Allocated Bourbon in US - New Law Would Require Fancy Bottles Opener at Time of Sale

[Lamboinee]

In the US, bourbon makers use a marketing ploy called "allocation" to limit the availability of "rare" bourbons in the market place. Many argue that allocation increases demand/price by controlling the market artificially. I am unfamiliar with whether this technique is used by other liquor makers in other countries, but I can tell you that it certainly creates an interesting situation here in the US. I can confirm that bottles with wholesale and retail prices below $170 sell for $1000's on the secondary budget and a buddy of mine just camped-out overnight on the sidewalk outside of a major franchise liquor store for the chance to buy some allocated bottles at MSRP as opposed to the price he would pay on the secondary market.

A new law proposed in the "grate" state of Ohio (known for being located south of Michigan and famous for producing carpet glue and buckeyes) would require fancy allocated bourbons to be opened at point of sale in an effort to address the negative consequences of the allocation system (e.g. inflated secondary market prices, lack of availability, etc.). 

Setting aside the argument that this bill is undoubtedly a great use of the legislature's time and resources...is this bill going to pass? Will it work? Is this a good thing for the average bourbon drinker, and should us non wealthy muggles care? Do other countries also control their liquor markets through "allocation"?

Link to the original article I saw: https://www.google.com/amp/s/wgntv.com/news/national/ohio-bill-would-require-high-demand-liquor-bottles-to-be-opened-when-sold/amp/

[wjs]

The first thing I thought when I read this was the interesting legal twists it presents. First off is driving with an open container, which I'm pretty sure is illegal in almost all states. Secondly, I paid for the thing, why should I have to open it? If the store was forced/compelled to open it in front of me before the transaction was complete, that would be different.

 

[BrightonCorgi]

Legislative brilliance...How about ban allocated bourbon? Sounds more equitable.

[MrBirdman]

I think a better solution would be what PA does - pretty much all bourbon in high demand on the secondary market is released in lotteries open only to PA residents and license holders. Some will no doubt hock their bottles on the secondary market, but it at least makes it harder for scalpers to game the system. One schmuck here put his bottle on Craigslist a few years back - he caught a charge and the offending bottle was poured down the drain...they claim. 

One easier and less intrusive way to cut down sales to third-party retailers would be to make all private sales illegal (which they probably already are) and put a large, indelible sticker on the bottles so, if they end up sold to third parties for resale, it's clear they were illegally acquired. It might diminish their value for scalpers, at least. 

[Dr vonPuffenberg]

Reminds me of when the new Corvette C8 was first released. If you purchased the car new and sold it in less than 6 months (12 months?), the warranty was voided.  

Now the car has been out for a while and I don’t think that’s the case anymore.

[ha_banos]

I thought this was normal in any limited market. Over here, no Springbank sells for RRP in stores let alone the secondary market! 🤣

Buffet-nomics applies. Move against the crowd.

[Woody Hayes]

10 hours ago, Lamboinee said:

In the US, bourbon makers use a marketing ploy called "allocation" to limit the availability of "rare" bourbons in the market place. Many argue that allocation increases demand/price by controlling the market artificially. I am unfamiliar with whether this technique is used by other liquor makers in other countries, but I can tell you that it certainly creates an interesting situation here in the US. I can confirm that bottles with wholesale and retail prices below $170 sell for $1000's on the secondary budget and a buddy of mine just camped-out overnight on the sidewalk outside of a major franchise liquor store for the chance to buy some allocated bottles at MSRP as opposed to the price he would pay on the secondary market.

A new law proposed in the "grate" state of Ohio (known for being located south of Michigan and famous for producing carpet glue and buckeyes) would require fancy allocated bourbons to be opened at point of sale in an effort to address the negative consequences of the allocation system (e.g. inflated secondary market prices, lack of availability, etc.). 

Setting aside the argument that this bill is undoubtedly a great use of the legislature's time and resources...is this bill going to pass? Will it work? Is this a good thing for the average bourbon drinker, and should us non wealthy muggles care? Do other countries also control their liquor markets through "allocation"?

Link to the original article I saw: https://www.google.com/amp/s/wgntv.com/news/national/ohio-bill-would-require-high-demand-liquor-bottles-to-be-opened-when-sold/amp/

Oh, another thing Ohio is known for is a Tennessee Volunteers killer. See ya on 12/21.

[BrightonCorgi]

I'd rather see any agreement between retailers and distributors that will ensure bottles are somewhat fairly allocated. Distributor can distribute the bottles as they see fit. Retailer can mandate one per customer (3 per great customer).

In some states that have ABC's there is more control over this.  

[Lamboinee]

1 hour ago, Woody Hayes said:

Tennessee Volunteers

Go Dores!

[99call]

4 hours ago, BrightonCorgi said:

(3 per great customer).

If it's fair to assume that flippers are also the "great customers". Isn't that just giving greater access to exactly the people that abuse the system?

 

 

[MrBirdman]

3 hours ago, 99call said:

If it's fair to assume that flippers are also the "great customers".  Isn't that just giving greater access to exactly the people that abuse the system?

Important to keep in mind here that in Ohio the state limits retailers to MSRP, and it looks like they did institute a lottery system at least for last year. Why that isn't enough control I don't know. We have the same system in PA and, while some people no doubt hock the bottles, the consensus here is that the system is much fairer than what's found in other states precisely because it gives people a fighting chance to try "rare" whiskies (many of which were relatively easy to find when I started drinking). The lottery is free to enter if you actually keep up on it (there's a one week entry period for each lottery and no notice about when it opens). PA residents only, one per household, and you can only win one of the drawings (each bottle is a separate drawing, you can enter as many as you want but can only win one). It's one benefit of a state monopoly. Some of the lottery entries are for businesses with a liquor license, and those winners can obviously charge what they want for a glass.

I have never won (only remembered to enter a few times and I don't drink that much anymore). Most winners I have talked to drank their bottles. I'm curious why this legislator thinks it is such a big problem in Ohio. 

 

[Greenhorn2]

What gets my goat with the allocated bourbon crap is you can leave the US and buy all you want. Just vacationed in St Maarten and liters of Buffalo Trace were 2/$40, Eagle Rare was 2/$55 and Blantons was $75 a bottle $420 a case. Cases stacked everywhere, but here where it's made you can only buy 1 bottle a day and my local store  gets 2-3 cases a month. I quit buying into the scam.

[riderpride]

I've read more than a couple stories on a bourbon forum of retailers bypassing their own shop and going straight to the secondary market in states/counties with pricing controls. Absolutely disgusting and short-sighted behavior.

There's too much good bourbon to chase the allocated stuff. I have a bottle of 2018 George T that I'm holding onto for something special and a 2019 Pappy 20 that I'll never drink (allergic to wheated bourbon lol), so I'm more than happy with regularly available stuff like Bookers, Knob Cr Single Barrel, Buffalo Trace, and some Evan Williams BIB.

1 Chase no material good - it's not worth the time and money.  

2 Love and appreciate what you have.

3 My country regulates and legislates based on 'feels' and rarely addresses the root cause of the problem. I doubt the approach in the OP's post will be effective. 

Cheers!

[Lamboinee]

1 hour ago, riderpride said:

There's too much good bourbon

There is...so...much...good...bourbon out there.

[MrBirdman]

1 hour ago, Greenhorn2 said:

What gets my goat with the allocated bourbon crap is you can leave the US and buy all you want. Just vacationed in St Maarten and liters of Buffalo Trace were 2/$40, Eagle Rare was 2/$55 and Blantons was $75 a bottle $420 a case. Cases stacked everywhere, but here where it's made you can only buy 1 bottle a day and my local store  gets 2-3 cases a month. I quit buying into the scam.

Yeah, it’s gotten silly. 

[HDGSN]

3 hours ago, Lamboinee said:

Go Dores!

GO VOLS!

[Lamboinee]

21 minutes ago, HDGSN said:

GO VOLS!

I can't win no matter who don't root for. It's like I'm losing twice. 

[Jackdani7401]

Couple of things come to mind here….

1) Why let a flipper realize the secondary profit on the bottle over the store? The store has to buy such a high volume of “shelf turds” to receive allocations. The store has to tie up thousands of dollars in inventory to make 18%-ish profit on an allocated bottle while Joe Friday can pay $149.99 for the bottle and immediately flip it for $800+? Seems like the store takes all the risk and the consumer sees the benefit. 
2) Ohio stores specifically are limited in the price in which they can sell bottles for. The OHLQ determines max and min shelf price, thus increasing the “risk” on the stores side and the benefit on the flippers side. 
3) Lottery or raffle style won’t matter as long as the store is limited in the max price an allocated bottle can be sold for.

4) Remove the upper limit of sales price and let the stores charge whatever they can get and it’ll eliminate the flippers benefit and reward the store for their thousands of dollars in “shelf turd” inventory they had to take to receive the allocation.

All in all, in Ohio specifically, I’m not against this. It equalizes the “risk” on both sides, open containers laws aside. 

[Lamboinee]

37 minutes ago, Jackdani7401 said:

shelf turds”

My mother used to call me this. Total nostalgia.

[BrightonCorgi]

15 hours ago, Jackdani7401 said:

4) Remove the upper limit of sales price and let the stores charge whatever they can get and it’ll eliminate the flippers benefit and reward the store for their thousands of dollars in “shelf turd” inventory they had to take to receive the allocation.

In MA, liquor retailers can charge what they wish but cannot sell below their wholesale cost. I don't like the State dictating how much, how or who should get any bottle of booze. 

If bottles go to "flippers", then so be it. Those retailers thought it was better to see to them go to flippers than increasing the retail price to actual market value.

[MrBirdman]

15 hours ago, Jackdani7401 said:

2) Ohio stores specifically are limited in the price in which they can sell bottles for. The OHLQ determines max and min shelf price, thus increasing the “risk” on the stores side and the benefit on the flippers side. 
3) Lottery or raffle style won’t matter as long as the store is limited in the max price an allocated bottle can be sold for.

You guys might be misunderstanding how the system in Ohio works. It’s a public private partnership where the state purchases the liquor wholesale and acts as a distributor to private retail stores, who sell the liquor on consignment.

The state is not sitting back and “dictating who gets a bottle” with regulations on entirely private transactions. If they were, limits on out of state residents would be unconstitutional. The state is acting as a market participant by selling liquor to customers, and they’ve decided to allocate the high demand bottles directly to winners by lottery. 

These bottles are not allocated to the stores by private distributors based on their purchases (the stores don’t purchase anything, all the liquor is owned by Ohio and sold on consignment). Winners simply elect a store to pick up their bottle at. If the bottles were sold at market value, the stores would get a higher commission but the lion’s share of the excess would flow to the state of Ohio.

But, again, in my experience most winners drink or share their bottles (sometimes as a paid split with friends). Unless they have evidence to the contrary I think the proposed solution in the OP is overkill. Even if flipping is common in Ohio, if winners want to risk their necks by breaking the law to make a quick buck, so be it. Considering the forum I’m on right now, saying otherwise would be hypocritical to say the least!

[HDGSN]

The only bourbons that should ever be “allocated” are the annual/limited edition releases. Bourbon jumped the shark when retailers began “allocating” regular production bottles like Buffalo Trace, ETL, any of the Wellers (even the 12 year) other than WLW, ECBP, etc. If there’s any scarcity with those products it is because distilleries are diverting barrels usually devoted to those brands for future use for the “rare” releases. States like PA and NC have it right. 

[Ken Gargett]

i think that this is one of the craziest things i have heard in ages. allocations - we see them in spirits and wines often - only apply to the products which have built up a reputation where there is such demand that it is the only fair way to get them to their fans and devotees. by allocating - whether from distributor to retailer or from retailer to customer - it spreads out the products to allow more people a chance to buy them. nothing to stop the winery/distillery etc from saying bugger this and putting the entire production in an auction. but most want to make certain that their products are seen by those who love them and often, those who supported them in the days before they reached this position (eg, got my offer for an allocation of bell hill wines from nz this morning - been buying their wines for years but i'd have no chance if it was just first in. ditto Giaconda). 

some keep an eye on secondary markets and if someone is going there with the products, just to flip them, rather than using them themselves or putting them in their cellars, then they are cut off. 

but the idea of making stores open the bottles is so monumentally daft it could only have come from politicians. opens the door to fraud. destroys the value of the product for the producer. what if you want to buy the bottle to give as a gift to a friend or work colleague or client? imagine going to a client and saying happy christmas, here is an opened bottle. 

i swear, humanity just dumber and dumber. 

[BrightonCorgi]

As @Ken Gargett eluded to. Distributors should send at least half of their allocated bottles to auction. They'll make more than if they wholesaled them. They can wipe their hands clean of any retailer concerns.

 

[Lamboinee]

On 12/10/2024 at 4:53 PM, Woody Hayes said:

Ohio is known for is a Tennessee Volunteers killer.

You stomped 'em!