Who’s to Blame for $6,000 Pappy Van Winkle?

Bourbon

December 24, 2013

How would you like to buy something for 20 times what it cost three years ago?

Thanks to demand, the three-tier system and ultra greedy retailers, that’s what’s happening with Pappy Van Winkle bourbons. One former Van Winkle salesman told me he couldn’t give it away 15 years ago. Now, retailers are holding lotteries, auctions and selling Pappy for 20 times its value.

I’ve personally seen Pappy Van Winkle 23-year-old sold for $5,000 and seen liquor store Facebook photos showing $6,000 price tags. MSRP is $79.99 for Pappy Van Winkle 15-year-old, $119.99 for the 20-year-old and $259.99 for the coveted 23-year-old expression, but good luck finding it at those prices. Or, really, good luck finding Pappy. Period.

The Van Winkle line in a New Jersey liquor store. Photo courtesy of Michael Soo.
The Van Winkle line in a New Jersey liquor store. Photo courtesy of Michael Soo.

On the lucky chance you do find Pappy, you’re likely to see prices rivaling a used Honda (see photo). Who’s to blame for the price gouging?

There’s a lot of blame to go around.

Media. I was a part of the San Francisco World Spirits Competition that declared Pappy Van Winkle 15-year-old the 2013 World’s Best Bourbon, and I’ve certainly blabbed to anybody with an ear about Pappy Van Winkle’s wheated bourbon merits. Hell, I even found a way to fit Pappy in a Brain World Magazine essay. I’m not the only one. From the “What to buy other than Pappy” stories to billionaires can’t afford it, the media has built this Pappy story and then complained about the story going overboard. Well, this is the Media Condition: We create the hype and then complain when it’s overhyped. (Just watch ESPN analysts some day create the story and then complain about the media for hyping said story.)

The Van Winkles and Buffalo Trace Distillery. The Van Winkle brand is now associated with a clothing line, a tequila and beer. Although Julian Van Winkle turns down more interviews than President Obama (well not really), the Van Winkles’ line extensions benefit from the main brand’s attention. In fact, all Buffalo Trace brands benefit from Pappy Van Winkle attention. Guess the No. 1 replacement for Pappy Van Winkle from us media types? W.L. Weller, another wheated bourbon. Guess who owns Weller? Buffalo Trace! And guess who has hyped it up for four years and is now complaining because Weller 12-year-old is no longer in his liquor store? Me! See, I started (or really added onto) the story and am now complaining.

The Government. No, this is not a conspiracy theory. As I wrote in the Courier-Journal, after Prohibition Repeal, states, counties and townships can regulate alcohol laws however they see fit. In most of the country, consumers buy whiskey from a retailer, who purchase from a distributor, who purchase from the distiller. This is called the three-tier system, and it greatly restricts alcohol producers from controlling its product once it leaves the distillery.

Every channel in the three-tier system is milking the Pappy phenomenon. Buffalo Trace has stronger negotiating power with distributors, while the wholesalers require retailers to purchase six cases of crap vodka for one bottle of Pappy Van Winkle 23-year-old. And then the retailer sets high prices to make up for the crap vodka expense.

Is this illegal? Hell, I don’t know. I’m sure there’s a price-gouging law or distributor bullying law somewhere that is intended to prevent consumers from spending 20 times a product’s value. Then again, isn’t a product’s value whatever somebody is willing to spend?

I don’t know.

I do know every time I see a $3,000 + Pappy price tag I feel a little dirty, but I am willing to give a pass to the Van Winkles and their distilling partners Buffalo Trace Distillery.

If the Van Winkles were setting the price, I’d be fine with $6,000 because they are the brand owners and have this privilege. But, the pricing power largely belongs to distributors and retailers, who increase prices far beyond MSRP.

The broken system allows $6,000 Pappy Van Winkle. Will this ever change?

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