The Bourbon Secondary: Killing the Culture or Keeping It Alive? | Ep. 124

The bourbon secondary market: love it or hate it, it’s not going anywhere. Some say it keeps rare bottles moving and rewards collectors. Others say it’s ruining drinking culture, pricing real fans out, and turning whiskey into Wall Street.
We dig into whether the secondary market is helping or hurting bourbon culture, what it means for casual drinkers, and if brands secretly love it.
What do you think, is flipping bottles killing the fun, or just part of the game now? Drop your take in the comments.

#bourbon #whiskey #secondarymarket

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Transcript

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If I got a Pappy 23, I'm never opening that bottle. It's gonna sit on my mantle, give it to my son to open it in his like wedding or something like that. Or I'm gonna sell the damn thing. Yeah. Because to be honest with you, it's not good. This is arsenic culture. And I'm Matt. And I'm Jason. I'm Drew. And I have a question for both of you. What do you think of the secondary market? It's after the It's after the firstiary market and before the tertiary market. yeah. Brain trust over here. Maybe one of those words is not like the, I know Drews is a little weird. I, I don't know. firstiary market. That's fucking awesome. So the secondary market is something has come up in our show a lot. I've heard of primarily with bourbon. Uh, a lot of times with beer. Um. But it exists on lots of different planes, not just alcohol. There is some alcohol where it is exorbitant like wine. You Remember we did the Rudy Kurniawan episode. Do. I do. that's a good one. And like people are paying millions of dollars on the secondary market for some of these bottles of wine. But then you get like shoes. You got like, what the fuck else is like a secondary market? I mean fucking like clothes. Clothes, yeah. Watches, literally jewelry, gold, Yeah. whatever. Um, but yeah, it just kind of got me thinking like, it's hard to, like if you are. in something yeah. Like you're into beer, you're into bourbon, you're into, you know, sneakers. the magic cards, Pokemon cards, right? Yeah. baseball cards. Any kind of collectible. Yeah. one of my cousins, his job is to, uh, buy Pokemon cards and then resell them on eBay. I don't think he makes a lot of Oh, I bet he does. Like, he makes enough to like, you know, pay whatever it costs to live in his parents' basement, you know, so, I mean, that's, that's something, Uh, but yeah, it's just like if you are in whatever industry that is. Okay. And it's like you have a legitimate, like yearning to get something, a specific item, we'll just call it item A. Right? And you can't get that because hype has turned it into something, some anomalous beast that is just like, makes it impossible when the retail value is like.$10 or$50. remember, you remember the first time that you were aware of the secondary market? I, I do actually. I think not even in beer or bourbon. Just in the world. Like I would say baseball cards when I was a kid. That's a good answer. know what I mean? Yeah. What about you, drew? Do you, I I think it was some movie that I watched back in the eighties where they were talking about artwork. Okay. You know, it was like some mystery. Somebody stole something a huge one. yeah. I remember. I think baseball cards is probably the right answer, but for me, what I remember is those fricking beanie babies. Yeah. You remember how crazy people went for those like, so like early nineties. Late Babies, I feel like is a weird case because it was cra Remember the Princess Diana Beanie Baby that was like the crown jewel. They were popular and like everybody bought'em, but I feel like there was never an actual Oh, there was huge. Are you sure? A hundred See, I remember all the, like that was, That was the ongoing joke though, is all these people bought these beanie babies. But like, you couldn't move'em. Oh, you could, but see, you're talking about later. When they first came out, we never saw 'em. Like I wasn't collecting stuff to animals at that time, but like I would hear about like, what the hell's a beanie? But I, I did, I had a few. They're so cute. But I remember, I remember the Princess Diana one was just like this crazy. You know, thing that you'd never see in your life. Yeah. But there was all these, you go to card shows, like basketball, baseball. I collected those, trading them with the shows. You would see Beanie Babies then how how many years ago was that? Uh, we're talking probably 94. Oh. so that was a we're talking between 90 and 95, was that like? Like Eight years ago. Yeah, about seven, seven years ago. what I feel like, but that's not, that's not true. Yeah. Say nineties. I was like, oh yeah. that just happened. You You have to be born in the nineties to get beer. I'm like, wait a minute. I thought it was like that. I know, That's what it feels like, yeah, that's, that's that's the first one I remember. That's, that's the first Okay. The fact that, you know what apprentice Die, beanie baby is, that lends me to think, I think I could pick one out. I think it's purple with a little rose or something Yeah. You collected Beadie I did not, bean babies. I remember when I was a kid, my next door neighbor, um, Thomas Morgan. Actually Jack's brother. He, uh, was like, I have, uh, an aunt. Who has a brother who has like a dog sitter who's like mom, Um, is related to Carlton Fisk. Hmm. And I I was like, Yeah. And I was like, oh, that's really cool. He's like, if you have a Carlton Fists card, I can get it signed for. you. and I was like, I was like, oh, hell yeah. So he told us to every kid in the neighborhood and like we're all like bringing him like, we got tops, we got Bowman, We got like whatever Carlton Fists cards that we got, and we Don Ru, there's some Don Rust cards and uh, and then flir. And then we were just like, yeah, he'll get a sign, he was like, all right. So he took him and he did, you know, send him off or whatever. Like a week goes by and we're like, where's my Carlton Fisk sign, autograph card bitch? And he is like. Oh, And she hadn't gotten 'em yet. You know, it's just like she's working on it. And like another week goes by. and like, Where's our Carlton Fisk autograph cards? And he is like, well, she got 'em, but like. You know, she's trying to track him down. He's real busy. Like he plays baseball for a living Guys you know, we're like, okay, like another four weeks go by. We're like, where's Carlton Fisk? Like, she's working on, it. just trust me, it's there. We never got her fucking Carlton Fisk cards back. I'm pretty sure he was like, that was like his favorite player. And he was Just like, give me all the cards. thought you were gonna go. He just signed em himself and so that's what I thought he's going with. Yeah. better. Or he took the cards. Carlton Fisk was immediately elected to the Hall of Fame. Yeah. And then those, the price went up on those cards and he sold'em all in the secondary mark. Yeah. Yeah. I imagine the getting it back in like his handwriting with his signature on there. And like 30 years later, I'm like, going to a trade show and they're like, uh, who's, who's, uh, Bob Goldthwaite? I, don't, I, don't. It's I've, signed a few Michael Jordan in my day. Here you go, kid. Yeah. Yeah. Um, yeah, that's a tangent. But I mean that's, I think that kind No, it's secondary. We're that, it kind. of encompasses the secondary. while we're talking about that, there's a bottle behind you, Matt, that's just appeared. one? Woo. one that says King. Oh, that's like a magistrate. You didn't even see that. behind actually opened this on a previous episode, but for this one That was our 100th Episode. where you, you brought that out. That was really cool. Um, I'm gonna wipe my brow here. Uh, shout out to the guys over at, uh. The bourbon house and, uh, we forgot to turn the AC on, but it is starting to finally cool down. So I got my sweat rag. But uh, yeah, these places are badass. They always let us, uh, record their Airbnbs. So uh, check them out@partyhouse.com, That's party HOU s.com and rent it for your party and have a party and drink any of this liquor behind except for this King Kentucky. Yeah, that's, that's not staying, that's not staying, not staying. That that is definitely not staying. So, uh, but thanks for pulling that back out, man. So the bourbon Secondary market. Has been something that's like really hits close to home for, for most of us. Um, you more so when I first, Started getting into, uh, bourbon and started realizing how crazy the secondary already was, I bowed out. I was like, I'm not spending time. It was honestly, you and I, Jason talked about like sneakers and stuff like that. Yeah. And I saw some cool shit and I was like, I do not, I do not need another time sink and another money sink. So I was just like, you know what? I'm just gonna like sit back from afar. But I mean, it's pretty much, as far as bourbon specifically goes, I feel like it has ruled the industry for the past six years. has, um, uh, the pandemic Pandemic, right? The pandemic, not COVID pandemic made it much worse. Um, people sitting at home, you know, whatever. But now we've seen people will say market correction for bourbon. It's not a market correction. It's, it's a complete and total. No Meltdown. like it is a down Like as in it's just so if you bought a bottle in, in the pandemic and you bought, bought it for $300, a lot of those bottles, you'd be lucky to get 200 out of today or one 50, right? So people were buying it, thinking everything's going up, everything's going up, everything's going up. But it didn't, it's like the housing market crashed. Think of it that way in bourbon. Well, Well, there now this one, this one's been immune to that the king. of Kentucky. I mean, it's $2,000. there was like, uh, there was, we had talked about like investment groups coming together. and like you get like 20 people, 50 people, and they would all buy like a, a barrel of pappy or something. Right? not a barrel. They would buy a, a lot of bottles they would buy, they would buy five King Kentuckys or a hundred at $1,800 each. Thinking what keeps going up? It's gonna go up to 5,000 in two years. Yeah, well it did go up, and this again is $2,000 roughly, depending on which balls you get. But still, your return on investment's, not what it was. And a lot of those balls went down. They were were treating it like, like the hedge fund of bourbon. You know, it's the housing market literally. Like it just crashed. It just just crashed. Yeah. But I mean, with that, there's so much speculation when you go in and you're gonna try to, you know, Hey, we think that it's gonna go here. But it's just like anything else, depe, you know, I guess you don't know how long that wave is gonna go. Right. And so this is a 2024, right? So it's. It is probably near the peak, you know, I would say then, and then now we're starting to see everything kind of pull back a little bit. And it's like all those people who are speculating, you know, I think there's a few things like in bourbon that have been, um, the drop, they're proof, they're, they're, they're not gonna, they're gonna be immune to that drop. I think the few bottles. you Yeah, a few bottles. Pappy is always gonna have it. It's not as much as it was. I mean, it's not King Downey, it's just not went up anymore. Right. King Kentucky, same way. This is a brown foreman product and it's their, it's their peak. Once the best one they have. I mean, all accounts, essentially, Jack Daniels is part of theirs. Some of their barrel strength. Coy Hill from that like specific Rick House area at Jack Daniels, that's a huge one too. But beyond those, you really see a lot of your secondary going down. It's those mid tier and like lower high tier. Those are the ones that are just kind of just down. What do do you think it does for bourbon though? The secondary market? a As a whole, like we, I I mentioned that it's pretty much defined the industry. Like, do you think it's helped the industry? Do you think it's hurt it? Great question. you think it's necessary? Because the thing is, um, generating hype for a lot of these bottles Is, I feel like this is just me, but I feel like it's a very organic process, um, brown foreman brown foreman can put out all the marketing they want on King of Kentucky. But if it was like, if it was shit and it was not good, that's only gonna get you so far. People are gonna discover that it's not good. Right? Yeah. or they're gonna figure out, you know, it, it's, it like it is shit quality. You know? Maybe it's just like a repurpose, like something else. But like, if people start saying it's good, even if it is a shit product, and then like the, you know, the next guy over is like, well, I respect that guy's palette. Yeah. Or, um, I want him to respect my palate. so I'm just gonna say the same thing. That's kind of like a um, like spreads like, wildfire. and that's, I feel like that's how hype is created. Well, and it's almost like an imposter syndrome in a way too, you know? But I mean for, I mean, for the state that we live in, um. I think that the, the secondary market and the hype has been great for the growth of bourbon as a whole. Like, look how many distilleries have popped up. Right. Expansion, right. Extra jobs. But on the flip side of that though, it's been a great thing. I think it's also fool's gold. Now you're seeing distilleries close down. You're these smaller ones that are coming out. There's so much in Dan. There's, there was one that closed down, I think in Danville. Danville. They. They hadn't even opened yet. Mm-hmm. And they're bankrupt closing down like these people that've expanded so much. Everybody at Buffalo Trace like, you're hurting. traces is fucking still expanding. Huge. well they're, they're in the, they're like a three, four steer expansion. But here's the problem. Buffalo Trace too, like if you look at it, so they were limiting bottles. One per person like of eagle rare, well or special reserve every 90 days. I went there two weeks ago and got something. They don't care. Like, oh, you can come back tomorrow and get another one. Yeah. Like they're not even shaking your like scan your like, whatever. but, so I think there's two points to that. Probably. You've got, like, they realize that the hype is kind of dying down, right? Mm-hmm. But when you think about the scarcity of some of these bottles, because not everybody has the ability to us to drive 40 minutes, wait for an hour and a half in line and go have a pick of some nice bottles. But some of that scarcity now is. Going away. Right. Yeah. Even, even if you wanna throttle it from the, like, if you wanna create it, so if you like, so people have always alluded to this. I don't have any proof of this. I don't know that this is true. I don't even know if I believe this, but they say Pappy has been held back. Like they make it scarce because they can Artificial, yeah. What is Artificial demand. Yeah, essentially. So it's like you're manipulating the market. I don't, I don't know that I believe that. I mean, maybe to a point. They're not, they're not releasing 5 million barrels of Pappy 10. Right. But they're releasing a lot, you know, or Van Le equal 10. But from that standpoint, I mean, I think, I think having this more available in your market is gonna be a good thing. Like if you can go to the store and get EH Taylor or Eagle Rare, or Weller Special Reserve Blanton's, that's what you used to be able to, if you go, if you rewind to like 2018, you could walk in any liquor barn in Lexington, Kentucky and get a blinds at any time of day. If you rewind to 2012, you could get a Elmer t Lee almost anytime you won 2009, you could probably get a Pappy, like you Well, that's the thing. Yeah. And well, that's, you're getting to where I was going with my point is that, see, I knew you were, I knew I, I was there with, you see, I knew. we shared you do it up on the, instead of a T for me. It you create like a buzz, right? And so you can throttle your supply a little bit, but then at some point that spigot needs to be turned back up. And so. I think there's an interesting sort of, what do we do here from a bourbon standpoint is like, do we want to increase that supply so it's more available in the market? Yes, prices are gonna come down because there's excess supply now, but it brings more buyers into the market as well because there's so many situations like I'm like you secondary market. I've never, ever bought a bottle of bourbon on the secondary market. Not one shouldn't. Yeah, I have, I have bought a lot. I'm, I'm more of. What I've had to do, I've talked to Matt about this too, so I've bought and sold on there. I'm not gonna lie, but a lot of times it's like, okay, if I can get a King Kentucky, I want it, I want this ball to open and drink. But if I didn't, if I got a Pappy 23, I'm never opening that bottle. There's, there's one of two things gonna happen. It's gonna sit on my mantle, well, three things, sit on my mantle, give it to my son to open in his like wedding or something like that. Or I'm gonna sell the damn thing because to be honest with you, it's not good. It's not my jam. It's it's not worth, the no, no, I don't even think it's worth retail. Like it's, it's, it's like licking an oak barrel. And again, my pal is different than everybody else's, but I think if you looked at all the Pappy 20 threes released, I bet less than, I bet less than 15% ever get opened. I bet they're just like traded as currency I believe. No, I believe that. a lot of times what I would do is if I had a, a nice bottle, which I've never owned a bottle of Pappy, but if I had a nice bottle and I couldn't trade it to something I wanted, I might sell it and then take that cash and buy something I wanted. So that's, that's something I want to bring up. um, is, you know, is the juice worth the squeeze as the saying goes? That's why I wanted to have this It's not exactly, but before I get into that, um, we were, we're talking about the secondary market being. like, what? For all intents and purposes, what we're saying is that it is. like the market indicator for that industry. So it's like, it's weird, but it's like bourbon itself is not dictating how popular bourbon is. It's the secondary market's perception of bourbon. That is actually making it surge. And then once that interest in the secondary goes down, it seems like the actual industry is following. Suit. So it's like without the secondary, would we ever have a bourbon boom? Because if you recall, back in the eighties, fucking nobody wanted bourbon. They were putting it in Turkey shaped, decanters lined with lead. You know what I mean? Just to get some of those. Those are I know. Just to get people to fucking buy it, you know? And all of a sudden somebody's like, you know what, I like this. And then one of his buddies is like, I like you and I want you to like me, so I like it too. And then hype just goes, woo. And then everybody's just like, let's fucking start buying this shit. So, I think if you, you know, if you wanna know where it's going and, and this could be a lot longer episode, I'll, I'll shorten up my part. We can go with something else, but, um, I think we're in trouble. I think the bourbon industry's in trouble because there's nowhere to go right now. Like the high end stuffs still great, but your medium to lower high end stuff, it's if it gets more readily available. There's no secondary to it, which tells you nobody, and people are looking at that. Nobody likes it. That's what you said, like they're tying it to the, the perception is it is is all about let's use an easy, easy bottle here. Let's look at eh Taylor to small batch. Okay. At the peak, that was probably going for one, uh, let's say one 50 a bottle. That's national. Yeah. Now it might be 75 to 85, in it's half well, what's retail. on that though? Uh, Uh, retail is caught up. So retail's probably 50 to 60. Okay. Like, I mean, it's close, Is that what it is at the distillery? Yep. So if you buy Blas now at the distillery or any big box store, you're gonna pay as much as it is to like buy it. Secondary. And eagle rare is a weird one because some of the stores in town are 60 bucks, 55 bucks you can buy Eagle, rare ship, 10-year-old shipped to your front door. That's pretty for like 50 bucks. Because, because other market it is great if you like Eagle Air. Yeah. Other markets don't have it jacked as high as our prices here, Kentucky's been, they took advantage of, and I get it. They need to recognize though, they kind of screwed themselves over. You can't keep raising your price to meet secondary when secondary crashing hard as can be. Like you're gonna pass it. Right. And when you hit that point, everybody's gonna be like, fuck you. but isn't the, but isn't, isn't that the point from an industry perspective? is to try to like. eliminate that disparity in order to have things line up So we from, from capitalistic. That's We've talked about the juice not being worth the squeeze. Uh, a fucking $2,000 bottle of Pappy is not worth$2,000. It's, it's not that good. I mean, that is a flex for all intents and purposes, if you're spending that com, that kind of Yeah. But if you, if you have a bourbon drinker that you think their pallet's good and you respect, you know 'em, they're never gonna put Pappy 23 in their top 50. No. they're not. No, but it still commands that kind of price, So like it's a status Yeah. So that's, I mean, that's kind of the epitome of. you know, That it does epitomize the secondary market, I believe. But it's like when the prices do come down, when the hype does subside, when, um, bottles become more readily available, uh, Pappy, notwithstanding you can get something like, um. Maybe an Elmer again. I don't know. We're not there yet. Blands, you know, Blands is becoming easier to come by. It's a good bourbon. It's, it is. It's, it's fine. Nothing for a point there, it was just like, I don't even wanna wanna waste my time with it because it's hard to get, and it's expensive. wanna stand in line for three hours for a bottle of bite. That's ridiculous. Come on. Ridiculous. and you know, they did a lot of product placement and a lot of shows and stuff, which, what did it do? Increase the height. Demand goes up, supply is still low. Everybody's watching John Wick and they're like, oh my God, how'd he get a bottle? of Blaton that, that, Product placement. That's uh, and, and Yellowstone. I think Yellowstone had the BLANs too. they had, they used Weller. Weller. That's what it was. My bad. Yeah. There's that bourbon store, that stuff here where there's that picture of, Yeah. Yeah, that was you look at, you mentioned Elmer t Lee and then another one from Buffalo Trace. Rock Hill Farms. Those are single barrel products. That's what they say on a label, but they've not done single barrel picks of Elmer since, I don't know what year it's been. It's been 15 years ago. They used to do some single barrel picks for like Benny's Outta Chicago, stuff like that. They had waxed Elmer's with stickers on it. Those are worth a lot of money. They're still commanding the high price now. Buffalo Trace just announced recently, they're coming out with Elmer and Rock Hill Farm back in their single barrel program. That's great. Well, it's, it's great for us. But then you, but then you look at it as like, how much in trouble are they? Because you've got this crazy big expansion. You're the best thing going in bourbon. No matter what anybody says, no matter what anybody tells you, Buffalo Trace sets the market, makes the market, they're the man. Right. But you say how much in trouble? I think it's all relative, because being in trouble is one thing, but just being able to provide your product To customers. Excuse me. And they're still not there yet. Yeah, yeah. At the price point that you originally dictated. That's completely different. you know? Yeah. It's not like they're hemorrhaging money and they're not selling their product. They're kind of at that inflection point to where They finally may be caught up with the, the, hype. train Or whatever. But then to your point, it's like if they're raising their prices here, availability, you know, hype's coming down, they're getting a little more availability. Are we just gonna pass each other and then they're gonna we, we, are at certain, certain points, certain distillery, certain bottles. But like you look at Pappy, let's talk about that one. Let's say Pappy 23, I don't know, the SRP or MSRP right now. Probably 500 bucks. Four to $500, right? Which sounds crazy, but when that's going for 2,500, $3,000, whatever it is, it's still, you're not even close. But if you look at like some of their other products, the Elmer t Lee's, like that was over $300 during, during the pandemic. Now. A hundred twenty five, a hundred fifty shipped. Yeah. Like it's half price, you is it's still kind of expensive for Elmer. Oh it is. Yeah. Yeah, yeah. Elmer's meant to be, meant to be a shelfer almost. Yeah. Like I, that's what it's meant to be. It's an everyday drinker. It's great pour for what it is, you know? Yeah. Well, I mean, I think those are a lot of. Good points and, um, I think everything I said was right, So, uh, everything Jason said, you know, you can kind of take it with Jason's gotta drink his mouth, so he can't he can't argue. I'll wait until he. drinks, so that way he can't Argue. But yeah, let us know in the comments. Sound off, see what, uh, tell us what you think about the secondary. If was beneficial if you fucking hate it and you wanna murder the secondary, uh, in the butt with a knife the tertiary or the firstiary. That's a good, a great term. Share this if you liked it. Uh, for more arsenic culture, you checks out on this, all the. socials We are@arsenicculture like, and subscribe on YouTube. We'll see you on the next one.