Bourbon shortage

[OscarV]

I just got the new Whisky Magazine and it has an article about a shortage of bourbon, especially in the 8 to 10 year old barrels.
Mark Brown, President of Buffaloe Trace characterises the current availability of this age group as "desperate".
The stockpile in that age range has dropped 40% in 2004 and stands at its lowest level since 1998.
Max Shapira, President of Heaven Hill said, "About five or six years ago we noticed an increase in outage. The 'angels' share' increased dramatically. Everybody has experienced it."
Also noted in this article is the fact that boubon makers are dropping age statements on labels, and sales are up here and abroad.

The increase in the 'angels' share' is interesting to me.
If it is happening to everyone, then the question is what do they have in common.
My first thought is the barrels, they all buy from only 2 suppilers.
Has the wood changed?
Second weather, the 80's and 90's had very hot summers, but the last 5 have been relativley mild.

Anyone else's thoughts?

Oscar

[gillmang]

Very good questions. I think this is an interesting chemical engineering question (also extending to other sub-specialties and disciplines).

I think the wood may be part of it. The wood in modern barrels is, it has been suggested by some, not as hard as in earlier times. More porous wood could equal more outage.

Possibly the types of warehouses used today may contribute.

As to weather, hard to say. Even if summers haven't changed much in 6-7 years, if winters are warmer than earlier, that may encourage more outage.

It may be a question of all the above.

I wonder if EPA requirements (I mean environmental-related) may have something to do with it one way or another?

Gary

[bourbonv]

The distillers may be saying that there is an increase of the angel's share, and I have no doubt that it is true to some extent, but the real thing that is causing a shortage is a lack of a good crystal ball 6 to 8 years ago. The whiskey industry has to predict sales 6 to 8 years in advance so they know what to make now. They did not make enough to meet demand.

There are a variety of reasons for this lack of production.

1) The distillers were not confident in the growth of the market. Yes 6 to 8 years ago the bourbon market was growing, but only in the high end products. Now that has had a trickle down effect and bourbon sales across the board are larger than they predicted. This is good for the industry but may be bad for the consumer as demand causes a rise in prices.

2) In the last decade we have had three distillery warehouse fires that deplete stocks for Heaven Hill, Jim Beam and Wild Turkey. These products were a small percentage of overall production, but the loss did not help the present situation.

3) Six to eight years ago there was a glut of whiskey on the market as United Distillers was selling their product since they no longer needed it after selling almost all of their brands. This created an artificial market that allowed people such as Old Rip Van Winkle, Jefferson Reserve, Noah's Mill, Old Pogue, Bulliet and even McKendrick and other brands to hit the market at a reasonable price and to fill their demand. That whiskey is no longer available and unless they make a deal with a distillery to start making whiskey for them, many of these brands will simply disappear.

4) There are some new markets opening up and a lot of the "shortage" is due to this expanding market. China and India alone are enough to create this shortage. This is all on top of the traditional overseas bourbon markets like Japan and Germany (I have wondered how much the unification of Germany has increased that market in the last twenty years).

All in all, I think the increase of outage is probably the least important factor in the shortage, but it is the one the distillers will want to focus on because that one is something that is completely out of their hands. Yes, the old growth trees are gone for the most part and the wood is not quite as hard, but I think that is not really the problem. Schenley started planting oak forest in the late 40's and early 50's so they would have wood for barrels. Those trees were probably harvested in the 70's or 80's and used for barrels. I don't recall anyone complaining about wood quality in that time period. Warmer winters is also a relevent thing. If the winter averages about 30 degrees before and is 40 degrees now, then the whiskey is still sleeping in the wood.

I think there is a whiskey shortage, but I think it is more due to business decisions than natural causes.

Mike Veach

[OscarV]

In this article it was mentioned that bulk sales to private labels would be the first noticable change to the consumer.
And the President of Buffaloe Trace said that increase in prices would not be used to deal with the the high demand.

Oscar

[bourbonv]

The small independent bottlers have already felt this pinch. Jefferson Reserve is no longer 15 years old because they can not get the product to support that age statement, Thus the new Jefferson Reserve without a statement. I believe Mark Brown at Buffalo Trace will try to keep prices as reasonable as possible, but I suspect that even there we will see a slight increase in price. The problem is simply the good old supply and demand rules will drive up prices somewhat.

The up side of all of this is that there is a bourbon shortage. That means consumers are buying bourbon and that will keep the distilleries profitable and running. Maybe even Charles Medley will finally get the investers he needs to get his distillery running again. That would be a great step in the right direction since Charles has made some of the best whiskey I ever drank.

If this growth continues, you might even see micro distilled bourbon on the market. That is best hope for the independent bottlers. They need to invest in small micro distilleries in order to get their products.

Mike Veach

[EllenJ]

...Maybe even Charles Medley will finally get the investers he needs to get his distillery running again. That would be a great step in the right direction since Charles has made some of the best whiskey I ever drank.

I completely agree with your evaluation of Charles Medley's whiskey. But if he gets investor backing today, they won't tolerate the costs of producing the whiskey he made in 70's and 80's. Most of today's bourbon distillers can make fine whiskey like that... if they could afford to.