Full Barrel costs?

[mozilla]

How does a distillery go about priceing a new barrel of bourbon? On the open market or just one barrel, is there a formula that quantifies the price? Is there a difference if the barrle has some age? who sets the price....Master Distiller, warehouse manager, distillery manager, accountants? Do they add bottling costs even if you bottle it yourself? Any of the experts have some prices or info in this area?
Thanks in advance.

[TNbourbon]

How does a distillery go about priceing a new barrel of bourbon? On the open market or just one barrel, is there a formula that quantifies the price? Is there a difference if the barrle has some age? who sets the price....Master Distiller, warehouse manager, distillery manager, accountants? Do they add bottling costs even if you bottle it yourself? Any of the experts have some prices or info in this area?
Thanks in advance.

You can't bottle it yourself -- it must be bottled as a pre-approved label. If you desire a personalized label, you have to go through the (expensive) label-approval process.
Regarding the barrel purchases I've been involved in -- and, mind you, I didn't do the negotiating -- the price is negotiated between the buyer(s) and distributor, not with the distillery. You can't buy directly from the distiller -- it must go through the 3-tier system.
That said, you can expect a discount from the general retail for the brand to which it was bottled -- after all, the distributor/retailer essentially have it pre-sold, so they undertake no risk in the transaction. For example, you buy it at retail at, say, cost + 5% instead of cost + 30%, which is the approximate retail markup here in Tennessee.

[mozilla]

Thanks Tim. Some of my questions were geared towards the bulk market....like KBD or Wathen's...and what they have to go through. Which should make the transaction easier without the middle tier. Do they get some bulk discount. How many barrels do you have to buy to get a bulk discount? Does the seller sell barrels that are exceptional at a much higher rate? With all the bulk sales....I just wonder how it all goes down.

[cowdery]

You can buy whiskey in the barrel only if you have a producers license from the TTB. Otherwise, as a consumer, you have to follow the procedures where, at least on paper, the whiskey is being sold to a distributor, then to a retailer, and it has to be delivered to you in bottles in one of the approved sizes, the largest of which is 1.75 L.

If you have a producers license and are buying bulk whiskey from a distiller, the price is set by the owner. Definitely not the master disller. It's basically whatever the market will bear. Certainly whiskey that is partially or fully matured costs more than new make.

The market has changed a lot in recent years and it's hard to find bulk whiskey at any price, especially if you want something well matured. Even new make is a tough "get" because most of the distilleries are operating at or near capacity just to keep up with the needs of their own brands. It's a nice problem to have, for the distillers, but it makes life hard on the non-distiller producers.

This is in stark contrast to a few years ago when there was a lot of whiskey, especially old whiskey, to be had pretty cheap. That's when all of the very old bourbons by non-distiller producers were created. Now those companies are finding it hard and expensive, if not impossible, to keep those brands supplied.

[bourbonv]

Chuck makes some very good points. Just to add emphasis to his point about distilleries just trying to keep up with their demands, I just met with John Vereeke and Angela Travers from Buffalo Trace. We are doing a tasting event here at the Filson with a pint bottle of the last of the Wright and Taylor Old Charter, bottled in 1929. I wanted to put Old Charter Proprietor's Reserve in the tasting, but it like the Classic 90 is history. They have not bottled it for over 6 months and will not bottle it anymore. The reason - the whiskey is needed to support Old Charter 10yo until production can catch up to demand.

When a distillery has to predict what they will need 10, 12 or more years in advance, these type of problems happen. The fact is I wonder why it does not happen more often.

[cowdery]

Well, I gues the fact that they're not making these anymore means they will disappear from store shelves...in 20 or 30 years.