Beam Suntory has completed its trilogy of controversial 2016 announcements, as it confirmed late last week it would be raising the price of Booker’s from $59.99 to $99.99, and also reducing output from six batches to four. Earlier this year, Beam released 3 batches of Knob Creek 2001, a 14-year version of its 100 proof bourbon at a suggested price of $129.99, as well as a one-time-only (we are told) release of 13-year cask strength Booker’s Rye at a whopping $299.99 retail price.
I’ve written about Booker’s Rye before, and I had no issues with their pricing of it. It truly is a remarkable whiskey and, if the story about Booker laying these barrels down and then passing away with the recipe, it’s also a rare piece of history in a bottle. Cask strength 13-year rye whiskeys are a rare find indeed, and if Thomas H. Handy Sazerac Rye (just 6 years old) sells for near $300 in the secondary market, I gave Beam a pass on charging the higher price for a whiskey that would never be released again.
The Knob Creek 2001 is a little different situation, but does get us closer to the matter at hand. As someone who began his whiskey journey drinking a lot of Knob Creek, I was pretty excited when I first heard of this release. The 14-year old whiskey is the oldest Knob Creek ever released and it was released in 3 separate batches with 3 different taste profiles. It was started by Booker himself, and finished by his son Fred, so there is a nice tip of the cap from a son to his legendary father. I have no problem with 2 releases this year honoring Booker Noe, completing two of the last projects he worked on. On paper these seem like rare gifts to us whiskey fans.
In reality, however, there were around 36,000 total bottles of the Knob Creek 2001 released at $129.99 and they are still sitting on store shelves in grocery stores everywhere. I have tried all three batches of the whiskey and without question (to my palate at least) it’s not as good as the standard Knob Creek release and far inferior to a couple of decent store picks I’ve had recently. Further, though some people did enjoy the whiskey, the majority I have spoken with did not, and nobody said they would consider paying above $90 for another bottle. This is telling, since I can run out and get a bottle of this just about anywhere. More telling, still, is that for a “limited release” bourbon, in the current frothy and often hysterical climate we now live in, people are selling these bottles in the secondary market at a net loss.
Which brings us to Beam’s latest announcement about Booker’s bourbon. I’ve never been a fan of Booker’s bourbon, but I always felt it was priced about right for a workhorse cask strength bourbon. It’s also available nearly everywhere including my grocery stores, Costco and Whole Foods. Either Beam is producing too much of it, or the price is too high, right?
Wrong. Beam’s explanation included “supply constraints and the value we place on the product.” I call bullshit on supply constraints based on a highly scientific test I’ve developed called “I see it everywhere and nobody is buying it.” W.L. Weller 12 and Elmer T. Lee can get away with “supply constraints” excuses because people want to buy them and can’t find them. My mother-in-law could bring me a case of Booker’s by lunchtime with minimal instruction.
It’s the last part of Beam’s statement that tells the full story, and it shows why they have missed the mark so badly here. When you see limited edition whiskeys sell for $100 and up, it’s easy to feel that your flagship bourbon deserves the same. Four Roses and Michter’s, for example, have multiple limited annual releases that rarely see store shelves and sell for over $100 each. Booker’s releases different batches with different names like “Dot’s Batch” and “Big Man, Small Batch”, but the public perception is not quite the same, is it?
David Perkins from High West told me recently, “Whiskey drinkers want two things: (1) Something they’ve never had, and (2) Something they can’t get.” In the current climate, people are allocating more dollars to things that seem rare, things that are new, and Booker’s just doesn’t fit that mold. What Beam should have been doing all along is scale back production to address the fact that demand isn’t meeting supply. That’s just smart business. Then, if demand begins to outstrip supply, you have two options: (1) You can raise your prices, or (2) You can produce more whiskey to meet demand.
What Beam has foolishly done here is attempted to cheat the market, and unfortunately, its loyal customers. They have basically tipped their hand and announced that they are going to manufacture a Booker’s shortage in order to justify raising their prices over 60%. They are betting that the whiskey hunters will see Booker’s less often, perceive it like Weller 12 or Elmer T. Lee, and therefore snatch up every bottle they find. If I’ve learned anything from 2016, it’s that you can’t rule out even the craziest of outcomes, but I can’t see this strategy working out.
The Booker’s Rye was a smashing success, it was hailed as the whiskey of the year by many, and I believe it deserved a premium price. It was a truly unique whiskey that shrugged off any controversy and will likely be sought after for years to come. Booker’s bourbon, on a similar level to something like Stagg Jr., is now going to be priced equal to George T. Stagg, a 15-year old powerhouse that is only released once a year in very small quantities. One has to wonder if this move was timed to coincide with the recent Booker’s Rye accolades, elevating the price and perception of everything bearing the Booker’s Name by association.
Four years ago, Maker’s Mark announced they were going to lower their proof from 90 to 84 due to a “supply shortage” but quickly reversed after a customer backlash. I haven’t had any trouble finding Maker’s Mark bourbon anywhere in the United States since then, but I have seen a whole bunch of new Maker’s Mark products including several new cask strength versions. I guess they found their way through their “supply shortage.”
Perhaps Beam should have considered a different experiment, akin to Elijah Craig or Orphan Barrel Rhetoric, and release a new Booker’s each year that is an additional year older. While continuing to serve the segment of the whiskey community devoted to regular Booker’s bourbon, they can also have their shiny new toy to offer for premium prices. Another option would be to hire an economist.