Buffalo Trace To Crack Down On Secondary Market

Today, Buffalo Trace (BT) declared their intentions to shut down secondary markets that sell BT products. What does this mean? Will Buffalo Trace join forces with the ATF to take down secondary sites? I can’t imagine any other agency would be able to regulate this and I would assume the ATF has bigger fish to fry. I understand they’re trying to protect their customers. It just seems odd. For some, the secondary is the only realistic chance they have at buying a bottle of Pappy Van Winkle. Now, this is obviously abused but why would Buffalo Trace want to shut down the only outlet some people have.

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From Buffalo Trace:

We do receive many e-mails enquiring about the online or “secondary” market for our whiskies and especially the high prices being charged for them.  We would like to take this opportunity to address the question as we enter the holiday shopping season.

Our strong recommendation is not to buy our whiskeys on the “secondary” market, aside from the fact that it is illegal in most states, there is also no guarantee about what you might be buying from a product provenance standpoint.  Sadly, we see mounting evidence in other parts of the world around counterfeit spirits.  We do not want to see any customer of ours duped in the secondary market nor having to pay exorbitant prices.  We are continuing our efforts to shut down the illegal “secondary” market for our whiskeys.

The U.S. has a well-developed system for the distribution of spirits which involves us, a distiller, selling to a distributor who in turn sells to a retailer.  While the system is not perfect, it does provide many consumer protection benefits, including a very good chain of custody for the spirits you purchase.  Our recommendation is to always buy our whiskeys from a fully licensed retailer.

With respect to pricing, while it is illegal for us to dictate the prices charged by a retailer, we have maintained our pricing policies over time such that both our distributor and retail partners can make an appropriate profit and still sell our whiskeys for a reasonable price so that our main goal can be achieved – the enjoyment of great whiskey at an affordable price.  If you do come across examples of price gouging, we are always interested in hearing about them.

For our part, we continue to distill and age evermore whiskey, which hopefully over time will alleviate the supply / demand imbalance we have seen in recent times.

Hope this helps answer an oft asked question.

Honestly, the current system hasn’t done a good job of getting the product to the consumer. Distributors hold back bottles. Retailers keep bottles to sell on the secondary market themselves. There’s no perfect solution, yet a 3 tier system developed from prohibition is far from efficient. It’s a good problem for Buffalo Trace to have. I’m  sure BT  receives thousands of emails from people complaining about “flippers”, “gougers” and “secondary markets”. They’re probably tired of that.

A “snitch” line seems like a way to calm the masses but not a solution. Buffalo Traces hands are tied when it comes to controlling prices. Distributors will not withhold from a retailer because they gouge. As long as that retailer hits their Sazerac sales quotas they’ll still get Pappy. I think it’s ridiculous what some retailers try to charge, but you know what the answer is? DON’T BUY FROM THEM. If a retailer tries to scalp loyal customers don’t shop at the store anymore!

Oh well, I guess I’ll go back to crafting my own bourbon

76 comments

    “Just Say No” is indeed the proper response. Just get over it and buy something else. It’s really pretty pathetic watching supposedly grown men (and you KNOW that it is 100% males) throw temper tantrums when they can’t their Pappy or Stagg or whatever. I sure as Hell wouldn’t want to share a drink with such a sorry bunch of losers.

    Will they also crack down on the retail stores that mark up their products 1000 percent? I found Van Winkles in store a few times this year only to see an extra 0 was added to the suggested price.

    No. They have no way of cracking down. The very most they can do is suggest to distributors that they shouldn’t allocate to those stores. Pappy/BTAC is a small % of sales. Why punish a store that sells a ton of your other products?

    You kiddin’ me!! I LOVE The fact that BT put out this press release. While it may not fix ALL the issues (and really who knows what can actually be done) I’m damn glad that they realize and admit that there is a HUGE one! Mark at BT and Preston @ VW seem to be a couple pretty righteous Cats based upon my correspondence with them. If they CAN do anything to quell the Flipper market… Hell Yeah!! I’m in favor of it! Considering that most of the retailers gouging this stuff base the $$ on F’n wine searcher because of the F’n flipper asking ridiculous $$. What, you think every year the gougers in stores just pull a magic price out their @SS. ALSO!!!… I know for FACT that Empire Dist. in NY are overcharging the retailers for the stuff!! I’ve seen the invoices!! I know of one small store that Empire charged $429.00 for a 20. As far as the “unknown” you might be buying… I know of TOO many guy’s that buy empty VW & BTAC bottles on E-bay – fill it w/ swill then re-shrink the tops. It’s happening in the NJ / NY area — don’t get fooled!! Another shop in my area has got a colossal stock of Sazerac product ALL year round.. but NO VW or BTAC – so I don’t know how true that may be that the retailer must make a Large(r) Sazerac order.

    I hope Buffalo Trace knows the distributor is marking up their product over the list price! Can’t think of other cases where distributors not only rip off the retailer, but bait them to buy one product for the promise of getting another that they know is limited and impossible to deliver!

    Distributors have nothing to do with the pricing. They are bound by a fair trade clause. They have to sell to everyone at the same price. It is the retailer that is selling above MSRP. You can’t really blame them though. If they watch the secondary market and see a Pappy 23 go for $1,200+ why not mark it higher in store? Or even go post it on secondary. The consumer sets the price. Until these Facebook pages are resolved this is the reality we live in. I do agree with you on the bait and switch though. I can’t tell you how many times I’ve walk into a store and the manager tries to tell me how good this new bourbon is, and then when I check any reviews it is terrible.

    Would be interested in what state you’re in and where you got that info. I’ve seen invoices with varying prices on them. Last year a retailer received a GTS for $59. Two weeks later they received a second bottle for $129.

    I would suggest getting in a bourbon group you trust and trading with them. It’s not a huge problem yet but could be soon

    Trying to work on that. And so far have done a couple local in person with people who appear to be into it and are on social media pretty well…

    Now that you mention it, maybe a bourbonr future endeavor?

    Set up a way to at least somewhat vet some traders (no selling maybe)? I’d pay a nominal yearly fee to to belong. Maybe verify, email shipping address, cell number or something?…Or regionals to do in person?

    OK I clicked on story because of the headline, so your clickbait trap worked. But I have no idea how you read Mark Brown suggesting not to buy on secondary market into they are cracking down on secondary market??

    Just reelin’ in the bait! I think this makes it pretty clear “We are continuing our efforts to shut down the illegal “secondary” market for our whiskeys.” Did you read the full release?

    I have no problem with their efforts. I just find it odd. And, they’re the first distillery I know of to publicly address the secondary problem.

    BT is the first to address the issue because Willett, Jefferson’s, & EC aren’t really at the for front of the issue. Plus the releases of these guys are MUCH Smaller (it seems) than the VW / BTAC. AND – for some reason WT can’t for life of them put out a really phenomenal limited release — That said, I enjoy what they do. But c’mon RARE BREED & 101 are SOOOOO much better than Diamond & Master’s!!

    BT is full of shit. There should be 100,000 bottles of Handy released annually. Instead they limit releases go build hype which creates more demand and drives up pricing and now WSR is allocated. Blantons is 6 years old and allocated give me a break.

    Pretty smart on their part. Handy is really the only one they could release a lot more of but why would I want to pay $100+ for barrel proof baby Saz?

    *KYLE…Hi!….I want to agree with you..but, some,most of these rare bourbons, especially the PVW’s and BTAC take many years to age. I don’t think they anticipated the swell of consumer demand that we are experiencing today 15-20 years ago. I sincerely hope they’re “making” enough of it as we speak to catch up to the increasing demands in the coming years.

    Van Winkle has been quoted (youtube video if youre interested from a store in RI) in an interesting talk he gave that they increase VW production about 3% a year. So dont get your hopes up anytime soon!!

    I find it ironic that bt is upset at the situation they created. Had they produced enough of their products that people actually want and not the watered down crap people don’t want their would be no need for a secondary market. The other reality is the secondary market is the actual reason for the bourbon boom. The majority of people who get into bourbon for the wrong reasons (flipping) actually turn into a fan of drinking it. In all honesty there isn’t much bt can do and it seems like a canned response from them. The only real way to solve the problem is to make their actual great products (btac, van winkle) widely available. This is the only way to effectively stop it. Other than that it seems like fluff.

    It’s a little more difficult than that when you’re talking about a product that takes 12-15 years to make. No one predicted this kind of demand 5 years ago much less 15. Im sure they’d love a magic wand to wave over barrels but that’s just not reality. And, if they produce too much now and demand drops in 10 years were sitting on another bourbon glut

    Perhaps Buffalo Trace should eliminate the middle men (current distributors & retailers) altogether…set up Buffalo Trace liquor stores throughout the country, control distribution to those stores with their own people ( subsidiary company of BT)…this way they get the product to the consumer directly for the MSRP…if consumers know each year they can get the PVW & BTAC at that $, then the secondary market for that product should implode…in order to keep the prices close to MSRP the distillery would need to control every aspect of getting it to the people….just my two cents.

    Never gonna happen! There’s hundreds of millions of dollars in distributing and they all have their own lobbyist pushing for more regulation/layers not less.

    Plus, you’re still left with the same problem. More people want it than there are bottles. The secondary is still alive and thriving

    I’ve yet to pay secondary market prices for any bottle of spirits. I can justify trading though. If a find a desirable bottle sitting on a shelf at MSRP, I buy it. Then I use BBB as guide to value when I trade. I drink the bottles I trade for. The secondary market does a good job of establishing the “true market value”. It’s no different than a “hot” Star Wars toy selling for a high premium on eBay. The problem is that BTAC sales are highly regulated and BB-8 Droids aren’t. Personally I’d be a little nervous trying to sell a bottle for a big profit. There’s no way that can be legal. Stating that “the container has a value that is substantially higher than the value of the alcohol in the container ” is no legal safe harbor. I expect ATF to simply shut down these websites before long. I’d love get into a circle of trusted bourbon traders, but I’m not sure how.

    Its about damn time! There’s alot of good ideas on the thread to end the rampant abuse of these rare bourbons on the “secondary market”…..I hope Buffalo Trace is thinking same, because something has to be done. I am more than THRILLED that they’ve acknowledged and addressed the corruption and greed associated with their products nationally! It is GREAT news, but, sadly, the only way i see them ending this problem is to make more product, and make it readily available to consumers. The thing that sends my blood pressure through the roof is when I see a “seller” on bottlespot.com with a bounty of rare bourbons for sale.. .smdh…how the heck did one buyer/consumer score soooo many rare bottles? Seems impossible for the “average” consumer to have access to all those bottlings. I mean, seriously, sometimes they have 3 or more complete sets of PVW,BTAC mostly …these “sellers” are obviously retailers, owners of liquor stores…or people who work in distribution. NO one particular consumer/customer (YOU NOR I) could have access to this HUGE stockade of coveted bottles! Absolutely despicable the greed and corruption in this sector of alcohol…I’ve noticed they’re beginning to do the same thing with the aged rums as well. There’s NO SHAME in these distributers, retailers and flippers games! Thank You Buffalo Trace for attempting to do SOMETHING about this HUGE disgusting problem.

    I have a liquor store in Michigan and its just a ridiculous investment that goes anywhere between 8 to 15 thousand all at once in buffalo trace products and the supplier tells me I may be on the list to get pappy’s but can’t guarantee it. So I don’t blame some of the retailers for trying to get a few dollars extra on their investment. If anything blame the suppliers trying to squeeze as much money possible to hit their quotas. I didn’t even bother this year with all that nonsense.

    Good for you for not playing into the racket. Not many understand that booze sales are in the top 5 in receipts at the Treasury.

    What really ‘moves’ Pappy is Rich & Rare, Fireball and showcasing garbage on end caps. Maybe a faux barrel buy helps but not really, they just give them away cause the hipsters still think it’s cool.

    Like what I heard Four Roses is going to start doing. Want their LE stuff?
    Buy a barrel. Want to buy a barrel? Have to go to KY. I like the less socialist approach.

    Starting in Jan in NY one of the distributors is going to try and implement an each store gets x amount of bottles per month and rotate plan. Now that’s some bs. A store that buys a ton gets the same treatment as the store that buys little? All in the name of fairness…

    Nothing more than political posturing on the part of BT. Nonsense.

    What about bars/restaurants who are now getting more of it than ever yet will charge 3-4x the price of the meal for a dainty pour of VW? No bigger sector of the market is ‘gouging’ at this point. I’ve personally sold bottles to those in the business who will ‘flip’ it for an insane markup, 22 ml at a time.

    Next irrelevant issue….

    Seems like the fastest way to get rid of fippers, the secondary market, etc. is to raise the price charged to distributors. Clearly they can’t increase supply for many years, and demand outstrips the supply at the current price. Why not just raise the price until supply = demand? Oh wait, because the old timers would whine about increased prices. But the flippers and gougers wouldn’t have any profit left to make, and the people that wanted a bottle could get one, albeit at a higher price. Some people think because they were there first that they are ‘entitled’ to buy at a low cost for eternity. However, that’s not how capitalism works.

    That’s pretty much what’s already happening now with the secondary. Except the profits don’t go to the distillery.

    Now, if someone with money really wants a bottle they can get it. If the guy that’s been drinking bourbon forever wants a bottle at retail he may have to put in a lot of legwork but they’re out there

    Here’s a thought…if BT works with the Feds on shutting down all the secondary market websites, then the “real” brick & mortar stores who used the secondary website price as their “retail” price would actually become the “black market”…you would have all these liquor stores still trying to charge ludicrous $$…and would be subject to Feds wrath as well…

    The “flippers are the problem” is a complete straw man argument. Consumers are upset that they can’t get these bottles so BT points the finger at the most convenient scapegoat: the secondary market. It’s easy for someone to see these bottles on the secondary market day after day and assume THAT is the reason they couldn’t get any. But even with all those bottles out there, it’s still a small fraction of the thousands of bottles that were produced.
    If flippers are the problem, why did my main store that got somewhere north of a dozen bottles last year get four this year? Why did other stores that got at least a few bottles get none at all? Unless you want to accuse those stores or the distributor as selling those bottles on the secondary market, there clearly is something else going on.
    If you want to blame anyone, blame all the bars and restaurants who wanted the prestige of having a set of these on the shelf, priced for you the consumer at a per ounce price far above secondary.

    I think it’s a combination of hype, the secondary market, and stores hiking up prices to capitalize on the hype. There are stores near me selling GTS for $500 a bottle, and worse, people are paying for it. The 20 Year Pappy is selling for over $1500 a bottle. I completely understand BT not wanting to increase production dramatically, because a decline in quality is the typical result. I think the statement is “blowing smoke”, but at least they have good intentions. It may take a few years, but Bourbon demand should settle down. Hopefully we bourbon enthusiasts can weather the storm and learn to appreciate some new, more available, reasonably priced bourbons in the process.

    The problem is the 4 tiered process we have in the alcohol business
    1. Distiller/brewer
    2. Distributer
    3. Retailer/Bar/Restaurant
    4. Drinker
    Each level is regulated in a way that makes on demand pricing difficult.

    Here is the question I have:
    Is BT telling its distributers to bundle other products with it’s sought after bourbons/Ryes, or are the distributers doing it on their own?

    My guess is BT is involved in some way; otherwise BT could just raise their prices to the distributors to balance the market.
    The existence of a secondary market proves there is no balance in the 4 tier system.

    Having a secondary market increases hype, which is good for BT.

    Perhaps Buffalo Trace should require its distributors give their bottles to liquor stores and not allow liquor stores who only distribute their bottles to bars and restaurants to have any, most of these bars are charging outlandish prices per ounce and are therefore every bit as bad as the flippers are to begin with, they could also make more of the stuff in the future making it a little bit easier to come by, or just charge 500 a bottle themselves .

    YEAH MOTHER FUCKER!!!!! (Sorry for the language Blake!) — DUSTY BIDS IS DEAD!!!! SHUT DOWN!!! One more outlet the F’n Flippers cant use!!! Ebay has prohibited selling of booze on there last year (ish) – (By the way — if any of you see full bottles of VW or BTAC on Ebay — y’all best be reporting it to Ebay to be taken down!). Next — Bottle Spot! Fingers crossed!!

    There is no problem with a secondary market. It exists in tons of forms, be it bourbon, wine, or any number of thousands of antiques (cars, artwork, books etc etc etc).
    Auction houses including Chirstie’s, Sotheby’s, Bonham’s, and Hart Davis Hart, all sell booze legally at the price the market is willing to pay. No complaints there.
    Stub Hub, Seat Geek, etc do the same thing for sporting events and concerts.
    Supply and demand. Economics folks. I feel as sorry for a person who can’t get a bottle of pappy as I do for somebody who can’t get tickets for the Superbowl or have a Picasso hanging on their wall.

    Exactly! I have an uncle with wooden duck decoys worth more than 5 Pappy 23’s. It’s crazy to me who could care less about a hand carved duck but there’s a market for it

    Yeah but is no one gonna say that stub hub sucks too? I’ve seen $30 tickets going for $200 on there and never selling. Meaning that actual fans can’t see an artist they like. The same goes for bourbon. Sure bottles of pappy 23 are listing for $3,000 but is anyone paying that? I doubt it. Meaning, again, that someone who would actually consume the product can’t because of some inflated, secondary price. Anyway, bottle flippers and ticket scalpers both suck. If you do either, I hope you get robbed.

    I never purchased from secondary market. But I had an instance where it affected me. A local large liquor chain gave you the opportunity to receive email when a particular product was in inventory. You could also search the inventory directly. I could see the had William Larue Weller and George T Stagg. I was at the store as it opens and requested the product. They looked at their inventory and said “Oh it is in the back, it was not shelfed during last nights restock. So I eagerly await for 30 minutes and the gentleman says sorry, those were not yet for sale. He said give me my number and he would call me when they were available. He called me that night, offering the same bottles for three times the price. I said F-off and moved on.

    Three things at play , folks – supply & demand, greed, and supply chain politics. I mean, come on, this is the liquor industry. If it’s ethics and morality you’re after, look elsewhere. As consumers in a high demand market, with all three of the above working against you, a viable and sustainable secondary market is inevitable. BT can posture all they want, but they ain’t changing it. The acknowledgement is refreshing, but no one in the bourbon biz predicted the demand spike for products that need to age 10+ years. Demand will eventually wane, or supply will catch up, (or likely both) and the bubble will burst. That’s when distillers will have built excess capacity and prices (and supply chain leverage with it) will freee fall.

    The one’s that could affect it sooner would be fed (and state?) govts, perhaps seething bc they arent getting their fair share of tax from the secondary market.

    Anyway, cheers withwhatever your juice of preference!

    Good points and I agree with you until your thoughts on the burst. Will supply and demand draw closer together? Absolutely. Will demand drop off the map leaving distilleries with huge supplies of unwanted barrels? I highly doubt it.

    “Will demand drop off the map leaving distilleries with huge supplies of unwanted barrels? I highly doubt it.”

    Explain please. Isn’t this what happens in a bust? When the inevitable bubble bursts then I expect all those newly constructed rickhouses full of barrels will need to go somewhere. Age statements should come back at some point because sellers will want to tout and differentiate their products once again.

    I don’t think it will be a bust. More of a plateau. I think most major distilleries are expanding but still conservative. Look at the cigar boom/bust of the 90’s. There’s a “bust” but not how people perceive busts in other industries like a stock market collapse.

    This is my opinion. I could be wrong…. But I’d never admit to it 😉

    Ive been to Buffalo Trace many times – they are expanding significantly, and even purchased surrounding land to start a farm to table bourbon. Im sure they arent alone. The domestic secondary market wont consume a significant capacity expansion – meaning distributors will turn back to retail, who will turn back to the consumer via lower prices and better deals. Im sure they are all betting on an expanding international market….

    The cigar analogy is a good one; many – MANY cigar shop retailers closed thier doors when the market became over saturated.

    I get it, blake, a thriving secondary market keeps this site going – and i love this site — In any event, the eventual bust will take some time; we have plenty of time to overpay for most of the top 10 luxury bourbons! Cheers…

    BT has fallen and hit their heads. Seriously, they are going after the secondary markets? Don’t they realize these people are actually fans of their product. I buy on the secondary market all the time. Only when I get something I really want at a reasonable price though. I’m not spending 500-1000.00 bucks for a bottle of Pappy. It’s good, but not that good. If they mean they are going to crack down on licensed liquor agents who sell the limited release bottles on the secondary market instead of selling it in the store at the legal retail price I can understand that. But if Joe Blow gets lucky and buys a bottle of Pappy and decides to sell it on Facebook. That’s not illegal and should be up to him. I myself have had a pretty good year. I got a bottle of Pappy and 2 bottles of the Angel’s Envy Cask strength. Bought them all at retail in the store. I’m not a bourbon collector or seller, I like to drink the stuff.

    I think the BIGGEST offenders are first, the distributors….simply because they are the first “in the food chain” to handle these rare/premium allocations…the opportunity for corruption is ripe within their network. Second, the MANY unscrupulous liquor store owners who keep their allocations for themselves or to flip. NO accountability is necessary on either side.

    I agree with Kyle M and others that Buffalo Trace is full of BS and this is just PR posturing. The truth is that Buffalo Trace is knowingly creating this situation by limiting supply. There is no reason that Handy should be on an annual release. Blanton’s at 6 yrs old and on allocation is a joke.

    Yup,I agree. Buffalo Trace can and SHOULD be able to do more…it won’t be easy, but if their name and reputation was negatively challenged they would have found a solution to this year’s ago…….their motto…..keep em guessing by keeping it scarce. …and the ol’ happy horseshit about the “angels taking more than their share” bs….hahaha. …anything and everything to keep the hype going …they can send a man to the freaking moon and back, but can’t stop the corruption, greed, mismanagement and malfeasance of their products! Gimme a break!

    What about the guys selling empty Pappy bottles on E-Bay for $50. each Who buys an empty bottle unless they are going to fill it and sell it for the $$$$$$$$$

    LMBOOOO, exactly! Very scary indeed. I always wondered what kinda assopening would go through the trouble to wank some unsuspecting Pappy groupie by altering these empty bottles….it takes a “special kinda person” to carry it out….that is precisely why I would NEVER EVER buy Pappy off the secondary market…imagine laying out $1000’s of dollars for so called “Pappy juice”, only to be swindled and bamboozled with that once empty Pappy bottle full of “Old Crow”, or “Virginia Gentlemen”! Man, I would kill the Joker who did that to me.

    LOL! Remember the guy that wanked the Koch brothers a couple of years ago over some fake wines he had packed and made up …this wankster made millions before he was finally caught……lol…he basically poured cheap wines into expensive bottles…lol…lol… and charged these unsuspecting idiots BIG money….lol..even made up his own labels for the bottles….lol…lol…smdh…unreal.

    Are you talking about the gift shop? They have to do that or else they’re taking money from their retailers which wouldn’t make them happy

    Are you sure it isn’t autographed? Most bottles at distilleries that are marked above retail are due to them having special packaging or being signed bottles.

    The sad part about EC 18 is that 3 years ago you could get it at Costco for $39.99! Now it is $125? How do they jump that drastically? It used to be $50 MSRP, but then Heaven Hill decided to stop production and start releasing 20,21,22,23 year old EC’s and then brought back the 18 for $25 less than the 20 year MSRP of $149.99. That is insane, no other bourbon on the market at the time has jumped that drastically in price, not even PVW!

    I’m tired of reading all this regurgitated crap. Sazarec/ Pappy with the help of the media and handful of celebrity chefs ( Sean Brock), have created this marketing frenzy/hype for a product they cannot produce enough of. Basic supply and demand. You mean to tell me Sazarec doesn’t have the $$$ or brains to produce more Pappy at the same price and quality. Yes, I know we still wouldn’t see the fruits of that if it did happen for 10-23 years. But If i grow good weed and sell out in record time after every harvest I’m buying a bigger farm boys!!! The BT press release and there actions to curb the secondary market is all smoke and mirrors. They love all the attention and money from it I assure you. Everyday they add more shit with a Pappy logo on it to their new merchandise store. I’m guessing before long they will make more off merchandise than liquor. I’m not a flipper, just a rational thinker. Whether you’ve drank Pappy for 20 years or 2 years you assholes are no more entitled to it than anyone else. This is the land of opportunity where power, greed , and money rule. If you don’t like it find another bourbon because I’m betting not too many of you started drinking Pappy from day one anyway. You could always move to Russia where Putin is sure to have a nice chilled vodka waiting on you!!!

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