"Why Don't They Just Make More?"
There isn't a day that goes by where someone doesn't ask me: "Why don't they just make more?" in relation to the shortage of certain popular whiskey expressions. I know that just about every single person reading this blog knows the answer to that question, but I thought I'd share this article from today's New York Times about the current commodities economy. Almost everything being discussed relates to the whiskey industry as well. I thought the most telling quote, however, was this one in relation to new mines. Just replace the word "mine" with "distillery":
Although companies are retrenching, they cannot completely retreat. Many new mines, for example, are designed to function at full capacity to keep them operating efficiently. And the sales are necessary to pay the debts incurred to build them.
For some reason, I also seem to be a person that people contact to bounce ideas off of about potential spirits business involvement. I get probably two to three emails a week from guys who have got this idea about building a distillery or jumping into the whiskey game because they see the money being made right now. To those guys I say read this:
“Raw material producers invest according to current prices without realizing how those prices might affect future demand,” said Michael C. Lynch, president of Strategic Energy and Economic Research, a consultancy. “Now that the demand is declining because of high prices, they have too much capacity, and once it’s built, you can’t unbuild it.”
If you're investing in whiskey because you think the prices look nice, I'd think twice about that investment. Because the above quote couldn't be more foreboding. And that's why they don't just "make more".