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There Is a Bourbon Shortage

February 27th, 2015

Author - Fred MinnickWhen I agreed to take the affirmative for the bourbon shortage argument, the words of Four Roses master distiller Jim Rutledge echoed in my mind: “We are having trouble meeting demand.” There’s a thought that the bourbon shortage is a bunch of bull mess smelling of marketing foul. But Rutledge is the one guy in this business I trust above all. His words are the golden truth.

Fast forward a few months after Rutledge uttered his comments, I broke the story of Four Roses discontinuing its Limited Edition Single Barrel on my blog. That’s when I knew that the bourbon shortage was real, so it took me awhile to understand this was not hype.

The problem is, these two words—“bourbon shortage”—lack a definition or statistical data to support a shortage exists. In fact, all we have to conclude that there is a shortage is the yearly Buffalo Trace press release saying there is one, which gets diced up and published all over the world, and anecdotes from several master distillers and brand managers. We also have solid evidence of brands discontinuing products—see Early Times 354 and Ancient Age 10 Year Old—to use these earmarked stocks for more popular brands. We have examples of proof lowerings and age statements being dropped to make the whiskey stretch out a little further per bottling, while brands place products on allocation and consumers stand in long lines just to put their names in the hat for a harder-to-find bourbon lottery. Meanwhile, consumers complain they cannot acquire once everyday bourbons such as Weller 12 year old.

For the past three years, with the continuing bourbon shortage conversation, we’ve heard all of this and the never-ending complaining that goes along with it. But nobody has provided statistical data to show the depths of this shortage.

I have done just that. In two separate surveys, my company, Minnick Media Inc., polled bourbon enthusiasts and retailers. The data suggests both groups indeed feel there is a bourbon shortage in perception and what they’re able to purchase.

This data should be viewed similarly to the U.S. unemployment rate. American citizens become fearful of the economy and job situation when the unemployment rate hovers around 9 percent to 12 percent. In 1933, at the height of the Great Depression, the unemployment rate was 24.9 percent. That means 75.1 percent of the working population was employed. Sure, they endured lower wages and perhaps did not work in their desired career field, but three-quarters of the working people had a job. Today, Grenada, Kenya, Kosovo, Macedonia, Nigeria, Nepal and many other countries endure higher unemployment rates than the United States during the Great Depression.

I offer these labor stats as a contextual perspective: Consumers are able to buy bourbon, but not the bourbon they necessarily want—just as most Americans had jobs during the Great Depression just not at the craft or salary they desired. So if your measure of the “bourbon shortage” is there is bourbon sitting on the shelves and in the warehouses, then, there is no shortage. But the bourbon shortage is not about everyday bourbons sitting on shelves—Jim Beam White Label, Wild Turkey 101 or standard Evan Williams. According to the surveys, the lack of bourbon availability exists in the mid-tier to premium brands.

About the consumer survey: 85 percent respondents were male, 50 percent lived in a household earning between $100,001 and $200,00 a year and 31 percent were between the ages 21 and 44 with the majority living in the Southern or Midwestern United States. Respondents were verified bourbon enthusiasts with 42 percent enjoying bourbon between 6 and 15 years.

Key findings from the consumer poll:

  • 86 percent said they have entered a store with an intent to buy a product but the bourbon was not in stock.
  • 82 percent said they have been unable to find bourbons they once easily found.
  • 67 percent said they have purchased multiple bottles in fear they’ll be unable to buy this product next time.

As expected, some brands showed greater availability than others, but your average bourbon enthusiast visits stores that do not or cannot carry Weller 12 year old and Old Charter. And 97 percent of the responders said their store did not carry George T. Stagg.

Where's all the bourbon?

Where’s all the bourbon?

None of that surprised me. What shocked me was that of the random twelve bourbons selected for this survey, Jim Beam White Label was only available in 85 percent of the respondent’s store of choice. I don’t think I’ve been to a liquor store that didn’t carry Jim Beam White. To go back to my unemployment analogy for a minute, how would this country react to 15 percent unemployment?

Jim Beam claims it does not have a shortage problem, of course, but why did the company drop the age statement on its Jim Beam Black? Of course, the particular liquor stores could just not like this product or the respondents simply don’t recall seeing Jim Beam White Label, but other mainstay brands with strong national presences showed signs of a lack of availability. According to the responders, Elijah Craig 12 year old and Noah’s Mill were unavailable in 15 percent and 58 percent respectively of their preferred stores.

In the “other” section of brand availability, Elmer T. Lee, Willett and Van Winkle dominated the write-ins, indicating they were widely unavailable.

The consumer survey was completed with 149 people. The liquor store survey is ongoing, but so far it’s darn near unanimous across the country. Of the respondents, 100 percent said they are unable to fulfill a consumer’s bourbon request at least once a day and the most requested product is Pappy Van Winkle, followed by Four Roses Limited Editions and Buffalo Trace Antique Collection. Liquor stores are unable to stock brands they once normally stocked and believe the lack of product availability hurts their bottom line. Perhaps most importantly, 100 percent of the liquor store owners / managers believe there is a bourbon shortage. Interestingly, nearly 70 percent of the liquor store respondents said they are “tired” of the industry’s excuses.

Liquor stores would know better than anybody. They are the front-line salesmen and women who interact with consumer.

With that said, the bourbon shortage must not be measured in quantity sitting in warehouses and new brands hittingBourbon Shortage the shelves. The shortage should be an actual statistical rate that can be measured and studied. This shortage narrative should be about consumer data just like the Nielsen TV ratings system or the unemployment rate.

My data confirmed what we’ve always known: Limited Edition bourbons were hard to come by. But it also offered a glimpse into the state of mainstay bourbons that are not available in more than 15 percent of the stores, while more than three quarters of bourbon enthusiasts are unable to find bourbons they once easily found.

With the continued bourbon demand, Elijah Craig 12 year old will become the new Weller 12 year old, which will become as scarce as Four Roses Limited Edition Small Batch, which will become Pappy Van Winkle, which will become, well, you get it.

The bourbon shortage equals a combination of the limited edition bourbon availability, in-store availability of mainstay products and the rate at which a consumer cannot find a product. These three core data identifiers represent the consumer, not the brands, and the data clearly shows they cannot purchase premium products, mainstay products are becoming harder to come by and they’re often unable to find what they want.

The bourbon shortage is real. It’s felt every day.

29 Responses to “There Is a Bourbon Shortage”

  1. EH says:

    There’s no mention of the extreme growth in bourbon consumers in this article. There might be a shortage of mid-tier bourbon compared to demand, but not in absolute terms.

    • Josh Feldman says:

      Economics is supply and demand. Arguing that supplies of premium Bourbon are what they always were but that demand has gone up is just another way of agreeing with Fred’s argument. Of course the shortage of premium Bourbon is due to increased demand. That’s obvious.

      • Saying “economics is supply and demand” is the sort of thing that would earn you a D in a basic macroeconomics class. It’s only 1/10th of the picture.

    • SirHuddlestonFuddleston says:

      There’s no such thing as “absolute” supply levels. It’s always relative to demand. Yes, demand went up — it’s not as if there were 40 rickhouse fires last year. Nevertheless, it means that there is, in fact, a shortage of preferred bourbons.

      • Dave says:

        There is such a thing when the product takes 12 years to create. These distillers have to predict the demand multiple years in advance and nobody can deny the significant increase in bourbon demand in recent years

  2. Dave says:

    Nice rundown Fred- might add this as well. Last week, the Jane Curtin to your Dan Akroyd, pointed out that distillers would not sell to merchant bottlers if there was a shortage. Fact is, players who were selling aged whiskey 2 years ago are not selling any “extra” bourbon, and if any is available, it is triple the price. Sure there is a plenty of Bourbon in aggregate out there, but demand is eating up both aged and new stocks. Producers are turning down customers domestically and abroad because they don’t have supply. Be a few years still before there is a balance. That’s just my opinion, I could be wrong….

  3. “The data suggests both groups indeed feel there is a bourbon shortage in perception and what they’re able to purchase.”

    I’m afraid this sentence undermines the whole premise of the piece. How people “feel” about economic forces isn’t really relevant.

    • Jason Q. says:

      @David J. Montgomery: “How people ‘feel’ about economic forces isn’t really relevant.”

      I think it’s relevant in that people’s feelings generally determine their behavior – which drives the market, does it not?

    • Good point. What you’ve hit upon is that while the survey in question is interesting and has some merit from an anecdotal point of view, anyone with statistical training will recognize it isn’t scientific and therefore doesn’t constitute hard, conclusive evidence.

    • Josh Feldman says:

      Economics is a social science because it’s concerned with how agents behave in various economic circumstances. How consumers feel and their behavior is EXACTLY the point and is 100% scientific. Fred reports consumers feeling scarcity, hoarding, and bidding prices sky high on secret secondary markets. I can corroborate this completely and it supports Fred Minnick’s conclusion completely.

    • Sam Komlenic says:

      The Consumer Confidence Index is a nationally recognized economic indicator.

      To quote from its Wikipedia page, “In simple terms, increased consumer confidence indicates economic growth in which consumers are spending money, indicating higher consumption. Decreasing consumer confidence implies slowing economic growth, and so consumers are likely to decrease their spending. The idea is that the more confident people feel about the economy and their jobs and incomes, the more likely they are to make purchases. Declining consumer confidence is a sign of slowing economic growth and may indicate that the economy is headed into trouble.”

      • But as an indicator of consumer attitudes, the survey as described doesn’t come up to snuff. Just for starters, the margin of error would be enormous. Those are facts that anyone with real statistical training would recognize instantly.

  4. Tracey says:

    I’m with David J. Montgomery, you can’t claim a shortage based on opinions. If you want to prove there is a shortage of bourbon then you need to dive a little deeper. 149 people who “think” there is less supply does not prove a single thing.

    The liquor stores in my area won’t take special orders unless you (the individual) agree to buy the entire case. They don’t have the shelf space to order whatever someone gets a hair about having. They aren’t wasting their money or shelf space on random items. If they are truly getting that many requests per day, one would think they’d use that and collect names and make a purchase and notify people. That doesn’t happen. I’ve never been told that they don’t have something because they can’t get it. It’s solely about buying what is popular and sells.

    The number of bourbon enthusiasts is rising but their tastes/palate aren’t expanding as fast as their numbers (in my opinion). I’ve got a half-dozen so-called bourbon enthusiast friends who’ve never even heard or tasted most of the brands listed on this article.

    Does that mean they aren’t truly bourbon enthusiasts?

    One of the reasons Four Roses and Buffalo Trace are so popular now isn’t because they are great but largely (again, my opinion) is that many craft bars are making drinks with it and it gets featured prominently on their menu (a.k.a advertising).

  5. Ol' Jas says:

    Q: “Where’s all the bourbon?”

    A: Um, someplace other than the vodka section of a Czech liquor store? 🙂

    • Lew Bryson says:

      Caught me! I’ll be honest, I was just happy to find an empty-shelved liquor store picture! Cheers!

  6. Ol' Jas says:

    I don’t know nuthin’ about nuthin’, but I think we have to watch our analogies.

    75% success buying a preferred bourbon is bad because 75% employment is bad?

    Maybe 75% success buying a preferred bourbon is GOOD because 75% success with the opposite sex is good!

    ***

    All in good fun. I don’t drink high-end bourbon, so I don’t have a dog in the hunt. It must be frustrating, though, to have money in hand but be unable to buy the thing you want.

    In any case, watching the debate is fun. Thanks to John for arranging these point/counterpoint articles.

  7. EHM says:

    Nice job Fred, but I’m having a hard time supporting your logic on this one. Your stats measure consumer sentiment and not the actual existence/non-existence of bourbon. By that same logic, I could take USA Today’s stat that 55% of Americans believe Christianity is written into the Constitution as evidence that it is (it’s not). Consumer sentiment or opinion polling is just that…a representation of opinions. I happen to agree that it is hard to find the bourbon I want, but i don’t think it’s hard to find bourbon. This happens all the time in business. Companies redirect resources from one thing to try out the market viability if another. The bourbon isn’t gone, it’s just being used differently. Ther’s no ETL, but other bourbons are popping up at a higher price point. And for me, it’s that price point that is driving the shift. If a company started charging $70 for ETL everyone would riot in the streets., but if you take that same bourbon and resell / reblend /relabel it as something else, you can sell it for $70 and nobody knows better. The bourbon isn’t gone or drying up, it’s just being diverted for higher profit. So yes – you don’t see some old (inexpensive) staples on the shelves, but that’s a profit decision, not a supply one. And pappy – that’s economics 101 – cut supply and demand will grow. Grow demand and you create a premium brand and profits. Have a premium brand and you can “encourage” retailers to buy a bunch of private barrels they wouldn’t otherwise buy just to be on the list to sell the good stuff. At least that’s what I think I would do if I owned a distillery with a bunch of low priced products in a market that has clearly demonstrated a tolerance for higher priced alternatives. In any case…keep on writing. Love what you do and the debate around it!

    • Josh Feldman says:

      EHM, your idea that the premium Bourbon that used to be in the premuim Bourbon brands Fred referenced in his piece – theones we all love – is still out there, just relabelled as something else more expensive – is just factually wrong. I can’t think of a single example except the ones that Fred himself mentions (Ancient Age 10) in support of his arguement. If you’re going to make this argument please give an example. And if the example you give is unobtainable in stores and is currently bid up sky high on the secondary market.then all yyou’ve

      • Josh Feldman says:

        …you’ve done is support Fred’s argument. (Hint… Famous Owl supports Fred’s argument).

      • EHM says:

        Good point Josh. I’m guessing at this too, but aren’t we all! 🙂 I’m just suggesting that a bourbon shortage implies there aren’t enough barrels to meet demand. Having participated in many (non-whiskey) discussions about increasing margins, I have to believe the distilleries are doing the same. Especially since I see the bourbon aisles expanding daily with more and more offerings. But you’re right – I’m definitely guessing at this. I think until someone releases barrel counts and maps barrels to all the bourbons they can be used to make over the aging cycle, nobody will know for sure.

  8. CLT says:

    149 is a very small sample. If this is a convenience sample, it’s not informative at all. If it’s an appropriately drawn sample, it’s going to be subject to quite a bit of sampling variability at that size.

    Further, the fact that 15% of the respondents stated that two extremely easy to find bourbons (EC 12 and Jim Beam) were in short supply adds to my skepticism of the results. I don’t interpret this as evidence that there is a shortage, but that they’re might be problems with the design of the survey.

    Finally, as others have mentioned “perceptions” of a shortage are not the same thing as a shortage. Sure, special releases are harder to get. And some standard Buffalo Trace products are harder to find. But, that’s not a shortage.

  9. Ed Moore says:

    Great debate! I think it’s about profit too. Every year a barrel ages, you lose some of the whiskey inside, so you can produce more bottles of bourbon from a young barrel than an old. This means you make more money from young whiskey than old. I think it’s a simple financial decision.. The distilleries are dumping the whiskey earlier to try and produce more bottles, but it’s not to keep up with demand, its to make more money per barrel. The hard to find bourbons aren’t there because they aren’t as profitable to make. I think that’s all there is to it. The whiskey is still there, they just want to increase profitability per barrel. That’s why you’re seeing the age statements disappear and the flavor profiles shift. That’s business.

  10. Danny Maguire says:

    It sounds to me that it’s not a shortage of bourbon, it’s a shortage of the ones people want to buy, That usually equates to the ones that are most heavily advertised. It would be interesting to find out what the advertising budget is for the various brands.

  11. If you’re interested in reading a little more about the economic theory behind this supposed shortage, I wrote up a little essay on the subject: http://professorcocktail.com/whiskey/is-there-a-bourbon-shortage/

  12. jb says:

    There’s no bourbon shortage. If there is, why then is
    the bourbon industry spending millions on marketing
    campaigns that promote bourbon? Popular shows like Justified
    wouldn’t exist if the word bourbon was deleted from the script.
    Then bourbon sponsors target the audience.

    Every bar and liquor store I’ve been to always has an ample supply
    of bourbon all of the time. Of course the ‘premium’ stuff is impossible to come by only because the profiteers have that area of the market cornered. If you want the premium stuff just go to any secondary market source like Craigslist and you’ll find an endless
    supply at extraordinary markups.

    No there is no bourbon shortage. Bourbon is just another popular
    product that’s been taken over by greed and profit just like blue jeans a few years ago, cigars in the late ’90s and Nike sneakers.

  13. Chris says:

    I’m the buyer at a small boutique store in Washington, DC. Here are some concrete facts relating to my buying for the store. The following are pretty much never available to me to purchase for my store: any Pappy’s, any Buffalo Trace Antique Collection, Eagle Rare (the regular one!), any Weller, Elmer T Lee, Four Roses Limited Edition Small Batch, any Elijah Craig over 12 years, Elijah Craig Single Barrel, any Jefferson’s above Reserve & Ocean, Evan Williams Single Barrel Vintage, Parker’s Heritage – basically any limited edition or extra-aged release from any well-established distillery. Last year I started carrying new releases Pinhook and Rebellion and now I can’t get them anymore. I have to grab Blanton’s & Taylor’s when the distributor has them, and even Buffalo Trace is in and out. The following are high quality new releases that have jumped several dollars on the shelf in one year: Breckenridge Bourbon, Whistle Pig, Willett Pot Still & 2-Year Rye. It is true that there are more options for me to purchase than ever before. However, I am looking for the best bang for the buck for my customers and have had to repeatedly adjust higher what I think is value because new releases keep pushing the price tag higher and higher. Almost every quality new release I see now is priced in the $40-$80 range on the shelf, and would previously have been thought overpriced. By the end of this year I would not be surprised if that range has shifted to $50-$90.

  14. shawn reinhard says:

    I am seeing trends in Iowa both similar to and opposite of the views in this article. Elijah Craig 12 is quite common and I have no problem getting it. I also hear talk of distribution of product causing shortages in some areas. I am told that Buffalo Trace in some areas is like Elmer T Lee is in Iowa: You can’t get it because of distribution. Yet in Iowa, Buffalo trace is readily available, much like Elijah Craig 12. If the national trends are just slow to reach Iowa then I guess my plan is to stock up and hope I can make it last.

  15. Ronnie says:

    Tracey,
    I don’t know where to start. Your store will not special order except a full case? You are shopping at the wrong place. Special order is a guaranteed sale, in the back door and out the front in a few days. No dusting the bottles and rearranging the shelves. They only order what is in demand, yet they do not have the products that are in the most demand all across the country. Seriously, find a shop with a competent owner who offers the service that you deserve.
    While you are right that the number of enthusiasts is rising, but the facts are that they are not drinking the same product exclusively like the fathers/grandfathers have always done. They are into trying every new premium product that they can get their hands on, especially the 25 – 35 age group.
    As far as your friends, you really can’t consider someone an aficionado if they have never tasted or even heard of the absolute hottest brands on the market.
    You are naive if you do not believe the huge increase in consumption of Bourbon in the last few years has not caused a problem with supply of a product that takes 4 – 15 years to hit the market. Distillers are in a situation where they have product to take care of demand levels from 10 – 15 years ago, but is not sufficient for today’s increased demand. Some have even suspended their Barrel programs sold to retailers.

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