Hello Reader, and welcome back! In part three of our series, Whiskey Availability – By the Numbers, I’ll wrap up the whiskey availability and marketing saga, first with some bourbon history, then a little science and math. If you’ve missed either of the previous posts, click Whiskey Marketing – part 1 where I discuss marketing and store layout or Whiskey Availability – part 2, where I delve into regional selections, allocation, and rare and limited availability whiskeys.
Most whiskey drinkers who’ve been journeying a while have heard of the magic elixir, Pappy Van Winkle or “Pappy” as it’s known in the whiskey community. Pappy is nearly impossible to acquire and it’s sad to say, the large majority of us will never get a chance to taste this fabled juice. Why? Whiskey Economics 101: supply and demand — with a heavy dose of creative marketing thrown in for good measure.
The Pappy Van Winkle story is a GREAT way to conclude our availability journey. An argument could be made, this much sought-after bourbon energized the bourbon craze we’re now enjoying. Read along as I share a little whiskey lore …
There really was a Pappy Van Winkle!
Julian Van Winkle Sr. had distilling and spirit sales experience prior to prohibition; William Larue Weller had hired Julian as his first salesman! In 1931, at the age of 61, Van Winkle opened the Stitzel-Weller distillery. Through the next 34 years, until his passing in 1965, Julian Sr. continued to influence the bourbon industry.
But, by the mid nineteen-sixties, whiskey in general and bourbon in particular was unpopular with young Americans. As the war in Vietnam wore on, many in their twenties and early thirties rebelled against anything their fathers and grandfathers enjoyed. The clear spirits – gin, tequila and vodka were in vogue and whiskey sales plummeted.
After a decade of steadily declining sales (and family squabbling), Pappy’s son, Julian Jr. sold the Stitzel-Weller distillery and (with the exception of the Old Rip Van Winkle name) the rights to all of their whiskey brands. With whiskey still not in favor, and Julian Jr’s. passing in 1981, the Old Rip Van Winkle line and remaining barrels at Stitzel-Weller went to his son, Julian III. Shortly thereafter, the Stitzel-Weller distillery stopped producing for the Van Winkle family. Julian III contracted the Hoffman Distillery in Lawrenceburg, Kentucky to store, bottle, and distribute his whiskey.
By the early 1990s, bourbon began creeping back into American drinking culture and the Pappy brand had begun to garner some attention. It is thought that Julian III had been sourcing older whiskeys, purchasing from many area distilleries, including some barrels from Stitzel-Weller that may or may not have been the original Pappy product. With help from the Hoffman Distillery, Jillian III released a 10 year old bourbon, followed by a 12 year old, then a 14 year old and eventually some 20 and 23 year old bourbons.
Upon the release of one of these older bourbons, a Chicago sales rep introduced a sourced 20-year-old bottle to the Beverage Tasting Institute’s judging panel. Amazingly, it scored a 99, and it was believed to be one of the finest bourbons ever produced. There is a common belief the bourbon inside that bottle had been purchased from one distiller who had purchased it from another.
Suddenly, everyone wanted a bottle of Pappy Van Winkle and the brand which had been languishing on store shelves became difficult, and then near impossible to find. And don’t forget, the bulk of this whiskey was likely sourced! Years later, after Sazerac purchased all the remaining Stitzel-Weller holdings and began producing Pappy Van Winkle under their banner, it is entirely plausible little if any barrels containing the original recipes Pappy Sr. had developed were even around. Marketing at it’s finest!
And today, other whiskeys have had similar back stories, complete with sourcing and availability challenges. Of course there are other factors to why some whiskeys are challenging to find as well … Whiskeys can be seasonal releases or under allocation allotments due to production quantities as I’ve noted in the previous posts.
But I promised some science – and a little math … follow along, (there may be a quiz!)
The Most Common Production Limitations
Let’s dig into this supply thing a bit. Surely distillers want to sell product and they want to get the best price they can for what they produce. That’s pretty easy to understand. Aside from production costs which are largely fixed (it costs “X dollars” to produce “Y” gallons), the supply side is all most distillers can control. But there is another factor to consider along with the number of barrels filled and set aside for aging … evaporation.
Barrels can lose 2-3% (on average) of their liquid contents to evaporation annually, depending on climate. In hot and dry years, 4-5% is certainly possible. While 2-3% evaporation loss per annum may not seem like much, consider the following “on average” examples for bourbon aged in a standard 53 gallon barrel:
Evaporation losses at 2% per year
▪2 year old Straight bourbon: 2 gallons per barrel lost
▪4 year old Bottled-in-Bond bourbon: 4 gallons per barrel lost
▪10 year old bourbon: 10 gallons per barrel lost.
Evaporation losses at 3% per year
▪2 year old Straight bourbon: 3 gallons per barrel lost
▪4 year old Bottled-in-Bond bourbon: 6 gallons per barrel lost
▪10 year old bourbon: 14 gallons per barrel lost.
In dry environments, more water is lost, thus increasing the alcohol level in the barrel; in hot and humid climates, more alcohol is lost. Such is the case in Taiwanese whisky, where it is seldom aged long as the loss in alcohol is significant. However, whiskys made in cool and humid Scotland can be aged decades, as evaporation is only prevalent in warm temperatures.
Evaporation loss is known as the “Angel’s Share” … and the Devil gets some too! Each season, as barrels expand and contract with temperature changes, liquid gets absorbed and pushed out by the wood. Barrels can absorb as much as 3-4 gallons each. This absorption loss is known as the “Devil’s Cut”. Most distillers do not attempt to recover the lost whiskey due to the costs involved. Jim Beam has a proprietary project where some of the absorbed whiskey is recovered, but only a small percentage makes it into each bottle of Jim Beam Devil’s Cut Bourbon.
Now remember that 20 Year Old Pappy Van Winkle Family Reserve Bourbon? If ALL the years of aging were average (seems unlikely) and just 3% of the liquid was lost to evaporation each year … and after barrel absorption is accounted for … more than 26 gallons or about half of every barrel destined to become Pappy is lost! I’ve read some reports where after 23 years, less than 14 gallons of usable juice (or less than 70 bottles) per barrel remain. And while the total number of bottles released each year is undisclosed, I’m certain there are very few barrels of 23 year old Pappy around.
Another example, using a recent and allocated release from the Jim Beam Distillery, Booker’s 2019-03 “Country Ham” was made up of just 364 barrels (as stated in the packaging documentation). Each barrel would have been filled with 53 gallons (or about 200 liters) of white dog (the initial mixture) and set aside to age for six years and four months. While the total number of cases made available for sale was undisclosed, one could calculate* about 4600 (or more) gallons could have been lost to evaporation and barrel absorption. That leaves only about 12,250 cases or less than 74,000 bottles may have made it to the thirsty whiskey world!
*Using annual evaporation rate percentages and barrel absorption averages (for detail, see datasheet below). Interesting sidebar – Monetary losses due to absorption and evaporation alone could have totaled in excess of $2,000,000 at retail, but of course losses are probably factored in production costs.
These are just a couple of examples and every distiller operates with the same rules of physics. Factoring limited productions and allocation to Liquor Control States, Liquor stores and Markets, bars and restaurants as well as other distribution points, it becomes a little easier to understand why some products are so hard to track down.
I hope you’ve enjoyed and learned a little as you followed our Whiskey Availability and Marketing series. By the Numbers can get a bit tedious but I find the detail intriguing. I’d love to get your thoughts. Cheers!
Written by Brian Dawson
WhiskeyfortheAges.com editor
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Photos in order of appearance:
Featured Image crafted by Brian Dawson
Pappy Van Winkle photo found on Google Images
Aisle of Barrels Photo by André Carvalho on Unsplash
Booker’s 2019-03 Country Ham by Beam-Suntory