If you’re a bourbon fan who has noticed higher prices in recent years, it’s because, well, there are even more bourbon fans nowadays, driving demand. The thought, “Well why don’t I buy directly from the distillery?” might have crossed your mind; Buying a barrel would cut down on the cost of bottling, labeling, marketing, and distribution.
That might be a great idea, but it’s not possible. Due to a law in the United States called the three-tier system, the distiller must sell to a distributor, who then sells to a retailer. Customers can’t cut corners and buy a barrel of bourbon from a distributor or distiller — only from a retailer. Some tours and experiences advertise visiting a distillery to pick out your own barrel of bourbon to be bottled with a custom label. This is possible to do — but there’s a catch. Once the barrel is chosen, it must then be bottled by the distillery, sold to the retailer, and then sold back to you, the customer.
If a barrel-sized purchase is out of the question, you might have your eye on the bottles sold in the distillery’s gift shop. It turns out, they probably aren’t going to be cheaper either. These bottles have been first sold to a distributor, and then bought back by the distillery to legally sell in its store, resulting in a price that’s often similar to what you would see at a retailer. At the end of the day, all alcohol sold to the public must be sold through a retailer; There’s no way around it.
Why has the price of bourbon gone up?
High demand for bourbon has contributed to a loftier price tag in the past decade. Collector culture has skyrocketed in the United States, with allocated bourbon and special releases often reselling at eye-popping prices. Bourbon producers have also attempted to expand into international markets in recent years, making the domestic supply of average bourbons less abundantly available. But a high price tag doesn’t always translate to a great bourbon; There are some bourbons you should leave on the shelf, and other “bottom shelf” bourbons that are actually worth the buy.
Bourbon is aged in new, charred oak barrels. While, by law, it must be aged for at least two years, many brands are aged for much longer. This means that distilleries have to anticipate demand years in advance, making game-day supply adjustments difficult. A sudden spike in demand is tough to predict, which could lead to a supply that doesn’t meet demand, hiking up prices.
Some bourbon retailers are not legally allowed to sell bottles below the wholesale price, depending on varying state and city regulations. However, no law limits how high these retailers might raise the price. The logical answer to high demand and a lower-than-normal supply — at least for retailers — is to raise prices to regulate the demand. This strategy is also poised as a solution to curb the issue of flippers — those who buy rare and limited bourbon to resell — which also results in price inflation. When it comes down to the cheapest bourbon you can buy, you’ll have to do your research if you don’t want to fall for the trendiest, most expensive bourbon on the block.
