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Whiskey Economics: Inside Bourbon Pricing
Manage episode 483036391 series 2810554
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The economics of whiskey pricing involves numerous factors that determine why bourbon costs what it does, from physical aspects of aging to market demands and consumer preferences.
• Quality and quantity are fundamental considerations in whiskey pricing
• Age significantly impacts cost due to taxes, warehouse space, and liquid loss through evaporation
• Temperature fluctuations affect yield as cold weather expands barrels pushing liquid outward while heat contracts wood drawing whiskey into staves
• Barrel strength whiskeys command higher prices because they aren't diluted, resulting in fewer bottles from the same amount of aged spirit
• Many distilleries have increased prices to capture value that was previously going to secondary market resellers
• Despite fears of a "bourbon glut," most established distilleries report strong sales with new operations continuing to open
• American whiskey prices have generally remained stable or decreased slightly over recent months according to store comparison research
• Family-owned operations like Old Louisville Whiskey Company focus on quality over quantity
• The Old Louisville 17-year bourbon (141 proof) scored a perfect 18/18 on the tasting scale
• Premium whiskeys with high price tags often accurately reflect the investment, time, expertise and limited quantity involved
Join us for our upcoming bus tour where we'll be visiting Old Louisville Whiskey Company and meeting Amin Caroud in person.
The mysterious world of whiskey pricing unfolds as we explore the complex economics behind what makes your favorite bourbon cost $30 or $300. Beyond marketing hype, we reveal the genuine factors distilleries consider when setting prices in today's competitive spirits landscape.
Every drop of aged whiskey comes with hidden costs. When distilleries age spirit for extended periods, they're making a significant investment – paying yearly taxes, managing warehouse space, and accepting substantial liquid loss. A 53-gallon barrel might yield only 20 gallons after 15 years due to the "angel's share" and wood absorption. Temperature fluctuations further complicate matters, as cold weather expands barrels pushing liquid outward, while heat contracts wood drawing whiskey deeper into staves, affecting both flavor development and final yield.
The bourbon market has evolved dramatically in recent years. Despite fears of a "bourbon glut," most established distilleries report strong sales with new operations continuing to open throughout Kentucky. Our price comparison research at local stores confirmed American whiskey prices have generally remained stable or even decreased slightly, contradicting inflation concerns. Meanwhile, premium offerings have seen strategic price increases as distilleries recapture value previously lost to secondary markets – Russell's Reserve 13 Year jumped from $80 to $190 in just three releases.
The episode culminates with a spectacular tasting of Old Louisville Whiskey Company's 17-year bourbon bottled at a hazmat-level 141 proof. This family-owned operation exemplifies the passion-driven side of the industry, where Amine and Beth Karaoud's commitment to quality over quantity produces truly exceptional whiskeys. The expression earns a perfect 18/18 score, with particular praise for its "cinnamon toast crunch" nose, thick viscosity, and maple syrup flavors balanced with well-integrated oak.
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Chapters
1. Whiskey Economics: Inside Bourbon Pricing (00:00:00)
2. Whiskey Thief Distilling Company Intro (00:01:33)
3. Scotchy Bourbon Boys Show Introduction (00:02:46)
4. What Factors Into Whiskey Pricing (00:10:56)
5. Aging, Barrel Strength, and Market Pricing (00:20:15)
6. Bourbon "Glut" and Market Realities (00:28:32)
7. Store Price Comparisons Analysis (00:37:34)
8. Old Louisville Whiskey Company Story (00:49:44)
9. Tasting the 17-Year Old Louisville (00:54:57)
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