Limited Edition Bourbon and the Secondary Market

The Bourbon Gray Market

A couple of months ago FiveThirtyEight posted an article about the secondary market in the sneaker industry. Now, I’m no sneakerhead (although I do still have a pair of gray Jordan XI in my closet) but the article was extremely interesting and I couldn’t help but draw comparisons from what is going on in the sneaker industry to the current bourbon market. The sneaker industry releases special edition shoes to which people camp out for, riot over and in general go a little too crazy over what is, in my mind, “just a shoe”. Sound familiar? Nike (Buffalo Trace) releases special edition Air Jordan’s (Pappy) which are by far the most popular and bring the highest secondary prices. However, there are other releases like the Lebron’s, Kobe’s and KD’s (BTAC) that also fetch multiples on MSRP on the secondary market.

Here’s how I see the bourbon secondary shifting:

bourbon secondary

Like it or hate it limited edition bourbons are sold on the secondary market on sites like Bottle-Spot, Facebook groups and Craigslist every day. The mysterious bourbon flipper is the most hated figure in bourbon today. Can’t find Pappy? Blame the flipper. Store increased their prices? Blame the flipper. Distilleries increasing prices? Blame the flipper. I think of a flipper as someone that doesn’t even drink bourbon and purchases solely for resale. I think this is a very small percentage of the market but increasing. What’s also increasing is the bourbon opportunist The guy that is in to bourbon but can fund a year of purchases with the sale of one bottle of Pappy.

The bourbon market doesn’t have the advantage of using mass amounts of data since the resale of alcohol is technically illegal (or a gray area?) but there is a new site that started tracking the bourbon secondary. BottleBlueBook uses multiple sources to track the current prices on the bourbon secondary. Basically, they’re tied in to a network of traders/sellers that submit the data. This is all done anonymously on the site and help builds the pricing data for each bottle. I had a chance to chat with the sites founder, Dan Donoghue.

What bourbons are currently trending on the bourbon secondary?

Honestly, as far as current trends are concerned it is way too early for us to speak on anything from our data standpoint. All we can say is that the market in general is crazy right now, but I’m pretty sure every bourbon drinker is experiencing that. The demand is skyrocketing and the lines for limited edition bottles are growing larger with every release.  The whiskey industry has done an excellent job marketing and building the popularity of the spirit.

 Do you think distilleries are leaving money on the table by not increasing prices or it a strategic move?

 There are a couple distilleries that are raising their prices, but overall the markup from the distilleries seems to be steady. I’d say right now it’s a strategic move, but who knows how long it will last.  I think part of the rise of bourbon and rye is due to longer aged bottling’s being significantly cheaper than a bottle of scotch of the same age.

I know retail prices are rising, but I believe that is coming from the retailer.  For instance, in the state of Kentucky at least, the price of a bottle of Old Forester Birthday Bourbon last year was in the ballpark of $45 and this year’s release is near $65.  That’s almost a 45% increase in 12 months.

What’s the most expensive bottle right now? 

The most expensive bottle in our system that we are trying to keep track of is the Pappy Van Winkle 23 Year Decanter Set.  The going rate is around $4,300 and it is still something that can be obtained, although not through retail.

How much of the secondary market is just Pappy Van Winkle bottles?

Everyone thinks the Pappy Van Winkle line is the driving force behind the whiskey secondary market, but it is simply not true. It is the obvious name that everyone knows, but there doesn’t seem to be an overwhelming amount of transactions compared to other bottles.

Bourbon’s Big Question:

The big question in the bourbon world is “Is Buffalo Trace leaving money on the table and giving up profits to the secondary market?  And if so, why?” The same could be asked about most major distilleries and it seems like several have begun to react. While some have begun to increase prices (Heaven Hill and Willett seem to be watching the secondary market for their pricing) there’s still a lot of money let on the table. In a recent interview with the New York Times Mark Brown, the CEO of Buffalo Trace, said this “We’ve been adamant about not raising our prices to our distributors much beyond the cost of goods and inflation,” Mr. Brown said. “The reason for that is very simple. We’re in this business for the long term. Just because bourbon is hot right now doesn’t change our way of thinking to say let’s take advantage of the situation.” It’s hard to put a price tag on brand loyalty but even as demand slows a lot of Bourbonr’s will remember who was price gouging, both retailers and brands, and who treated their customers fairly.

Pappy Van Winkle Secondary Prices - Copy

While the bourbon industry doesn’t have the luxury of increasing supply like the sneaker industry they could still raise prices to capture some of the profits in the secondary market. Why would they do this? Are distilleries that kind hearted that they just want to produce whiskey and not worry about maximizing the bottom line of the Profit and Loss statement? I highly doubt it. So, what’s the motivation? Think about the amount of free marketing and publicity these distilleries receive each fall. Almost every major publication writes some story about Pappy and most include other limited release bourbons.

Bourbon Fix:

Whether we’d like to admit it or not, it feels great to drink something that others couldn’t get. When the Wall Street Journal said that Pappy Van Winkle was the bottle that Billionaires couldn’t buy it reinforced that feeling even more. Here I am sipping on Pappy 15 while Warren Buffett wishes he could trade places with me. I highly doubt that is the case but there are plenty of people that would love a bottle and can’t find it. For those that have drank Old Rip Van Winkle 10 year know that while it is a good bourbon it’s simply that just a “good” 10 year old bourbon. Whenever I hear about people paying $200 for this bottle I purchased for $49 it all of the sudden taste a little better. The same could be said for the majority of limited edition bourbons. While most limited editions are quality the psychological effect pricing has is substantial.

Will the Bourbon market anytime soon? These things are almost impossible to predict but I don’t see it slowing for at least another 3-5 years. I still question myself from time to time. Would bourbon be as much fun if there was no hunt? Yes, I’d love it if I could still walk in to my local store and grab Pappy 15 in February  but there’s a certain level of excitement that comes with hunting elusive bourbons. This includes both new limited releases and dusty bourbons that have been sitting on the shelf for decades waiting for the appreciation of a bourbon enthusiast. For now, I think we need to be ready for the craziness that waits for the bourbon industry every fall.



    Great post Blake. I think I may be in the minority but as a consumer not a flipper I’d much rather the distilleries raise the prices and make the flippers a little less enticed to buy. That said the thrill of the hunt and the find at retail prices just make that bottle taste a little bit better… Cheers!

    Thanks, Jack! I’ve had this same thought but then I wonder if it would actually help or if it would just increase the secondary prices. BT increased the prices on BTAC this year by about 20% and it didn’t seem to slow the flippers down at all. Markets are a funny thing

    I think that is the case Blake because the secondary market is 200-300% away on the BTAC collection. If a bottle sells for $350, raising the prices from $69 to$87 is only costing the reseller $18 in profit. If you move prices up to $149 like Willett has done, I cant see the secondary moving up another $80-$100

    This right here sums up the bourbon craze almost exactly to me

    ‘That differential allows people to buy something on the cheap but feel like they’re wearing a luxury item.”

    Many people are trying to get limited releases as status symbols to blast their social media feeds with. The cries of “i got pappy 10!” followed by a picture of ORVW show that these people are more into name awareness than they are into drinking the bourbon in my opinion. As you say, its a great bourbon for $49 dollars, but its not “liquid gold, or unicorn tears” as many say when they show off the bottle (almost always still sealed).

    I think the market will self correct as more people realized that they are buying hype to some level. Once the fad moves on something else and the prices rise a little, the flipping will stop, and the hunt will become easier. Those that drink bourbon to enjoy will soon realize there are many good products that can be purchased from the shelf without the craze and secondary price of limited releases, those who buy for name only will burn out as I said. As always good write up and good read!

    I cut my bourbon teeth on ancient age in 1968.
    As my income increased so did the quality of the bourbon.
    In the early 2000’s pappy’s (all ages) was my regular drink
    of choice. I worked very hard to retire comfortably.
    There are plenty of good bourbons that don’t require selling the
    farm. If your ego is bigger than your brain pay the price for a
    bottle of pvw. Not me!

    I’m continually disheartened by the rampant stupidity that has come along recently and goes along with the annual release of Pappy Van Winkle and the Antique series.

    5 years ago I was able to walk into my local VA ABC store and purchase a bottle of PVW 20 for $110 or so without any issues but after that it’s become a PITA.

    Last year I managed to get a bottle of the 10 ORVW for $49 in an AL ABC store because I had culitivated a great relationship with the whiskey buyer and on Friday picked up a Sazerac 18 for $79 (sheer stupid luck) in a random VA ABC store but I refuse to pay anymore than that or go to any extreme measures.

    Last night I looked up prices on one of my internet go-to booze sites: PVW 23 was $2500, 20 was $1800 and the bottle of Sazerac I just got? $699.

    Like Pat said above…$39-49 is a good price for the 10 year. It’s a good bourbon but not great…yet.

    $129 is a great price for the 20 but I’m not willing to go through the ringer to get a bottle and most wait lists are 2-4 years. I mean really…there was a store in MN that had a lottery to be able to buy a bottle. People were lining up 6-7 hour prior to store opening in negative wind chill temps to possibly get a number to be able to have a chance to overpay for one bottle…that is stupidity at it’s finest.

    I’ll just be over here drinking Maker’s 46, Michters or any other number of really good bourbons and ryes that I can get easily and are moderately priced

    The psychological effect of scarcity is the biggest driver of these types of markets.
    As a former sneaker freak, I always loved having a pair of shoes that nobody else had. At the time, I was living in NYC and would get stopped in stores for people to comment on the shoes that I was wearing [at the time – i was a big air max fan]. There was something great about people asking where the shoes came from and being able to quickly tell a story about it knowing that I had something rare that other people coveted.

    In terms of bourbon, I see this happening all the time. A guy that I work with has a connection for getting a bottle of PVW each year. The guy he gets it from gets 2 bottles and sells one to my friend at retail price [no flipping or secondary pricing]. The first guy doesn’t even drink bourbon, but always keeps the rarer bottles for himself [last year a 23, this year a 15] while passing the 15’s and 12’s on to my friend. It becomes just a status symbol and conversation piece for him.

    I’ve been lucky this year to get a lot of good finds [unfortunately missed out on 4 Roses Small Batch LE…] As with the shoes, the first thing I do is open them up and try them on [pour a glass]. At this point, there is zero resale value. This keeps me out of the opportunist category and squarely in the never. Sure, sometimes I regret having not traded something, but if I hadn’t tried what was in there, I would never know what I was missing. I have no problem with the opportunists in terms of trading, but selling at an insane markup is the same to me as ticket scalping… Purchasing and selling the value of scarcity regardless of the quality of the end product.

    TLDR; scarcity is a huge psychological motivator of these types of markets for both buyers, sellers, and resellers

    A year ago my local liquor store had three or four bottles of ORVW 10 (at the front counter, no less) for $45. I should have grabbed ’em all, but I only bought one. Now I’m kicking myself! (Yeah, I drank it.)

    My take away from all of the posts I’ve read is this: bourbon drinkers tend to be a group of intelligent, thoughtful, literate sorts!

    I have been looking for a bottle of PVW for sometime. I know everyone is looking but if you can stir me in the right direction, I would appreciate.


    funny thing. my step brother and i were talking about EXACTLY this this weekend.
    How he pays a premium on shoes so he doesn’t have to line up.
    The big difference tho, with sneakers there are many many people who just collect for display (collectors). These people tend to not over pay and line up. The people who wear them (users) tend to not mind overpaying to stay “fly”
    On the other hand, us drinkers (users) tend to not over pay as much. the collectors/gifters don’t mind over paying to save hassle.

    I remember this happening with Tamagotchis more than a decade ago. I had myself a little keychain pet that I had to feed and clean up it’s mess everyday. The moment that little bugger got mad me it entered a shoebox.

    I don’t see bourbon ever asking me to feed it but I do have to clean up it’s mess from time to time. If it ever gets mad at me then I will surely but it in a shoebox; like I did to that stupid digital pet. However, I just don’t see that happening. Right now bourbon has become an aged Tamagotchi and it’s in need of a break. I’ve obliged and I will admire the bottles I’ve been able to acquire over the years. I will tend to those bottles occasionally and clean up the mess it leaves from time to time.

    Here’s to you outdated Tamagotchi; you stupid digital pet.

    I’d be interested in seeing some figures as to how many “flippers” actually sell for these outrageous prices. Who in their right mind would pay upwards of $200 for a 10 year old bourbon, let alone some of the astronomical prices seen for BTAC and PVW on bottle-spot and other sites. Not to take away at the quality because it certainly is there, but if you’re willing to pay retail plus 300-400% I’ve got some ocean front property in Arizona I’d like to talk to you about.

    Happens on a daily basis. Stagg is closing in on $400. WLW has been at $400+ for a little over a month now. ER17 is around $350. No love for Handy at $180 and Saz is up around Stagg if not a little higher.

    However, I say the same thing about prices and demand for purses and shoes to my wife. She then points me to my bourbon room and then I shut my mouth.

    Not sure if someone already brought this up but figure its a good question. I am not sure what the laws are in regards to this, but can’t the retailers just break the seals on the bottles when selling them to stop the secondary market? I would have no problem waiting in line, letting them know which bottle I will buy, and then have the store remove or break the seal.

    I have a feeling no one will risk $2000 on a bottle with a broken seal which may have been filled with cheap bourbon vs the real thing.

    Couple of issues with this. What if it’s a gift. What if you’re saving it for a special occasion (kids birth, wedding, etc.). It can be illegal to have an open container in a vehicle so you’re forcing people to break the law

    I have to agree with what you wrote in your article. As a regular drinker of fine bourbons I’ve always liked that I can drink some of the finest without really breaking the bank. Now with the craze with Pappy and the BTAC it’s a game of cat an mouse. I was lucky to pickup 10,12, two 15s, and a 23 this year but I had to pay a premium with two stores that charged me secondary market prices. I jumped on the grenade early thinking it might be my only chance and because of that I was left with only one option and that was to sell my 23 yr pappy online to recoup the money I paid for the two stores that ripped me off. I hate it more than anything and I hope one day BT will flood the market with Pappy so we all can enjoy without the flippers and stores price gouging. It sucks for all of us that enjoy it but I have to admit the chase was kinda fun.

    Very interesting article, I’m writing this from Sweden and I can say that I see the exact same thing when looking at Scotch here (swedes LOVE scotch). Limited Edition bottles are flying of the shelfs (1260 bottles of Ardbeg sold out in 2 seconds) and appear for twice or even four times the price on Facebook and elsewhere.
    The same thing is starting to happen with Bourbon, you see it here and in the rest of Europe. You have to be vigilant to get a hold of the BTAC, I have managed to get a few for which I’m grateful but they have sold out in minutes.

    I have a unopened bottle of Pappy Von Winkle Family Reserve 20 years. Can anyone tell me where is the best place to sell it? Not sure if Wall Street hooligans, hedge fund playboys, tech-star cowboys will be actively looking for it on ebay.

    I am in desperate search for a bottle of any of the Van Winkle bourbons. I want to get it for my father who will turn 80 years old in January,2018. I have tried everything I know for about three years and just cannot get my hands on any. I would love to connect with someone who would be willing to part with a bottle.

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