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The Bourbon Boom

About a decade ago, something peculiar started happening in liquor shops nationwide. Certain bourbons began to disappear. “I’d go to someplace like Party Source in Covington, Kentucky—which is a huge store—and I’d see these big holes on the shelves,” says Lew Bryson, a veteran whiskey writer and author of Whiskey Master Class.

Where bottles of bourbon had recently lined the shelves like dutiful soldiers awaiting a call to duty, there were now vast gaps, as if the whiskey had been spirited away under the cover of darkness. Once relatively common bottles—like Weller 12-year-old and Elmer T. Lee—started going AWOL. “There was some weird shit going on,” Bryson recalls.

About the same time, a new sort of stranger wandered into whiskey bars. They were typically young, typically men, and typically asked for—no, demanded—specific brands of bourbon. And if the bar had them in stock, money was no object—they would pay whatever the price.

Larry Rice, owner of The Silver Dollar and The Pearl in Louisville, Kentucky, started getting calls from his bartenders asking how to handle customers who requested 25 ounces of whiskey at the going per-shot rate, but wanted it in unopened bottles. (Even though one of his bars is also a package store and can legally sell full bottles, Rice declined.) “When we [ first] opened, bourbon was just whiskey to us,” Rice says. “We held it in high regard, and we loved it, but not in any weird cultish way. It was just what we drank.” About a dozen years ago, Rice started noticing “serious industry folks”—writers and brand representatives—would start showing up three or four times a year, and ask for his help in sampling some of the 600 whiskeys he keeps on hand. “Then it went from a few times a year hosting in town, to a few times a week.”

Joseph Magliocco, president of Michter’s Distillery in Kentucky, also noticed that some bars were suddenly pushing the prices of some of his whiskeys to astronomical levels—he knows of at least three bars selling his Michter’s Celebration, a small-batch blend of rye and bourbon, for around $1,700 an ounce.

Who or what was behind this mysterious behavior became the subject of wide-ranging speculation and debate. But one name frequently came up—although it was unclear if he was a ringleader, or a victim. He was an older man with a stern, sidelong gaze, as if regarding a shiftless nephew who’d just asked him for a loan. And as the man became more prominent, he grew increasingly elusive, hiding out in the backs of locked cabinets that inveterate whiskey drinkers refused to open for even their closest friends. When he showed his face in public, a small frenzy would occur. In opening our bourbon X-File to try to figure out what happened to these beloved but increasingly evasive spirits, we find his portrait atop of a sheaf of documents.

His name? Pappy Van Winkle.

A lineup of Pappy Van Winkle bourbons.

The tectonic shifts in the past decade’s bourbon market were both completely expected and wholly unexpected, more rational than irrational, involving matters both structural and human.

The structural problem could be diagnosed as simple supply and demand. Bourbon needs to sit quietly in barrels, allowing the whiskey to slowly interact with oxygen and the wood, creating deep, complex flavors. Bourbon typically matures at around four years, but many argue that the sweet spot is somewhere between six and 12 years.

That means bourbon supplies are wholly dependent on distillery managers accurately predicting demand five or 10 years hence. Shortages result when the maturing supply fails to meet demand. And when yesterday’s production outpaces today’s demand, surpluses languish in warehouses.

These ebbs and flows have long been part of the industry’s cycles, with “bourbon lakes” forming when there’s too much whiskey for too few drinkers. Distillers then wait nervously for renewed demand as their stocks continue to age, with each year increasing the risk that the whiskey will become too tannic and over-oaked, as it also gradually disappears through evaporation.

Bourbon lakes have flooded the market from time to time—notably in the 1960s, following a decade when whiskey makers optimistically cranked out the stuff to meet soaring demand. Supplies engorged the pipeline, but then the industry was caught flatfooted by a sudden consumer shift away from aged spirits and toward a lighter, exotic spirit called vodka. It was a slump that persisted up to the ’90s, with consumers drawn like misguided moths to light beer and Appletinis. “Elijah Craig 12 [year-old] was practically a promotional item,” Bryson recalls of the era. “Everybody had all this old whiskey, and nobody could sell it.”

“Whiskey got backed up,” agrees Magliocco, who noted that North American whiskey sales fell nearly two-thirds between the 1970s and 2000. “It was like a fistfight to sell this stuff,” he says. “Who the hell wanted 10-year-old bourbon or rye?”

As it happens, the bourbon lake germinated the seeds of the bourbon revival. When the broader consumer market started to become more curious about “brown goods” again in the 2000s, what they found was plentiful, fairly priced, and fantastically flavorful.

Among those desirable whiskeys: the Pappy Van Winkle line, a brand of whiskey with roots dating to 1893. That’s when Julian Proctor Van Winkle Sr. took a job as a salesman for the W.L. Weller and Sons distillery in Kentucky. He learned the trade well, and later bought the Weller distillery, producing a bourbon from a mashbill that favored wheat over the more common rye. The result was a spirit that was mellow, gentle, and increasingly prized.

Prized, but priced high enough—about $125 for the 23-year-old bourbon around 2000, increasing to $200 by the end of the decade—to keep it from flying off the shelf. But several factors led to the bourbon’s launch to cult status.

In 1996, the Beverage Tasting Institute awarded 99 points to Pappy Van Winkle’s 20-year-old bourbon—an unprecedented rating for a domestic whiskey. The following year, The New York Times wrote about a “jokily named” whiskey that was “available mainly in stores in Louisville and surrounding Jefferson County” and was the favorite of the city’s restaurant critic, who likened it to an “old Bordeaux.”

Before long, prominent chefs like Anthony Bourdain, David Chang, and Sean Brock were ushering Pappy toward cultishness (Bourdain claimed he wanted a “full-back Pappy Van Winkle tattoo”). As the 2000s progressed, Pappy started to go underground, with collectors and speculators snapping up bottles, many swiftly resurfacing for sale on auction websites and in private bourbon chat groups, at multiples of their original retail price.

“It’s like the dutch tulip merchants with the tulip boom all over again.” — CHUCK COWDERY

The fever spread to other whiskeys. And soon the worry was not that the lingering bourbon lake of the 1990s would overflow—it was that it would be sucked dry, with the cycle reversing and leading to widespread shortages. “We had a moment of realization around 2013,” says Brent Elliott, master distiller at Four Roses Bourbon. The company had been growing solidly after returning to the American market in 2002 (the whiskey was sold exclusively in Japan and Europe for a time), and one would have expected growth to taper off once they were back in all 50 states. “But it didn’t taper off,” Elliott says. “It accelerated.”

Others also noticed the change. “I think it was about five and a half years ago we started to realize we were missing shipments,” says Kris Comstock, senior marketing director at Buffalo Trace Distillery, which makes Buffalo Trace, Pappy Van Winkle, and other brands. “We’d get orders from distributors around the country, and like any company, we were happy to fill orders. Well, halfway through the month, we’re all out. For three or four months, we didn’t realize that we were shorting customers. Not a bottle of Buffalo Trace made it to Wisconsin for five months. That’s when we called a time out, and asked, ‘What’s happening here?’ ”

The higher end of the bourbon spectrum was particularly affected. “I remember the days when Blanton’s would collect dust on the shelf at $35 or $40 a bottle,” Comstock says. “Today, consumers hoard it. We now release literally 15 times more Blanton’s—not 15 percent—yet it’s harder to find today than it was then.”

Bourbon was back, although with the irony that the best was impossible to buy at any but stratospheric prices. “It’s like the Dutch tulip merchants with the tulip boom all over again,” says whiskey writer Chuck Cowdery.

Some of the vintage whiskies at Silver Dollar in Louisville, Kentucky.

When desirable bourbons disappear from the shelf, where do they go? “There’s a difference between people who collect, and people who collect to sell and profit,” says Michael Gordon. “I’m not in it for the money.” Gordon is founder and president of a waste and recycling service company in Louisville and has been collecting whiskey for nearly two decades. The habit started when his late wife bought him two intriguing bottles for his birthday, piquing his interest, and he began scouting for hard-to-find bourbons and ryes.

His collection today totals nearly 500 different labels, with a fair number of duplicates—he has about 25 bottles of Elmer T. Lee, for instance, a dozen George T. Stagg bottles, and “a lot” of Weller. He amassed much of it while on the road, when he’d detour to out-of-the-way stores in search of untapped veins of fine whiskey. Among his finds: a random liquor store in Red Rocks, Colorado, which always seemed to have bottles unavailable elsewhere.

In many ways, the bourbon market was afflicted by a perfect storm. The cocktail renaissance of the ’00s created a larger pool of informed consumers, many of whom sought out bolder, more flavorful spirits. Products of every stripe—coffee, beer, bread—were finding consumers willing to pay premium prices for quality; whiskey wasn’t alone. And then came shambling, well-intended, but clumsy social media. “People like to hunt,” Gordon says, and social media gave whiskey hunters a whole new range of weapons for tracking down rarities.

Social media provided not only a new set of tools for tracking down rare bottles, but a trophy room as well—a platform where collectors could post photos of their conquests and acquisitions, further stoking competition and collection fever, and further depleting shelves. Bryson notes the rise about a decade ago of what he calls the “bunker mentality.” “If they see 10 bottles of Weller, they buy all 10,” he says.

“Certain brands developed a cult following,” agrees Larry Rice, “and instead of buying a bottle or two, people would buy out every bottle a liquor store had.”

When demand started to outstrip supply, distillers had a few coping strategies. They could raise prices to slow demand, although many were hesitant to do so, because lowering prices again when supplies catch up reeks of discounting and cheap goods. They could drop age statements and start using younger spirits, which many did. Or they could curtail bottlings of midpriced labels, and divert that whiskey. “A lot of repackaging started happening,” Rice says. “You started seeing them pull brands and reintroduce new brands, or introducing new packaging—like Old Fitz now being packaged with age statements in crystal decanters. It’s no longer an $18 bottle— now it’s a $139 bottle.”

Even with a potential bourbon tsumani on the horizon, those in the whiskey trade caution against the notion of another golden age of abundant, inexpensive whiskey.

And then there were allocations—restricting the number of bottles available in each market. Allocations were typically doled out to reward those who historically bought the most, with the idea of keeping the best customers happy. The end result, though, was cranky bars and liquor stores, who had to placate customers clamoring for a product they couldn’t easily supply.

”It’s not fun,” says Elana Effrat, who worked as a spirits manager for an importer and distributor in New York at the time. “I had spreadsheets with A, B, and C lists that I’d rotate through,” she says. And reducing supply usually just led to more demand, as word of scarcity spread. “Keep it allocated and people will keep buying it,” she jokes.

And so the process of allocation moved from distributors, who decided which stores and bars would get which spirits, to store owners, who decided which customers were worthy of the allocated bottles they received. Some refused to play games and simply put bottles on shelves when they arrived, allowing lucky customers to snap up rarities. (Sometimes these were marked up far above the distiller’s recommended retail price.) Others contacted their best customers to offer them a bottle or two, building long-term goodwill. And some created raffles for charity, selling tickets for a drawing, with the winner allowed to buy a bottle at the distiller’s suggested price.

Louisville collector Michael Gordon says he was among those who benefited from being a good customer—he also collects wine, with about 1,300 bottles in his cellar. That led to good relations with local liquor store owners, who gave him an inside track when rare bourbons became available—a good position to be in, as random encounters with bourbon rarities have become fewer and farther between.

But Gordon doesn’t simply collect for the sake of collecting. Every so often, he invites a dozen or so friends, along with some newcomers, to his basement to share and sample. He also donates 50 to 100 bottles each year to charity auctions—his way of giving back, as well as supporting research into cures for cancer, the disease that claimed his wife. (Two bottles of Pappy Van Winkle 23-year-old he recently donated to a Ronald McDonald House auction sold for nearly $5,000 each.) “I can control what I do with it, and how I give it away now,” he says. “But one day, I’m sure my kids will sell the collection for millions.”

A bottle of Blanton’s.

With demand for quality bourbon soaring, producers have done the obvious: expanded distilleries, built new warehouses, and generally filled the pipeline, which will start disgorging the new whiskey in a half-decade or so.

Brown Forman, maker of Old Forester and Woodford Reserve, among others, is building 50,000 square feet of new distillery space in Louisville. Buffalo Trace is midway through a $1.2 billion expansion, with new aging warehouses being built and filled every few months. Since 2015, Four Roses has invested more than $50 million to expand its production capacity.

What’s more, the craft whiskey market has continued to boom—with hundreds of new distilleries coming online. Many of these have now been around long enough to start releasing whiskey that’s been aged for four years or longer, with some high-quality bourbon now emerging from unexpected places.

This suggests the gaps on the bourbon shelf may soon start filling in, and enviable whiskeys may return to the shelves at fair prices, possibly even with age statements. History suggests wild swings in cycles, and so one wonders: Is another bourbon lake in the future? Can we expect Pappy Van Winkle back on the shelves at non-stratospheric prices?

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