Will the Bourbon Bubble Bust?

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July 19, 2013 by Bourbon Empire

Probably not. Or at least not in any drastic way. Hopefully it will just deflate a little. It’s hard not to look at rising bourbon prices and wonder when the bottom will fall out. High prices and overexposure can be a death knell. It’s like when movie stars begin appearing in too many movies, tabloids, and on talk shows. Pretty soon you just want a taste of something different.

But that doesn’t mean you never want to see Ben Affleck or Owen Wilson in another movie again. I recently came across an article reporting that vodka growth still leads the broader spirits market and was relieved. It meant that the intensity is fading, and a little relief for bourbon drinkers. It’s time for a rest.

Vodka production can turn on a dime, but bourbon needs time. That’s part of the reason for the current high prices. Distilleries are looking closely at market trends and trying to determine their production sweet spot. If they overproduce now in anticipation that sales trends continue, they run the risk of creating a future glut and selling at a loss. If they produce too little, prices stay high and demand deteriorates. I’ve simplified this a bit, but it’s not unlike the scenario OPEC faces.

Bourbon currently runs in the veins of the fedora-and-tattoos set, and their tastes are notoriously fickle. Every hour Twitter announces the (re)arrival of a new cool drink. Amaro is doing well right now. Sherry was hot 13 minutes ago. Remember all the way back to April 2013, when vermouth was the rage? I was recently approached by an ancient old man on the street with a flowing grey beard. He looked like a wizard, walked with a cane, and told me that in 2012 people were really into sloe gin. Back in 2011, when people were shorter and lived closer to water, cocktails on tap were apparently a “thing.”

Those are all wonderful drinks, but I have a hunch these trends are more a result of an overheated blogosphere with infinite space to fill struggling to find new stuff to write about.  It’s hard to think that today’s starlet will become the replacement go-to of people who enjoy drinking a couple fingers of something brown. Hopefully it just distracts them a bit and gives bourbon a little time to catch its breath.

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