A hot topic in the bourbon community as of late has been that of overpriced bourbon. Almost every Instagram feed you see eventually makes some kind of reference to a unicorn bourbon or a complaint about refusing to pay the inflated price for the juice they desire. Photographs of Elmer T. Lee, Old Fitzgerald, or the infamous Pappy Van Winkle at MSRP or 100 times MSRP pop up in news feed constantly. I myself fall into this category often, but who doesn't? The Bourbon industry has become so popular the production isn't matching the demand. Some distilleries due to either natural disaster, theft, or other catastrophe have lost large amounts of their shipments or even entire warehouses. Now it may seem basic to point this out, but doesn't cost and demand go hand and hand? Of course it does so how can we expect the same product which is a scarcity to remain the same price? The yet simple answer again...we can't.
Yes, the cost of bourbon will rise and yes, the cost of rare desired bourbon will rise. It only makes sense. What the real question may be now, is how is this counter balanced? The demand is high and people want good quality special release bourbon, many are willing to pay a higher price for a quality product and do, but are they really getting them? There are a few trends going on in the bourbon industry as of late which are effecting the current pricing of bourbon and I believe in the long run will start to counter balance the over pricing of some bourbons. Granted there will always be the few that will continue to go for ten or more times the suggested retail price and even those that never make it to the "normal" retail market, but eventually things will even out at the retail level.
One influence which should end up helping consumers over the next 5-10 years is the explosion of new distilleries providing more options to the consumer. In the article After a Decade of Explosive Growth for Kentucky Distilleries, What's Next? written by Janet Patton of the Lexington Herald Leader, Patton writes a recent update to an economic study conducted by former University of Louisville economics professor, Paul Coomes and Barry Kornstein, reported in 2009 only 19 distilleries existed in the state of Kentucky with the current number now being 68. This is not shocking to think of since many are still owned by larger established industry leaders. Bringing it closer to home, the state of Virginia alone has a total of 45 distilleries producing craft spirits. After conducting some quick research I found In the Hampton Roads area covering the seven cities over the past 10 years, 6 new distilleries have opened, each producing a variety of spirits including gin, whiskey, and moonshine.
Each of these new companies is claiming to have an unprecedented product and some may, but if you don't see the facts, reputation, reviews, or some history to back it up it could just be a farce. Many of these new distilleries are outside sourcing their products from other companies and pushing them to the market a bit sooner than prudent in some cases. These bourbons are lacking age statement and many are blending significantly younger and older barrels to create their products. Many of these distilleries are then setting their price points upwards of one and two hundred dollars a bottle causing uneducated consumers with the demand for the product, to purchase it believing, they are getting something special. The consumers later find out the product barely compares to some bottles priced at a fraction of the cost. Currently this is contributing to the overpriced bourbon scandal, but be assured as time goes on these companies will get weeded out.
The power of marketing influences all. Careful research is put into the design, brand image, and message sent to the buyer that these products are genuine and just as legitimate as some of the high rollers of the current industry. The marketing strategies are well planned and down right ingenious to a thirsty market. We have all been there, bought into the hype, purchased the bottle, only to be disappointed later. These types of "pop-up" distilleries typically are disappointing, but they add additional options to consumers and therefore some competition. The impact though negative to the reputation of bourbon and the whiskey community could eventually benefit the customer by keeping market prices in check. I suggest doing your research before making a purchase much over the nominal market price in your area.
Another argument which could be helping consumers is that of counterfeit whiskey. Could counterfeit whiskey be keeping some bourbon prices affordable? A quick search of Ebay, Craigslist, or Facebook market place will turn up empty high-end whiskey bottles for sale. Many propose these bottles are being refilled with lesser expensive whiskeys or even artificial coloring and then resold to consumers on secondary markets or through private sales. Upon discovering the counterfeit products or even the scent of this many consumers loose faith in the industry and refuse to purchase a product that does not fit the acceptable market price point. Wary buyers wont grow an industry.
These factors combined will eventually start to counterbalance the industry for consumers and the overpriced bourbon factor. Unfortunately MSRP is only a suggestion and retailers unless governed by law or contract can sell a product for the price they choose. What are your thoughts? Do you see other factors which may help consumers over the next few years or do you think the bourbon industry will be lost to those willing to pay hundreds for a bottle sold to the retailer at a fraction of the cost? Want to add your food for thought? Subscribe and add a comment at the bottom!
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