Is Bourbon Broken? Part 2 – The Secondary Problem Header

Is Bourbon Broken? Part 2 – The Secondary Problem

In Banter by Brent Joseph51 Comments

Welcome to Part 2 of our 4-part series exploring the question, "Is Bourbon Broken?". Make sure you read Part 1 – The Consumer Problem before proceeding with Part 2, as the posts are meant to be read in sequential order. 

If you really have to have that bottle, you’re forced to buy it on the secondary market. That is when you are at the mercy of the hype train. People are paying 4-8x retail for $30 bottles? Are you kidding me? That’s insane to me.

There is so much value on the shelves if you’re actually a bourbon drinker. If you’re just bunkering bottles because bourbon is “hot” right now or hoarding shelf queens to show off to your friends and neighbors, you’re also part of the problem. It’s great that you have 15 unopened bottles of Blanton’s on the shelf in your office, but how many (if any) do you have that are opened? Do you actually enjoy drinking it or are you just collecting bottles so you can flex online to a bunch of strangers?

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You don’t get to complain that you had to pay $400+ for your bottle of Col. Taylor Barrel Proof. If you stop feeding the secondary market, things will come back to normal. I’d like to think that eventually production will catch up a bit and some of the bottles that have been so scarce for the past 5-10 years will start to repopulate shelves. But if we keep paying up on the secondary, the flippers will always be a few steps ahead of you. There are always people that will skirt the rules and try to game the system. For Example, this past fall, there was a guy that was paying the delivery driver of a local grocery store chain to tip him off as to when the Old Forester Birthday Bourbon shipment was being delivered at each store. This individual ended up with multiple bottles and immediately ended up on the secondary market. As long as people keep spending up on the secondary, this type of behavior will continue to proliferate.
"If you think I’m wrong, how many of you would pass on a bottle of Blanton’s for $100 if you walked into your local store tomorrow?"
The other downside to the secondary market is that it shows the distiller’s just how much you’re willing to pay for that bottle. How long is it going to be before Buffalo Trace says “Hell, if all of these people are paying $120-$150 for a bottle of Blanton’s or Elmer T. Lee, why don’t we just double what we charge and raise the MSRP?” They would double their revenue for the brand without increasing production overnight. It has already happened with the MSRP of Old Weller Antique and McKenna 10 yr BiB and you still can’t find those on store shelves. If you think I’m wrong, how many of you would pass on a bottle of Blanton’s for $100 if you walked into your local store tomorrow?

Let me know what you think about my thoughts so far in the comments, and stay tuned for the next installment of Is Bourbon Broken? – The Distribution & Retail Problem.


ABOUT THE AUTHOR
Sr. Contributor |

Brent was born and raised in Indianapolis, IN. After graduating from the University of Kansas with a degree in Journalism, he moved back to Indy where he eventually resurrected his family's brand of all beef kosher style hot dogs and opened a restaurant, King David Dogs, in downtown Indianapolis. When he's not juggling the many duties of an entrepreneur, he can usually be found relaxing at home with his wife, their twin boys, and their two dogs. Brent is a member of the Bourbon Society of Indianapolis, a BBQ enthusiast, and a cigar aficionado. Three things that are even better when enjoyed together with good friends. If Brent is not talking about bourbon, he's probably talking about sports, in particular, NFL football and Kansas Jayhawks basketball. You can follow his blog, BBQ and Bourbon here.
Read Brent's full profile.

About the Author

Brent Joseph

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Brent was born and raised in Indianapolis, IN. After graduating from the University of Kansas with a degree in Journalism, he moved back to Indy where he eventually resurrected his family's brand of all beef kosher style hot dogs and opened a restaurant, King David Dogs, in downtown Indianapolis. When he's not juggling the many duties of an entrepreneur, he can usually be found relaxing at home with his wife, their twin boys, and their two dogs. Brent is a member of the Bourbon Society of Indianapolis, a BBQ enthusiast, and a cigar aficionado. Three things that are even better when enjoyed together with good friends. If Brent is not talking about bourbon, he's probably talking about sports, in particular, NFL football and Kansas Jayhawks basketball. You can follow his blog, BBQ and Bourbon here. Read Brent's full profile.

  • Jeffrey Schwartz says:

    Unpopular opinion here… I wouldn’t pay $65 for Blanton’s. But then again I don’t collect horsey stoppers. Cheers, Brent, another great piece!

  • Chris says:

    Great insight. I totally agree, there is a lot of value on the shelf. I frequently grab the Old Forester 100 proof. Great value at 22 dollars and its consistently available and delicious.

    • Brent Joseph says:

      Chris,
      Thanks for reading. There are so many good value drinkers out there on the shelves. I just don’t want to out them and ruin it for the people in the know.

    • steven peter Hudson says:

      sorry but value and taste do not mix. there’s no such thing as bang for your buck . if a bourbon is a 98 out of 100, and it costs 500 dollars, and another bourbon is a 94 out of 100 and it costs 20 bucks. the 500 dollar bourbon is still the better bourbon, no amount of savings on your part or unwillingness to pay will make it a better buy or better bourbon. A Ferrari will ALWAYS be a better car than a Hyundai even though the cost is prohibitive to you.

  • JDub says:

    The secondary market is a result of supply and demand. Look at limited production cars such as the Hellcat when it was first released – a secondary market materialized overnight with dealers charging above MSRP and original buyers flipping for thousands more than they paid. Production was increased, and today you can buy one for thousands under retail. The same thing happens with toys (Beanie Babies, Nintendo Switch, etc.) and eventually the market compensates.

    The big difference with bourbon is that it’s consumed (or supposed to be). It’s much more difficult to satisfy the demand for a consumable item. Now throw in the aging requirements for bourbon and the distilleries are constantly chasing the curve. Why didn’t Buffalo Trace start making more Eagle Rare 10 years ago? Because 10 years ago there was no demand for more.

    I’ve switched to single barrel store picks. The bourbon is just as good and I don’t miss chasing the latest hyped bottle. Let’s hope the bourbon train slows down and the flippers get stuck with bottles they can’t sell.

    • Jeffrey Schwartz says:

      I’d rather have a great pick over anything (and I mean anything) allocated.

    • Brent Joseph says:

      JDub,
      Actually almost all of the big distilleries have ramped up their production over the past 5-12 years. They’ve all made considerable investments into increasing their production. Some have pretty much doubled what it was 15 years ago. The problem is, that it takes years for the product to mature. Hopefully we (the consumers) will benefit from that eventually, but with the internet and social media hype train chugging along at full speed, it may not make a difference.

    • steven peter Hudson says:

      Store pick, lol all that means is some guy, you dont know, who isnt you, liked one of the 5 choices he was given, more than the others. thats it., nothing more, theres nothing special about a store pick except a sticker.

  • Mike says:

    Also part of the problem is the younger generation getting into bourbon resulting in the recent ‘bourbon boom’ They are more active on social media fueling the hype for said bottles thus increasing the 2ndary market.

    And certain people will always have more disposable income then others. To some, $400 isn’t a lot to spend on a EhT BP. They will say “my time is more valuable” therefore won’t put the time/effort in to find one closer to retail.

    Only true way to kill 2ndary market is for supply to increase and curb back on allocation imo.

    • Brent Joseph says:

      Mike,
      The best way I’ve found to combat the secondary is to not be a part of it. Thanks for reading!

  • KTM says:

    Spot on in all regards. People are paying 60.00 in stores for Eagle Rare 10 yr. Hard pass on that for that price. As when Bookers price doubled I move on to something else. And have found many I like as well or more. Those will remain unsaid. Don’t need hoarders and resellers ruining them for me!

    • Brent Joseph says:

      KTM,
      Thanks for reading. The best thing you can do is refuse to pay the mark up prices and keep your favorites a well guarded secret.

  • Amy Rogers Prunty says:

    “…if you’re actually a bourbon drinker…” BINGO!! I’ve actually had people in the groups I’m in poo-poo my recommendations because they’re not fancy. No, buddy, I’ve had that fancy bottle, and I like this $30 bottle better. Once you’ve tried a lot of different bourbons, you know what you like. I’m not trying to impress anyone – just trying to be happy & enjoy my hooch.

    • Brent Joseph says:

      Amy,
      Thanks for reading, you keep drinking what you enjoy. Let the other fools fight over who can take the best parking lot crotch shot and ask “Is this any good?”

  • Al says:

    Agree with all above. Another cautionary tale is Heaven Hill BIB. Distiller raised the age by one year and at least doubled the price in order to make hay while the sun was shining.

    Single barrel store picks? Heavens yes!!

    • Brent Joseph says:

      Al,
      My point exactly. What is stopping these brands from doing this across the board? Are people going to stop drinking?

  • Mayer K says:

    I’ve been exploring bottles that are $20 and under and finding a lot of great value. I rarely spend more than $35 – $40 for a “higher” end bourbon and I’ve never explored the secondary market. There are so many great whiskies in that lower bracket not that the high end ones are not great, they are, but it’s often incremental.

    • Brent Joseph says:

      Mayer,
      You’re absolutely right, there are a ton of great value bourbons out there. Just be sure to keep it to yourself or the internet newbies may catch wind and blow up your favorite brand. AAA 10 year and Weller 12 USED to be in that category. I would buy the AAA 10 year, not the 10 Star, in 1.75s by the case at around $20 each and it wasn’t that long ago. Thanks for reading!

  • George says:

    It’s also becoming a problem with the local liquor stores who feel they can charge whatever they want because a certain bourbon has become popular. Some have become worse than the guys on line. I’ve stopped buying at two stores already because of them overpricing certain bourbons.

    • Brent Joseph says:

      George,
      Same here locally. I go into the retail side a bit more and touch on this in the final 2 parts of this series. Thanks for reading!

  • Don Foy says:

    Great article! I gave up 2 years ago. I am not buying anything over $30.00.

  • TBrown says:

    Agreed, again, with one huge exception. I “collect” bottles and drink “collectible” bottles and I’ve done so for many double digit years. There is nothing wrong with building a collection of fine spirits. Any implication otherwise is flat wrong. People collect all sorts of things, spirits and particularly bourbon are not exempt.

    That being said, getting hands on a “collectible” bottle at SRP is no doubt extremely difficult but nevertheless still possible. That is why it’s important to have a personal relationship with your local retailer, a tidbit shared with me by a Buffalo Trace executive many years ago.

    Like you however, I have not and will not contribute to or participate in the fleecing that occurs in the secondary market (or the ‘primary’ market for that matter). If I’m unable to get a bottle, any bottle, at or near the distillery’s SRP then I just won’t be getting that bottle. That’s life (for most anyway), nothing is guaranteed. And by the way, I’d never pay anything close to $100 for a bottle of Blanton’s, never! Keep writing!

    • Brent Joseph says:

      TBrown,
      Thanks for reading and taking the time to comment. I wasn’t trying to say that collecting anything is wrong. Anyone is more than welcome to do what they want and spend their money as they like. What I meant was that if you are one of the people that is willing to pay or are charging retail plus x for things like dump dates, etc, then you are part of the problem that has lead to this current market situation. To be clear, I’m not against people collecting, this is just my perspective on what we as bourbon lovers are currently dealing with.

      • TBrown says:

        Understood but I honestly inferred a bit of a stigma concerning “collecting” & “collectors” as I read the article. I’m glad you took the tim to address that. I enjoy your articles & commentary. Keep writing.

    • Jeff H says:

      I think it also depends on your definition of “collector” and the reasons for acquiring the bottles. It sound like we are similar. I currently have 61 bottles of bourbon (plus scotch, etc) and I don’t consider myself a “collector”. Why? Because I plan on drinking them all at some point in time.

      So does that make me a collector or a consumer?

      And I like you would not overpay for a bottle. I do enter the raffle at my liquor store each year and usually get something nice from that (at close to MSRP). But there are so many other things on my shelves at home that are so good, why would I waste time hunting for the impossible bottle when I can open up something just as good that my local whisky buyer recommended.

      • Brent Joseph says:

        Jeff,
        I think that makes you more of an enthusiast. You can collect or hoard. But if you don’t really drink any of them, then I think you’d be considered a collector, which is fine. But the issue is more of where the secondary market is.

  • Buzz says:

    Go Benchmark!

    • Brent Joseph says:

      Just wait, I’m lucky enough to be in the test market where we get Benchmark Full Proof, Bonded, Single Barrel, Top Tier, and Small Batch. Hopefully this is a benefit of all the extra bourbon that BT has been laying down over the last decade. All of it is $26 or less and a few I really like.

  • T says:

    I wouldnt buy Blantons for 25$. Sorry, its just not that good. BSFTB is a bit better, id buy at 35$.
    Like covid-19, there are no easy solutions, people will act selfishly, irrationally, and will prove unable to act in a manner required for our collective known best interests, it comes in waves (wave function of supply/demand), and given enough time, shall too pass. For time being there are enough good bottles in my reserves and on store shelves under 100$ to keep me interested in drinking whiskey

    • Dan Zam says:

      I thought I was a bourbon Wonk Until I find myself stumped by the acronym BSF TB. What’s that. Hi, two wouldn’t pay more than $50 for plantains. New York area prices are quite a bit higher than those in the Midwest and Florida, but I agree that one can still purchase good bourbon without succumbing to the secondary market and all the hype. Blind taste test confirm this.

  • Jeff H says:

    Same statement as in Part 1 – Broken? No, but it certainly has changed.

    And I agree with your thoughts here the main issue is the consumer. And yes, I walk right by the $100 Blantons.

    15 years ago when I was dating this wonderful woman (who is now my wife), she took me on a weekend birthday trip to LA for some Giants/Dodgers baseball. When we checked into the hotel and got to the room there was a bottle of Blantons waiting for us that she had picked up at the local shop. No hunting needed. It was on the shelf of the store.

    I have a couple of acquaintances that have trophy bottle collections. One has even built a custom display case for them. They are very proud of their bottles. But as I told my oldest daughter a few years ago when she bought a car and she asked me if I was proud of her for buying the car. I answered “I am very proud of you for all the things you have overcome and accomplished in life. Not many people could have done what you have done. But honey, anyone can buy a car. I am proud of you for who you are and not because of what you own.”

    On the other hand I knew a restaurant in Louisville (just a regular place, not too fancy) that kept a bottle of Pappy behind the counter at the bar and and if you asked the owner for “2 fingers of the old man” you got a pour for $10. He wasn’t trying to show off or make a ton of money, he was just sharing with his regular customers. So there are still a few good people out there.

    So I do get frustrated when I find one I really like and 2 years later it is the new trend and becomes hard to find. Weller got there just because it was associated with Pappy. Blanton’s and Eagle Rare are that way now. Russell’s Reserve is now heading that way as well as a few others.

    I have been drinking bourbon for 40+ years and have very fond memories of excellent bourbons over the years, though now I make new memories of new drams. Like all things the bourbon industry changes. Do I miss being able to buy whatever I want as I could in the ’90s and most of what I wanted even as recently as 3 years ago? I do. But as long as I can get good bourbon off the shelf any day of the week, the bourbon industry is not broken.

    So while all those people are spending there days hunting for that trophy bottle they can stick on the shelf, bribing delivery drivers, etc. I am home having 2 fingers of I.W Harper 15 year, Eagle Rare 10 year, or maybe open my Bomberger. And when those are gone I have plenty of others to choose from.

    • Jim says:

      well said. Care to share a glass of the Bombergers 😉

      Agree with you that it is not broken, but it is reaching a level of dysfunction that is impacting a lot of consumers.

  • Fred Honeyager says:

    There are to many great Bourbons in the $25 to $35 a bottle range, I will never pay more than that for a bottle of Bourbon. I have tasted some of those from the secondary market and frankly was not all that impressed, I would just not pay that much money for any of them, Call me cheap but that is how I feel….

    • steven peter Hudson says:

      yup you are cheap and have a worthless palate obviously. those bottles are sold as crap for a reason. No manufacturer is going to sell good bourbon at 20 bucks a bottle. thats for the people who think mellow corn and old ezra are good stuff.

  • Brian says:

    I’m with you. I’ve become disgusted by the secondary over the past couple years and where it’s gone. Just this week, the new OF117 series that was just released is now going like hot cakes with people selling upwards of 6 from the car at 400% markup. *smh* I think it will only get worse.

  • Brad Rodo says:

    you think you guys have it bad? Try it up here in Canada.

    In Ontario all of our liquor is controlled/distributed by the LCBO (Liquor Control Board of Ontario; the world’s largest purchaser of alcohol!). You would think having that title would grant us decent stock of rarer products, but you’d be wrong (most stores only carry your usuals; woodfords, Jim Beam, Elijah Craig, Basil, OF 86, Buffalo Trace, etc.)

    so when rarer products do become available; Blanton’s, EHT, ER, etc. people pull up the stock listings on their apps and go out and literally drive around to all the stores in their surrounding area (even going as far as 2-3hr drives) buying up the stock. we’re talking 20-30 bottles a trip sometimes…

    Next thing you know, they’re offering their $50 bottle for $300 on one of the many Bourbon Facebook Pages out there. They also boast their collection (all sealed bottles) online as some weird sort of flex.

    As someone who opens all his bottles, I always tell people “not a single Master Distiller has ever finished making a batch of Bourbon and said ‘man I really hope this bottle sits sealed on someone’s shelf for 30 years’….”

  • Steve Hauser says:

    Too many people have too much money and no common sense. Or to put it another way, they want what they want and are willing (and can) pay for it. Will the bourbon boom bust? Will supply ever catch up with demand? It sure has been an interesting 10 years. Literally hundreds of “New” bourbons/distilleries coming online every year. I am glad to buy a good to great store pick for most days, and have my share of epic bottles bought back when you could buy them off the shelves. Good luck to those real bourbon aficionados searching for their red-eyed unicorn to drink and to share.

  • Tom says:

    Hi Brent. The first two articles have been fabulous and I’m looking forward to the next two.

    My story is one of temptation and overcoming it. I’m in Ohio so subject to the nuances of a control state. I’m actually one who likes how Ohio has handled holding lotteries for it’s allotment of unicorn whiskies. For your readers, Ohio has gone to a system where it puts it’s allocation of rare whiskies in an on-line lotteries open to Ohio residents. To me, this is a better system than hundreds of different locations getting 3 bottles apiece and running their own in-store lotteries. And better than non-residents coming into Ohio to buy our meager allotment.

    To speed things along, I have my immediate family and as many friends who will enter the lotteries with the hopes of lightening striking in my favor. This past fall, one of my daughters won an E.H. Taylor Amaranth Grain of the Gods in the lottery. This was before Thanksgiving and she asked if I’d like her to offer it up as part of our Thanksgiving whiskey tasting. (My wife loves to host parties so with the passing of our parents over time our house has become ‘ground zero’ for all family gatherings.)

    So, the temptation. It just happens that at about the same time my daughter got the Amaranth I was purchasing a private bottling of Irish Whiskey through an Irish whiskey group I’m part of. In the U.S., the group was using Folsom Wine & Spirits as the shipper of the whiskey. As I was completing my purchase, I noodled around on Folsom’s website to see if I wanted anything else and there is was, a bottle of EH Taylor Amaranth for sale at (I believe) $1399.99. I mentioned that to my wife and she starts yelling “Sell it, sell it”. But I thought back to a comment made by the moderator of the Irish whiskey group. He told me that he was once talking with the master distiller at Midleton Distillery (they make Jameson and an assortment of other whiskies, some really high end) and the distiller told him, “I don’t make fine whiskey to gather dust on a shelf. Open it and enjoy it.”

    So, back to Thanksgiving. Since I had a centerpiece for a tasting I got out a variety of Buffalo Trace products (Buffalo Trace, Weller SR, Weller Antique, Eagle Rare, Blanton, EH Taylor Small Batch and Single Barrel) and the Amaranth. Due to Covid it was only immediate family in attendance and there were 7 of us tasting. As you might expect, we started with the lower proof and worked our way up to the 107, then shifted back to the Taylor’s.

    With only the Amaranth left to taste I took the family through the story I just wrote ending with something like this, “So, we had a choice. Sell the bottle on the secondary market for a buttload of money or open it and sit around and drink like rich people.”

    With that, I opened the Amaranth.

    As with all our family tastings, at the end I said I’m done pouring for others. Anything out is fair game, if you’d like something I didn’t put out let me know what you’d like and I’ll get it for you. This led to the following exchange:

    Me: “I’m done pouring tonight. Help yourself to anything on the table.”

    My brother: (Taps the Amaranth) Even this?

    Me: “Yes, even that.”

    Brother: (Pours a healthy shot)

    So, that evening the seven of us shared a bottle of something none of us may ever taste again. It was a wonderful experience to share that with family. It was also evident that we raised our daughter to want to share – it was her bottle after all.

    Thus, I say screw the secondary market; open and enjoy.

    Thanks Brent. Best wishes.

    • Bill Keene says:

      “…drink like rich people” Exactly! My friends who I share my bourbon with are always amazed that I’ll open any bottle I have to sip with comrades. That’s what makes bourbon special, not pointing at that unopened bottle on the shelf.

  • Scott says:

    I don’t buy the supply and demand argument. The main reason being there are people buying the product, not to consume, but rather for the purpose of reselling it. They are taking an item that is scarce and making it more scarce by removing it from the market, to create an artificial market.

    6 widgets go on sale and 10 people want them.

    6 widgets go on sale and those 10 people still want them, but now 20 more show up to try to buy the widgets, with the intent to sell back to the first 10.

    And don’t get me started on the feeling of entitlement to resell alcohol. We’ve got an entire amendment to the Constitution around that.

    But muh secondary!

  • Jeff says:

    Actually, the wholesale cost of Blanton’s and Henry McKenna BiB 10 Year have held steady here in Louisiana. What folks in the business will sell them for? Now that’s a different story.

  • James says:

    I’ll pass on the current, watered down Blanton’s every time….. My first bottles of that were in late 89 and 1990. It’s not near the same.

    Great article(s). Thank you for shedding light on this subject!

  • Bill Keene says:

    Enjoying your articles so far. I have a lot of open bottles on my bar (too many, according to my wife) and I am willing to open any bottle I have to enjoy with friends. I do have to admit that I’m a tater in that I have one bottle of Beanball Bourbon that I bought in Cooperstown several years ago. I expect that I will be leaving it to my nephew (don’t have any kids of my own) when I die because it will NOT be opened until the Padres win the World Series. Although things are looking hopeful for this year. Fingers crossed.

  • steven says:

    im 100% of the belief that producers are 100% in favor of the secondary market and reduce shipping and distribution to keep prices up and over inflated. Ive talked to distribution reps and hear them say, they used to get cases of the sought after stuff , no they literally get a bottle or two and are told to advise the retailers who dont know, to not sell it for retail. The only place youll get a hyped bottle for retail now is in a big chain store like a total wine. But thats it. Its a big scam started by the secondary market but now fully backed by distributors and distillers. Ive seen and know of several times when employees of the distillers or distributors have sold cases of high end bourbon for secondary cash in the tens of thousands of dollars and put it right in their pockets 100% tax free and under the table. No one is going to stop it. It will only end when people fall off the bourbon wagon and go to either another spirit or back to wine or craft beer again, then all these poor souls will be left with bottles they overpaid for , that they cannot possibly sell. Like those old bottles of Patron, and crystal that are now 1 10th of their value.

  • Greg says:

    You can get a handle of Jim Beam for $19.99 at Total Wine. Bourbon is not that complex. Why pay premium prices for sweet-tasting corn whiskey? Novelty names like Colonel Elmer F. Shitbritches are not worth anything more than that.