Posted on | July 21, 2015
Written by | W. Blake Gray
The Bourbon Craze is No Fluke, and it Continues to Go Upscale.
I get emails and calls every week from people looking for specific bourbons,” says Frank Pagliaro, owner of Franks Wine in Wilmington, Delaware. “If they’re not in my customer database, I don’t sell it to them. They’re just calling around to every store.”
Bourbon is the hottest spirit in the nation, and it’s being driven by the high end. Nielsen reported in February that sales of all whiskey were up 6.6% by volume and 10.7% by value over the year before, and whiskey now makes up 26.4% of all spirits sold by volume in the country.
Irish and Japanese whiskey are growing even faster from smaller bases. But it is Bourbon and other American whiskies that have ignited a buying craze that cuts uniquely across age and gender.
“It’s every age group, male and female,” Pagliaro says. “We do a whiskey tasting every week. You’ll have a 21-year-old guy there with his girlfriend standing next to an 80-year-old guy.”
This wasn’t the case a generation ago. “In the 1980s, I was driving down I-95 and I was with the president of Four Roses,” recalls Joe Magliocco, now president of Mitchter’s “There was a funeral procession going the other way and he said, ‘Joe, there goes another brown-goods drinker.’ Bourbon was an old man’s drink in the 1980s. But now you see groups like Whiskey Chicks and Bourbon Women. Whiskey appreciation has really spread to a much wider demographic.”
The phenomenon started in bars. Mixologists generally prefer working with whiskey to white spirits like vodka and gin. Television has also played a role. Whiskey smuggling during Prohibition was the lynchpin of HBO’s Boardwalk Empire, and characters frequently savored a glass of straight whiskey. On Mad Men, the main character Don Draper drank Old Fashioned cocktails—one of the simplest of all whiskey cocktails—frequently enough that some bars ran Mad Men specials. At Locanda in San Francisco, you can get an Old Fashioned flight.
Dan Cohen, PR director for Beam Suntory, credits flavored bourbons with providing a spark. “Flavored whiskies bring in people who were previously intimidated by brown spirits. And 45% of Red Stag drinkers are women. That’s a lot higher than with unflavored whiskey.” Beam’s Red Stag debuted in 2009 as one of the fastest spirit launches of the 21st century, and opened the gate for other flavored entries. Unlike with flavored vodkas, which are something of a spiritous dead end, many flavored whiskey consumers appear to graduate to straight whiskey.
The boom caught most distillers by surprise, and because top-quality bourbons spend years in barrels, producers have been scrambling to catch up. Buffalo Trace announced rolling blackouts in distribution in 2013. “We’re distilling more than we have in the last 40 years,” Harlen Wheatley, Buffalo Trace Master Distiller said in 2014. “Still, it’s hard to keep up.”
Many producers are expanding. Four Roses is spending $55 million to build a new facility. Maker’s Mark is adding a third still, increasing its production capacity by 50%. Others are getting more creative in enhancing existing brands with flavors, proofs, barrel finishes and such.
When Michter’s started, it didn’t even need a still. “We had our pick of great stuff because Kentucky was awash in great whiskey and nobody had any idea what to do with it,” Magliocco says. Now Michter’s has two stills of its own.
Bullish on the High End
For retailers, the key to dealing with spot shortages seems to be to buy whatever bourbon your distributors offer, and don’t shy away from anything expensive. The proliferation of extensions and new brands has given the category vibrancy at all price points.
“Our reps know that we’ll take anything craft that comes our way, so when they get a couple cases of something, they give us a call,” Pagliaro says. In May, when he did get a few bottles of Pappy Van Winkle, rather than deal with disappointing some of his customers, Pagliaro auctioned them off to his mailing list and gave the proceeds to charity.
Interestingly, Pagliaro says his whiskey sales, and margins, have taken off since he stopped selling cheaper spirits. “Last year I got rid of all our half gallons,” he says. “I thought: let people go up the street for them. I made room for really good old craft bourbons and craft beers. It’s working. People come in and say, ‘You’ve got the best selection.’”
Oscar Garcia, spirits buyer for 67 Wines in Manhattan, says his store is also doing best with the high-end expressions. “You get people walking in every day looking for them,” Garcia says. “American whiskies have taken a very prominent place in our shop.” When he does get a rare bottle, Garcia doesn’t put it on the shelf. Instead, “we offer them to our best customers, who want to drink the whiskey rather than put it on the black market,” Garcia says.
Bourbon appears to be settling comfortably into an era like wine in the late 1990s, with lots of room to grow and a customer base that isn’t going to age out of the market. “People are willing to try lots of different things,” Garcia says. “It’s a very fast category and I don’t see it slowing down.”
MAKING IT SPECIAL
The romance (and value) of bourbon has been boosted in recent years by a number of techniques aimed at distinguishing special bottlings from their peers. Wood treatments, extra aging and other nuances are brought front and center in the packaging and marketing of these bourbons, and the added depth and complexity of the liquids can be used as upselling points.
£ Special finishes
• Jim Beam Sherry Cask
• Woodford Reserve “Four Wood”
• Woodford Master’s Pinot Noir Finish
• Colonel E.H. Taylor Cured Oak Bourbon
• Jim Beam Signature Craft Quarter Cask
• Michter’s Toasted Barrel
£ Extra aging
• Elijah Craig 23-Year-Old
• Orphan Barrel (Lost Prophet, Barterhouse, Rhetoric, Forged Oak)
• Booker’s Bourbon Roundtable: Bluegill Creek Batch
• Booker’s Bourbon Roundtable: Booker & Bar
• Booker’s Bourbon Roundtable: Cast a Line
• Wild Turkey Master’s Keep (17 years old)
• Blade and Bow 22-year-old
• Old Forester 1870 Original Batch
£ Single Barrels
• Parker’s Heritage Collection
• Evan Williams Single Barrel 2006 Vintage
• Old Forester Birthday Bourbon
£ Cask Strength
• Angel’s Envy Cask Strength
• Elijah Craig Barrel Strength
• George T. Stagg Jr.
• Maker’s Mark Cask Strength
• Jefferson’s Ocean Aged at Sea
• Buffalo Trace Experimental Collection (the latest is French Oak)
• Blade and Bow
• Jefferson’s The Manhattan (barreled with vermouth and bitters)