Anyone who has visited a liquor store or perused Breaking Bourbon lately has probably noticed an uptick in premium priced bourbon, rye, and American whiskey that are crossing a once unthinkable MSRP of $500. Some of this can be chalked up to the inflationary period the United States is undergoing, where everything is pretty much costing a whole lot more across the board, but a lot more has to do with the American whiskey market maturing, and companies exploring untapped segments in the marketplace. Few will probably greet $500 bourbons with open arms. But is it necessary for bourbon’s future and is there a silver lining that comes along with it?
Bourbon, along with rye and American whiskey, continues to be in high demand. This demand isn’t coming from bourbon enthusiasts alone, rather a broadening of who is buying American whiskey in general. Along with that growth comes a wider net of who gets pulled into it.
The top end of whiskey buyers used to be confined only to the ultra rich, hardcore whiskey collectors, and the occasional celebrity. If a whiskey hit three figures at retail 10 or even 5 years ago, it was a shocking occurrence. But as all whiskey prices have risen, the whiskey buying public has become more and more desensitized to higher pricing. Now if a limited release isn't priced over $100, no one takes it seriously.
With this sudden rise in pricing, it's easy to feel cheated and that whiskey companies are taking advantage of their customers. This increase in pricing, of course, doesn't guarantee any of this more expensive whiskey is worth the sudden uptick in price. Were we all getting really good deals on whiskey over the last 10 years, or is better whiskey suddenly getting released to the market? If the whiskey is in fact “better,” where did all of this great whiskey all of a sudden come from? Were companies sitting on their best stock? These are the questions that make the dramatic rise in pricing feel exploitative.
With this new $500 price range developing, perhaps it allows whiskey makers and companies to try new things that they wouldn’t otherwise be able to beforehand, simply because the cost of development would have far outweighed what they could have recouped at retail. With bourbon’s popularity still sky high and pricing going up, is it more favorable for whiskey producers to jump in and offer new ideas, new styles, and potential amazing products because the money is now there? Or will the market see what accounts to even more “bourbon shovelware?"
You can’t blame someone for feeling angry when they see a $500 bottle of bourbon on a store shelf. Bourbon has had the benefit of living in its own bubble for far longer than most thought it would. Where in that same store sits a $600 tequila, $800 Japanese whiskey, $1,000 Scotch, $1,200 Cognac, and a whole separate section reserved for ultra-high end wine. From a business standpoint, why don't bourbon, rye or American whiskey have a monetary counterpoint? If bourbon is pulling in a wider group of drinkers, some of which might be coming from other spirits and used to high prices, why then isn’t there a $500 bourbon to entice them? American whiskey is simply playing catchup and with so many companies doing it at once, they are quickly making up for lost time and revenue.
American whiskey used to feel more all inclusive and that was a comfortable feeling. The price range of bourbon was fairly tight, rarely topping $150. Rye and American whiskey usually had an even smaller ceiling than that. Of course, in reality, the lack of supply, heavy allocations, and out-of-control secondary market has made American whiskey usually quite exclusive. It is possible that having a higher priced tier might make the flippers and investors gravitate towards that with higher margins. Making $50-$100 off a bottle seems trivial when you can make five times that off of a more limited and “special” limited release.
But that’s not to say every $500 bourbon will be as hard to find as a Pappy Van Winkle. There are plenty of high aged bourbon available, even to non-distiller producers. But before 2021, it would have been hard to make money off of such a release if a company was forced to price it under $200. A high priced tier allows the possibility of new releases simply because there’s an opportunity to make money off of it now.
Will a rising tide raise all ships? That might mean higher prices for everyone, or it could mean a better defined American whiskey market. Since the boom, the American whiskey market has acted like the wild west, where pricing has been wildly inconsistent. With more pricing tiers, and more time behind them, companies might get better at pricing their products appropriately. Yet they might not either. Hopefully the market weeds out the foolhardy.
It always comes down to the individual person deciding for themselves what a product is worth to them and what they’re personally willing to pay for it. Not very long ago, $100 for a bourbon or rye was a laughable act. Much like $500 seems laughable now. But what will it feel like 5 years from now?
How many people know a well-off family member, boss, or friend that has been bit by the bourbon bug who has disposable income and is looking for "the best?” It’s not uncommon for us to be asked what’s the best bourbon you can buy in the $200-$500 range. When told there are plenty of bourbons available under $100 that might be just as good, most reply, “No I want something special.” That “special” usually equates to price, and not who makes the bottle or if it’s a blend, single barrel or barrel proof. It almost exclusively needs to be a bourbon and above all else, expensive.
The growing group of well-off and/or desensitized consumers who believe expensive means better, has had little to quench their thirst, so it makes sense for whiskey companies to cater to them more directly with a more expensive tier of releases. The fact that so many companies did just this in 2021, shows this isn’t just a couple of egomaniacal producers that have the guts to charge exorbitant amounts for their product just for the sake of it. These companies have immediately proven there is an economic opportunity for a segment of the bourbon market that has been grossly underserved. It’s easy to hate this change. Fearful of the ramifications it might bring, but $500 bourbon won’t be going away and you should probably expect a lot more of it in 2022 and beyond.
Is this yet another sign bourbon is jumping the shark, or a necessary part of bourbon coming into its own and establishing itself on the world whiskey stage? Sound off in the comments below.