The drinks business' woes have been splashed all over the press for months now. Boomers, who have driven growth across the high end segments of wine and spirits for decades, are aging-out of their prime drinking years. Millennials are not falling for the romance that high-end wineries have hung their marketing hats on, and see other recreational consumables as interchangeable with booze. Cannabis, RTD (ready-to-drink cocktails,) hard-seltzers, abstinence, and rising prices have all taken a bite out of legacy sales channels.
And those trends were all gaining traction before Trump's antagonistic trade maneuvers took their catastrophic toll, most particularly, on American whiskey. Canada, once a top five export market, dropped US products from its shelves virtually overnight. Europe has...well, who knows where things across the pond stand now, as court rulings and tit-for-tat trade barbs seem to change weekly? Regardless, the effects are quite real.
This hit home recently when, on a recent Sunday morning, my local grocery store had several cases of Weller Special Reserve sitting out for anyone to help themselves to. mere months ago this same bourbon caused lines to form before the liquor department opened for business, and sales were limited to one bottle per customer. No mas.
Given how crazy the secondary collectibles market had gotten, a correction was overdue, but this is much more than a correction in the traditional sense. Many jobs have already been lost, companies have gone belly-up, and the economic landscape of an industry has been fundamentally altered.
But there is an upside for consumers here that we should begin to see emerging sometime this year. All those barrels aging in inventory right now will continue to age. Collectively, they translate to around 40 million cases. Depending on how you do the math, that could amount to 2 years of supply. Certainly not all of it is primo quality, but some if it has got to be. Whatever the distribution, that kind of supply glut will inevitably translate to pricing pressure, the birth of second and private labels, and greater availability of higher quality product (as evidenced by the above photo) - all good things for consumers.
What I'm most looking forward to is the second of those consequences. Anytime there's surplus product in the supply chain, producers will find ways to move that product without eroding brand equity or taking price hits. Some of the supply will get sold off to blenders who will slap their own labels on it (like the Cameron Hughes and Costco/Kirkland models,) and some producers will do that themselves (this was the original idea behind Decoy.) With so much inventory just getting older, I expect the next few years will see a number of these one-off's hitting shelves around the country. Who knows, maybe we'll even see the return of $15 six year old bourbon. I'll keep you posted.