[WD] The Distillery that Everyone was Searching for (online)💻

Move over Bitcoin mining, a volcano in Antarctica is raining gold to the tune of $6,000 a day. Thinking of booking a trip? Pump those breaks. The volcano only produces about 80 grams a day.

In today's dispatch, we're diving headfirst into:

• Springbank: The Bubble That Didn’t Quite Burst

• Worthy Reads: Sampling some of the best from around the web

• Cocktail: How do you feel about bananas?

The Bubble That Didn't Quite Burst

It's like déjà vu all over again. Back in the 1630s, during the Dutch Golden Age, tulips were the new hotness. The Ferrari of flowers – everyone wanted one. And the rarer the color pattern, the more cash you'd have to shell out. Sound familiar?

Enter Springbank, a brand that in five years shot up in both popularity and price. At the peak, The 21-year and 25-year expressions soared over 500% in just a few months. But the reality of this surge was likely not as widespread as it first seemed. Some undoubtedly paid top dollar for these coveted bottles. What is more likely is many enthusiasts just watched from the sidelines, unable or unwilling to jump in at the peak of the hype.

Springbank's aged expressions – the 15, 18, 21, and 25-year-olds – saw their prices hit stratospheric heights during the pandemic-fueled collecting frenzy of the early 2020s. At the peak of the madness, in March 2022, the 21-year-old surged 541%, while the 25-year-old climbed by 551%. Speculators and investors, intoxicated by the promise of easy money, piled into the market, driving asking prices even higher.

But as with all speculative bubbles, the sobering moment was inevitable. By January 2023, the bubble had burst, and prices came crashing down like a house of cards. The 21-year-old fell by -73% from its peak, while the 25-year-old tumbled by -54%. The trough came right during the holidays, with the 25-year settling at $2,600 and the 18-year coming in at $1,400.

But here's the thing: while tulip prices eventually crashed and faded, returning to pre-bubble levels. Today Springbank is still up between 140%-305% from 2020. The 18-year and 15-year expressions peaked in August 2023, a year later. So, what is the reason for Springbank's ability to hold onto much of its value? Data points to two aspects:

1. Scarcity: The distillery's restraint in not cranking up production to cash in on the hype has kept their whiskies scarce and exclusive. Yup, that 25-year-old Springbank is still going to take a quarter of a century to mature.

2. Brand Power: Springbank is now synonymous with outstanding Scotch whisky the world over. Even casual drinkers have heard the name – brand is king, after all. In March 2022, all four expressions were in the top 500 most searched for whiskies.

Now, it's worth noting while Tulip Mania and Springbank’s surge share some common threads, they're not exactly cut from the same cloth. Springbank's rise and fall was part of a broader collecting frenzy that swept across various industries during the pandemic. But the psychological factors at play? Those are timeless. The pursuit of status, the allure of rarity, and the dread of missing out – these are the ingredients that fuel speculative bubbles, whether we're talking about Dutch tulips or Scottish whisky.

As the dust settles, a curious trend emerges in the search data and price movements. When the 25-year-old Springbank crossed the $4,000 threshold in June 2022, interest in the 21-year-old began to climb. In the months that followed, the search rank for the 21-year-old improved from 941 to 614, signaling a significant uptick in curiosity.

This pattern repeated itself when the 21-year-old hit its own peak of ~$2,440 in May 2022. As the price gap between the 21-year-old and the 18-year-old widened to around 75-80%, search interest in the 18-year-old started to rise. From June to October 2022, the search rank for the 18-year-old dropped from 1,460 to 890, suggesting that buyers were seeking a more affordable alternative to the increasingly pricey older expressions.

These shifts in search interest and price movements hint at a classic speculative bubble behavior: the "greater fool" mentality. Buyers snap up an asset, banking on the hope that they can flip it to someone else at an even higher price. But as the prices of Springbank's aged expressions continued to climb, the rate of appreciation began to slow, and buyers and investors started to realize that the jig was up.

But even as the speculative froth dissipated, the enduring appeal of Springbank's whiskies remains intact. Even after the significant price corrections, the 21-year-old and 25-year-old expressions were still trading at ~$1,410 and ~$2,740, respectively, as of October 2023 – well above their pre-surge levels.

Both the Tulip Mania and Springbank's price surge were propelled by a potent mix of scarcity, speculation, and a hunger for status and exclusivity. Tulips and aged whiskies, each demanding years of meticulous cultivation and maturation, became emblems of wealth and sophistication in their respective eras. Ok, maybe sophistication is a step too far, but bragging rights are certainly earned. The economic conditions of the Dutch Golden Age and the Covid-19 pandemic, both marked by increased wealth and limited outlets for spending, created fertile ground for speculative frenzies to take root.

Tales circulated of fortunes being made and lost over tulip bulbs. But recent historical research suggests the economy-wrecking disaster wasn't what it made out to be. Sure, the tulip trade was frothy, but confined mostly to a small group of merchants. While the fallout was significant for those involved, it didn't collapse an entire economy. Who knows, maybe in a few hundred years people will misrepresent the great whisky bubble of 2020 telling tales of fortunes won and lost.

So what's next for Springbank? Who the hell knows. But one thing's for sure – in a world full of flash-in-the-pan trends and get-rich-quick schemes, there's something to be said for sticking to your guns and doing things the old-fashioned way. Even if it means weathering a few storms along the way.

📰 Worthy Whiskey News (a.k.a. our favorite reads)

• Blue Note’s parent company R. Distilling Co. raises capital to finance inventory purchases this is after recently securing financing to expand its Memphis production facilities.

   

• Need a drink that stands up to dragon fire? Matthew Lillard's Sandkheg's Hide bourbon might be just the elixir.

• Love the thrill of Geocaching but don’t find the rewards enticing enough? Master of Malt said hold my glass with their “Whisky Treasure Hunt.” Yes, you will have to go outside for this.

• Irish Whiskey sales are stalling, is the great Irish Boom quieting? Or are consumers just too confused by industry jargon?

• Can someone please just do this for whiskey? Wine stores are entering the Wedding Registry Business.

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📈🥃The Campbelltown Cocktail 🥃📈

We could also just call this the speculation cocktail being that two ingredients have been in high demand lately.

Ingredients:

• 2 ounces Springbank 10-year-old scotch

• 1 ounce Cherry Heering liqueur

• 1/2 ounce green Chartreuse

Directions:

• Add the Springbank 10-year-old scotch, Cherry Heering liqueur, and green Chartreuse into a mixing glass with ice and stir until well-chilled.

• Strain into a chilled Nick & Nora glass.

• Express the oil of a lemon peel over the drink and discard.

What a ride it's been this week, huh? Thanks for joining us on this journey through the world of good spirits at great prices.

Got friends who love a well-priced bottle as much as we do? Share this newsletter with them and let's make our merry band of spirited enthusiasts a little bit bigger.

Thanks again for being here. Let's raise a glass to the week ahead.