January 3, 2013 by Bourbon Empire
It was bound to happen. Bourbon’s resurgence in popularity over the past few years has created a unique set of market forces that are doing to prices what happened to vodka a long time ago. The economics are simple — increased demand leads to higher prices. Add to that a healthy dose of out-of-control hype and other popular perceptions about what is the “best” and you end up where we’re at today.
Just a few years ago, Bulleit Bourbon cost in the high teens when it was released. Now it’s usually somewhere in the mid-to-high 20s. Sazerac Rye (not technically a bourbon, but close enough for the purposes here) has practically doubled in price, if you can even find it. The biggest winner out of all of this are the Van Winkle labels. Just a few years ago, Pappy Van Winkle 15-year was about $70. I recently saw it in a DC liquor store for $249. It’s becoming the bourbon equivalent of Grey Goose. It isn’t necessarily the best, but it has status. That’s what people are really paying for. One friend of mine compared the cost of bourbon to what Moscow millionaires have done to the art market — driving up prices in Peacock displays of wealth.
I recently tried Pappy 15-year alongside Buffalo Trace’s signature brand, which usually sells for $20-25. Was the Pappy better? Yes. Was it about 22 times better? No. From an economic perspective, the quality versus the price doesn’t much matter. Companies don’t charge what a product is worth, they charge what people will pay, and this is affected by rarity, prestige, and a host of other factors. Pappy is more rare, and an excellent bourbon, but what you’r really paying for is novelty. Everyone wants to try it, or at least display it on a shelf, or gift it to someone they want to impress.
Bourbon is hot right now, and when people who are generally unfamiliar with the product want to know what’s the best so they can try it, a million websites point them toward Pappy. Why? Because that’s what everyone else says is best.
Is there a best? No. It’s all actually pretty subjective. Some people prefer the spicy flavor of a bourbon made with more rye. Others opt for one that uses more wheat. Some people associate age with quality. This is sometimes true, but with bourbon, too much time in the wood can actually ruin it. Many master distillers running some of the biggest distilleries in Kentucky prefer bourbon that’s 7-10 years old.
This isn’t a criticism of people who don’t know much about bourbon driving up prices, it’s an awareness campaign helping them not get suckered into paying too much for it. Bourbon drinkers watching the prices of their favorite brands increase should adopt a ribbon. Then they should form a secret society where they drink other excellent bourbons that haven’t been run through the hype machine yet and are still affordable. These include Elmer T. Lee, Old Grand 114, Buffalo Trace, and Wild Turkey Rare Breed.
One simple thing to remember as you navigate the flurry of new brands being released to cash in on the bourbon craze: a lot of them can be traced back to just a few distilleries. Van Winkle, for instance, hasn’t actually distilled its own whiskey since 1972, when the Van Winkle family sold the Stitzel-Weller distillery but retained the brand name. Since then, it has contracted out to other established distilleries such as Buffalo Trace to make their product. By no means does this mean the product is inferior (far from it), it’s just nice to know as you attempt to navigate the labyrinth of different brands on the market. They’re all marketed as unique, and they all have their differences. But they’re not always unique enough to really justify the high price.