailer's perspective.

What they say is true. Buffalo Trace's wholesale prices are mostly the same; however, since we are now on strict allocation (one case per month or two) there are no longer discounts for large volume buys. The reason that stores like K&L have such competitive pricing on Buffalo Trace whiskies is that we buy in bulk. It's no different than what Costco offers: buying power. However, take away our ability to buy deep quantities and you take away our ability to offer low prices. We've had to raise our Buffalo Trace prices a few bucks and it's not because we're being greedy. It's because the prices have indeed gone up by $3-$5 per bottle due to the allocations.

That's no big deal.

Here is the bigger deal, however. Let me start by saying this clearly: in no way am I justifying price gouging or jacking up prices for exploitative purposes. What I am saying is this: consumers in the United States enjoy free-market capitalism. They have the right to shop where they want to. By the same token, retailers have a right to mark up prices due to increased demand. They name the price, you decide if you want to give them your business. That's the way it works. Obviously, we're not exploiting the current shortage because we want our customers to know we're looking out for them, but at the same time you can't be someone who shops around for the lowest price, finds the retailer with the best deal, but then gets mad when a shop exercises that same essential capitalistic right (actually you can be that person, but just know that it's blatant hypocrisy).

But here are more telling figures:

-In July of 2013 we sold $2,172.14 worth of Buffalo Trace Kentucky Bourbon. In July of 2014 we sold $1359.32: a decrease in sales of $812.82

-In July of 2013 we sold $1649.38 worth of Eagle Rare 10. In July of 2014 we sold $1000.60: a decrease in sales of $648.78

-In July of 2013 we sold $1079.64 worth of Elmer T. Lee. In July of 2014 we sold nothing because we couldn't get any: a decrease in sales of $1079.64

-In July of 2013 we sold $1430.12 worth of Weller 107. In July of 2014 we sold $572: a decrease in sales of $858.12

You can see where this is going. With the success that Bourbon is enjoying, and the extreme popularity of the Buffalo Trace whiskies, our sales numbers should be going up not down. However, we can't get the whiskey we need because Buffalo Trace doesn't have enough to sell us. When you throw in Blanton's, Weller 12, Rock Hill Farms, Sazerac rye, and all of the other limited releases that we sell from the Buffalo Trace portfolio (not to mention single casks) you're talking thousands and thousands of dollars of sales being taken away each month due to lack of inventory.

Again, it's not the end of the world for K&L because we have so many other products that can help pick up the slack. And we're not blaming anyone for the issue because it's nobody's fault! However, if you're a mom-and-pop retailer who happens to rely on your Buffalo Trace sales to help pay the bills (let alone the 75 other whiskies that have gone on allocation over the last year), then you're going to need to make up those losses somewhere. After years of depending on the profit generated from those products, it can be a shock when they're suddenly taken away (and frustrating when the demand is still there!).

There are obviously some exploitative practices going on out there, but raising the price on a Buffalo Trace whiskey by $10 isn't always the result of some "greedy" retailer looking to screw you over. It's the result of a situation that sucks for everyone involved. The lights at your local retailer don't magically stay on and the employees don't pay themselves, so each retailer will need to decide what they have to make for their own particular situation. If that makes you upset, then be upset. But please don't blame the retailers who have spent years supporting Buffalo Trace, building that brand with their consumers, only to see their hard work come to a screeching halt.

Not everything is an elaborate scheme to make the life of a whiskey drinker miserable. Some things are simply the result of supply and demand.

-David Driscoll