[Whiskey Decision] 🧶 Spirits Pricing in the US 💰

Think your holiday traditions are wild? Check this: stateside, Santas aren't just jolly old men; they're rappelling down cliffs in North Carolina and shredding slopes in Maine. Denver's Christmas lights? They don't do deadlines. Arizona's got a tree that says 'desert chic,' while Florida's sand tree could be its own beach. Menorahs made of ice, Festivus feats that would make Seinfeld proud – it's all happening. Let’s the celebrations commence!

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

• Spirits Pricing in the US: A Damn Mess

• Case Study: The Widow Jane Odyssey

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

• Chart Worthy: Tax rates by state for spirits - ouch!

• Cocktail: something perfect for a warm night by the fireplace

🥃Spirits Pricing in the US: A Damn Mess 🍝

Navigating the world of U.S. whiskey pricing is like trying to follow a recipe for the perfect Old Fashioned - there's a basic structure, but each state seems to add their own twist. The end result? A blend of systems and policies that would confuse even the most astute economist.

Let's start with the Three-Tier System, the backbone of U.S. whiskey distribution. Picture it as a relay race: the whiskey baton passes from supplier to wholesaler to retailer, each adding a little sprint of markup. According to a 2020 R Street Institute analysis, wholesalers typically boost prices by 17-22% above supplier costs. Retailers in open states like New York then join the race, tacking on margins of 35-45%, as per a 2020 NY Liquor Authority report. Control states, not to be outdone, range from 25-45%. It's like every tier is trying to outdo the other in a high-stakes game of markup monopoly.

Now, let's time travel to the 1930s, when minimum pricing regulations were the knight in shining armor for small retailers, shielding them from the dragon of large chain's loss-leader tactics. Fast forward to today, and these regulations, still in place in states like Pennsylvania with margins of 5-15%, often stifle discounting quicker than a speakeasy during a police raid.

In the ring of liquor sales, we have 17 control states where government monopolies dictate the game, often leading to prices that are 15-35% higher than their free-market counterparts. Pennsylvania, for instance, flexes its markup muscle with a 66% increase over supplier cost, as per a 2021 report. In the other corner, open states with private stores face their own hurdles, grappling with markups of 25-50% thanks to local policies, reminiscent of a wrestler struggling against the ropes of alcohol tax rates and license quotas.

The gap between MSRP and shelf price in whiskey is wider than the Grand Canyon on a map drawn by a toddler. A 2021 VinePair report illustrates this with Pappy Van Winkle 15 Year, boasting an MSRP of $120 but flipping for over $800 in the secondary market - a markup that would make any Silicon Valley startup envious. State-specific minimum pricing laws add another layer of complexity, much like trying to navigate a corn maze after a few too many tastings. Any way you approach it, the market is ripe with inefficiencies and outdated practices.

📚Case Study: The Widow Jane Odyssey ⚓

Brooklyn 2012, Widow Jane Whiskey begins its journey, blending the art of distilling with the reality of market dynamics.

In its nascent days, production was a few thousand cases annually - a coveted treasure among connoisseurs. Focusing on “hand assembled” blends containing no more than 5 barrels. This limited bounty, juxtaposed with acclaim (there is a bunch), catapulted the whiskey into a realm where prices soared like Icarus towards the sun. Retailers, seizing the moment, marked up bottles of “Bloody Butcher” from the humble $40 MSRP to lofty summits of $280-$320. Here was a display of market forces in their raw, unbridled form — the age-old adage of supply and demand.

As Widow Jane's saga unfolded, its capacity expanded. Production lines stretched and swelled, elevating the case count into the tens of thousands. This surge in supply began to quench the once insatiable market thirst. Also being acquired by Samson & Surrey added to their coffers. By the epoch spanning 2017-2019, the whiskey's price began a gradual descent to more earthly realms, aligning closer to its MSRP. The market, once a wild frontier of exorbitant markups, now tread a path of moderation.

Today a balance has been struck. Production, now an impressive 65,000 cases per year, has met the embrace of a market. The whiskey now commands a price in the $55-75 range. And let’s not forget that the brand sits within the umbrella of Heaven Hill in 2022. A story as old as time.

Share the Decision (About Whiskey of Course)

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

• Once upon a time, Macy's wasn't just for shopping sprees—it was a bourbon buyer's paradise, stocking private-label spirits from top distilleries. Uncover this hidden chapter of many department stores!

• Who knew whisky could 'mushroom' into something so wild?
  Bearface's Matsutake 01 pairs Canadian spirit with earthy fungi – a curious sip for the adventurous palate.

• Arctic-aged whisky for ~$5k? Talisker's Glacial Edge 45-Year-Old pushes the barrel, literally chilling in the Canadian ice for a frosty flavor twist. It's the coolest thing since, well, ice itself

• Booze and browsers collide: OnlyFans creators are stirring up private whiskey groups on Facebook, with a side of cheeky charm. Curious about the unlikely saga?

📈Chart Worthy📉

If you think federal income taxes are outrageous, you’ve clearly not seen distilled spirits Taxes. Washington tops the country with over $7 per 750ml bottle. Insane!

📈 Top 5 Pour Decisions: The Priciest of Whiskeys 📈

Biggest five-year price surges among our featured whiskeys for 2023

1. Shenk’s Homestead Kentucky Sour Mash Bourbon +486%

2. Springbank 21 y/o Single Malt Scotch Whisky +397%

3. Stagg Jr Barrel Proof Bourbon +306%

4. Elijah Craig 23 y/o Bourbon +300%

5. Hancock’s President’s Reserve Single Barrel Bourbon +293%

📸Rewind: A selection of our most popular IG Posts

• Scotland is producing how much Whisky???

• Barrel Proof from Elijah Craig just crossed $100

• High West’s MWND is off its highs but still well ahead of MSRP

• A double dose of Christmas: It’s that season Mariah & Blantons and Lego & Very Olde St. Nick

❄The Boulevardier ❄
A perfect “by the fire” cocktail for these cold winter nights

Ingredients

• 1 ½ ounces Rye (We are all about Frey Ranch this week)

• 1 oz Campari

• 1 oz sweet vermouth

• Garnish: orange twist

Instructions

1. Add Rye, Campari and sweet vermouth into a mixing glass filled with ice. Stir until chilled.

2. Strain into a rocks glass over fresh ice.

3. Garnish with an orange twist.

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.