Bourbon Bubble Meets New Consumers

About once a week, I’m asked: “When is this bourbon bubble going to pop?”

My canned answer offers an optimistic outlook for distillery stockholders, suggesting that we’ll experience another 20 years of bourbon growth and enthusiasm unless the distillers fuck up (which is possible) or the U.S. experiences trade woes (which could happen.)

I base my enthusiasm partly on covering the industry and reading market research, but much also comes from personal experience with new consumers.

At the Kentucky Derby Museum, convention groups hire me to host a bourbon bar, where I give a 15-minute talk about bourbon’s history / production styles and taste them through the differences between wheated bourbons, high-rye bourbons, extra barrel-finished products and/or non-Kentucky bourbons. I’m booked for national events, too, and I speak about my books at venues ranging from the Kentucky Historical Society to the New York Arts Club. Annually, I’ll interact with 25,000 to 50,000 know-nothing-about-bourbon consumers.

My most-prominent months are April and May, because of the Kentucky Derby, and every year I keep an unofficial log of how many vodka drinkers I’ve converted into bourbon fans and what bourbon was the favorite.

This year, I’m sad to report the vodka conversion rate was low. There’s a loyalist vodka surge that goes something like this: “Screw bourbon, give me cranberry, red bull and vodka.” I’ll ask: “which vodka?” They say: “Doesn’t matter.” Okay then.

For my bourbon poll, the hands-down favorite was Woodford Reserve Double Oak. My bar varies per event, but I consistently carried Four Roses Small Batch, Elijah Craig, Maker’s Mark, Woodford Reserve and Woodford Reserve Double Oak with occasional appearances of Angel’s Envy, Blanton’s, Booker’s, Larceny, Johnny Drum and Buffalo Trace. These observations were based on eight tastings, so this is by no means scientific data or even actionable information for you, the bourbon lover, but it’s an interesting gauge into how a new consumer tastes bourbon.

What I’ve learned is they’re looking for one really prominent note they can taste, which is why Woodford Reserve Double Oak makes sense. “I really like that chocolate note,” one consumer said. The use of a second virgin charred oak barrel gives Double Oak a plethora of chocolate and buttery notes that jump out of the glass in comparison to other products. In past observation years, new consumer palates picked MB Roland and Hudson Baby Bourbon (two younger craft products), indicating they like oak. (In a head-to-head taste off at the BookExpo America, Four Roses Small Batch out tasted Maker’s Mark by a margin of 3 to 1.)

This year, after consumers fell in love with Double Oak, they’d come back to taste the others. “But I still like Double Oak better. Where can I get that? And how much is Maker’s? Boy, I can really taste the spice in Four Roses. I need to get all three of these. Oh, and Elijah Craig… what’s that one made of again?”

That’s why I’m hopeful about bourbon’s future. Once new consumers taste a brand they like, they want to taste more…. unless they’re vodka and cranberry loyalists, in which case there’s no saving them.

 

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8 Replies to “Bourbon Bubble Meets New Consumers”

    1. Victoria, thanks for reading. I rarely use curse words, but when I do, it’s for a reason. No word perfectly captures a colossal screw up like the F bomb. If distillers lose this bourbon momentum, it’s their fault. Hope that helps explain the word choice. Cheers!

  1. What do you anticipate happening when production starts catching up with demand? We have a number of once-common bourbons that are going for outrageous prices simply because they are not on the shelves with any regularity. Admittedly, most of the price gouging is on the retail side, but the producers are also partially responsible. How will the industry shake out once these bourbons are back on the shelf and available all of the time? I am thinking that the retailers will have to lower prices on these bourbons because the newish bourbon fans will lose interest in $70 Elmer T. Lee or Weller 12, as an example, when they can be found at all times (or most of the time) on the shelf. This will make the true limited releases seem even more outrageously priced than they do now; could that be the beginning of the bubble bursting?

    It would be interesting to know how much of current bourbon demand is driven, across all price points, by the notion of rarities and holy grail bottlings. (Even though many folks have no desire or intention to ever buy these limited releases, they likely know of them and feel that they are a part of something special even if they are drinking Jim Beam White in a Coke.) Would we still have a bourbon boom without the rare bottles getting so much attention in the press, and are the producers killing the goose the laid the golden egg if they put more of these bottles back on the shelves?

    1. All great questions, Carlton. The only brand I see enjoying the “rarity” status is Pappy Van Winkle, because of it’s constant and often worthy hype. The rest of the once-staple bourbons that are now hard to find are being earmarked for new markets and burdened by new demand. What I’m seeing is this is encouraging consumers to try something else. And yes, the liquor stores are jacking up prices. I wrote a really good article about pricing for Whisky Advocate. Do you subscribe? If not, you can read it in Barnes & Noble. Many of your questions will be answered in that story.

      1. I did read the Whisky Advocate article, Fred, and enjoyed it. Looking forward to the release of your new bourbon book.

  2. Like any other market ‘bubble,’ the top is in when there are no more buyers (bids) which support higher and higher prices. It’s human nature to chase price, so as prices double in shorter and shorter time increments, so does the fear, desperation and irrationality.

    And, if what we’re seeing is an actual bubble, then it should end with a bang rather than a whimper. Using broad based metrics like retail sales of brand X or just plain consumer sentiment (forget secondary prices) it doesn’t seem like blow off top is here yet or nearly hot enough.

    Seems to me a nice little ‘correction’ is need to shake some of the weak hands (fewer bidders at higher prices) which will allow a true insanity to take place. That’s a concentration of capital like never before seen based 100% on perception and irrationality. Pappy 23 at the price of a Honda Civic? It’s coming.

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