Despite ongoing shortages of small-volume Bourbon releases, allocated items play a key role in making spirits retailers relevant to Bourbon drinkers. “Stores that don’t overcharge earn the respect and loyalty of their customers,” says Scott Niecko, co-owner of Michigan’s Mega-Bev chain. “And that respect is the key to long-term growth.”
Indeed, limited supply of sought-after Bourbons and other spirits is frustrating for consumers and retailers alike. And while some retailers may capitalize on shipments of the coveted products with sales at exclusive price points where legal, others are opting for tactics built on ensuring fairness to all customers and aimed at building the stores’ reputations. Increasingly, licensed beverage retailers are getting creative when it comes to divvying up allocated spirits, with practices ranging from full-scale store events to tie-ins with loyalty and single-barrel programs to raffles and even charity auctions.
At Southern Spirits, a 12,000-square-foot store in Indian Land, South Carolina, not far from the North Carolina border, a Saturday morning allocation event takes place every four to six weeks. “We send out a message the day before on social media, and customers will immediately begin to line up, camping out overnight,” says general manager Drew Podrebarac of the first-come, first-served event. The sale typically attracts about 350 people, and each one of them is entitled to purchase one bottle, and sometimes two, all priced at the MSRP. Southern Spirits capitalizes on the event, which typically features the likes of Buffalo Trace, Bulleit, and Old Forester releases, via add-on sales, including its single-barrel offerings. Looking ahead, the South Carolina store is pursuing a mobile app that will allow attendees to simply remain on store property without having to line up in the hours leading up to the event, Podrebarac reveals.
JJ’s Wine, Spirits & Cigars in Sioux Falls, South Dakota also leverages allocated whiskies as a tool to drive sales of its single-barrel spirits program. Each year, customers who have earned their way onto the store’s allocation list—by being members of JJ’s VIP rewards program and purchasing its single-barrel offerings, along with other whiskies—are notified that they qualify to make a purchase in December. The sought-after whiskies are then sold at MSRP, generally $25-$130 a 750-ml. “It gives our customers the opportunity to sample some really great products that we stand behind and enjoy their whisk(e)y journey, while allowing us to drive profits from the single barrels,” owner Tom Slattery says, noting that the store doesn’t make much money on the allocated spirits due to their small volume. JJ’s approach to the limited releases “allows us to focus on fans of high-quality whisk(e)y and our good patrons who participate in the store and its activities,” Slattery adds.
JJ’s also holds a weekly raffle, whereby customers who have earned tickets through various means, such as the purchase of a whisk(e)y flight at the venue’s bar, can also win the chance to purchase a special bottle. Recent weekly raffle offerings included Weller Special Reserve ($35 a 750-ml.) and New Riff Balboa rye ($51).
A Chance To Buy
Many retailers now utilize raffles as a solution to the allocated spirits conundrum. At Molly’s Spirits in Colorado, twice-yearly virtual raffles allow winners to purchase rare bottles such as Pappy Van Winkle, W.L. Weller, and Elijah Craig at retail price. Under the system, customers who are members of the stores’ Spirits Club earn one raffle ticket for every $500 they spend in a six-month period. According to Justin Marcotte, liquor manager at Molly’s Lakeside, Colorado store, “the nice thing about the raffle is that it rewards our regular customers,” as compared to a system that attracts bottle hunters from outside the area. Indeed, previous approaches employed by the retailer included auctions and raffles available to anyone, programs that “didn’t take care of our regular customers,” Marcotte notes. The current system also helps build Molly’s loyalty program, as membership has grown 20% since implementation.
The New Hampshire Liquor Commission (NHLC), meanwhile, which operates nearly 70 Liquor & Wine Outlets in the Granite State, recently awarded a lot of 16 limited-edition whiskies, along with other prizes, in a charity lottery that benefitted Best Buddies New Hampshire, a non-profit organization aiding individuals with intellectual and developmental disabilities. As part of the effort, 2,500 raffle tickets were offered at $100 each, with all proceeds—$250,000— earmarked for Best Buddies. The raffle’s winner scored bottles of Pappy Van Winkle 23-Year-Old Family Reserve Bourbon, E.H. Taylor 18-Year-Old Marriage Straight Kentucky Bourbon, and Sazerac 18-Year-Old Kentucky Straight rye. The lot carried a secondary-market value of more than $40,000, according to the NHLC.
Indiana’s Belmont Beverage has also come up with a tactic to fairly distribute unicorn bottles while also aiding local charities. Starting in 2015, the 35-unit chain began hosting charitable auctions at three of its locations with meeting spaces that can accommodate about 100 people each. Attendees are charged $25, and in return receive a Belmont gift card in the same amount. About 30 lots are showcased at each auction, each priced at MSRP, plus tax. Anything raised beyond that is donated to local non-profit organizations. Professional auctioneers donate their time to run the events.
“At the first auction, we donated $13,650 to a charity,” says Gary Gardner, Belmont’s operations manager. An auction in South Bend, Indiana earlier this year netted a local cancer charity $55,000. Since launching the auctions seven years ago, the liquor store chain has donated $562,000 to local charities, Gardner notes.
In addition to benefitting the organizations, the auctions help to bring people to the stores, the retailer explains, as attendees are hosted at a pre-event Bourbon tasting and will often peruse store shelves. Belmont marketing manager Marc Gernhardt says some lots have proven to be highly coveted. He points to a recent six-bottle lot of W.L. Weller with a combined retail price of $300. “It fetched $3,000 at the auction,” he says.
Other retailers, meanwhile, have found that simply placing allocated bottles on store shelves without any fanfare is the fairest approach, and one that often creates in-store excitement. Southern Spirits will sometimes hide bottles of Pappy’s or E.H. Taylor on store shelves during the Saturday allocation events, and according to Podrebarac, it creates “an Easter-egg hunt atmosphere.”
Mega-Bev, with seven stores in Michigan, has been using this approach for the last seven or eight years, and places special finds on store shelves weekly. “Once the practice of collecting and/or reselling Bourbon became popular, we had to come up with a way to make sure all of our customers had an equal opportunity to obtain rare bottles,” says Niecko, noting that spirits raffles aren’t permitted in the state. “Customers who come across rare bottles like it, but those that don’t aren’t fans of the tactic,” he says, adding that the consumers with the best luck finding bottles are often dedicated Bourbon hunters whose schedules allow them to frequent stores on a daily basis.
Help On The Way
For the short term, most spirits retailers say they don’t expect demand for highly sought after products to abate, and their own access to the labels will remain complicated. “Access is getting more difficult because now there are more people looking for these products,” says Marcotte of Molly’s. “A good portion of these consumers enjoy good Bourbon, but there’s a small percentage who buy them to show off to their friends or as an investment with plans to flip.”
Longer term, Marcotte and others point to the recent and ongoing expansion at many distilleries and suggest that enhanced supply may be coming, and retailer management of allocated shipments may ease. “The flood is coming,” says Podrebarac. “It will be a sad day for those retailers who find themselves sitting on hundreds of cases of allocated spirits,” rather than distributing to customers now. “That’s why we take the approach that we do.”