Let's just add "allocated bourbon" to the list of things I never knew anything about before owning a restaurant. But I love food science, food history, food marketing, food economics, all the things. So learning about these special, allocated bourbons are a rabbit hole I gladly dove into.
As I started researching for this post, I found myself pulled in so many different directions, with so many questions. Why are some bourbons "allocated"? How does someone buy an "allocated" bourbon? Does "allocation" even matter? And how does it work in New Hampshire, one of 7 ABC (Alcoholic Beverage Control) states?
For this post, I'll just give a very basic overview of what an allocated bourbon is. But I'm already drafting posts addressing, "How can I get my hands on an allocated bottle?" and "How to drink bourbon?" So stay tuned!
Let's dive in!
What is allocated bourbon?
A: Allocated bourbon refers to bottles that are released in limited quantities because of high demand, thereby making them more rare and/or harder to acquire. Demand for these specific bourbons is so high that distillers can't keep up. So they may allocate bottles for many possible reasons: to make the process more manageable, less chaotic, more predictable, and/or more democratic, to name a few. Based on a simple law of economics, these rarer/in-high demand bottles are often more expensive, sometimes commanding upwards of $10k a bottle after-market. Of note, allocated bottles have a suggested retail price, but there is a secondary market for these bottles that often command a premium price But not always. I have noticed some allocated bottles for just $27.
Why are some bourbons allocated?
A: Several reasons contribute to a bourbon being allocated.
Time/Aging Process -- Bourbon is aged a minimum of 2 years, although most brands age for at least 4 years. Some age for 10 years or more. Hand-in-hand with the long time line is the space needed to store all those barrels, for that extended amount of time. This long aging & storage process requires a distiller to have enough space and money to just wait and wait and wait. Until the bourbon is ready. That's a pretty high opportunity cost. Most distillers can't tie up that much space & inventory for that long in large quantities. So the time value leads to both smaller batches & a controlled release.
Limited Capacity -- Part & parcel for the limitations caused by the lengthy aging process, is the limited capacity for distiller to try to meet demand. They just don't have the resources, people, money, time, space to produce more bourbon.
Supply vs. Demand -- There's a big disconnect in supply & demand. Demand for high quality, interesting bourbon has increased over the past decade or so. Because of the lengthy process, it is very difficult (impossible even?) for suppliers to try to plan for and meet demand. Allocation is a way to help even out and control for the disequilibrium.
Scarcity of Ingredients & Resources - Bourbon is aged in NEW white oak barrels. Environmental regulations, the time nature takes to grow a tree, and the tight labor market for loggers are just some reasons that make it a challenge to get enough new oak barrels.
Marketing - Some producers have a limited release of their bourbon for marketing purposes. Make something scare & you might just make it special.
Over time, certain bottles of bourbon can "go on allocation" or "off allocation", depending on what is happening with supply and/or demand, inputs, marketing, time & labor, etc. As most markets tend to move towards equilibrium, with the quantities supplied more closely matching the demand, it is anticipated that producers have adjusted, to their ability, years ago to be able to supply more over the years. Therefore, bottles that are currently allocated will likely come off allocation. So keep an eye out on the bourbon aisle.
To Learn More
If you want to find out more about allocated bourbons, check out these websites by people WAY more knowledgeable than me!
From Food & Wine: To Understand Why Some Bottles of Bourbon are so Expensive, You Need to Understand Allocated Whiskey
From Wooden Cork: What is an Allocated Bourbon? A Comprehensive Guide
From Boubon Bossman: 2024 Calendar of Limited Releases
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