Friday, September 30th, 2016

Bourbon and water, hold the water

1

“No. No, Mother, I have not been drinking. No. No. These two men, they poured a whole bottle of bourbon into me. No, they didn’t give me a chaser.”

North by Northwest

Maker’s Mark is not able to keep up production to meet demand. Rather than raise prices or encourage a temporary shortage, the company has decided on a less-than-novel approach. They’re going to water down the product, just like cheap bartenders have done forever.

I checked with my Maker’s mark drinking expert friend and he told me the company sent out a letter to people like him explaining the changes. (He once had naming rights to a barrel.) They claimed in the letter that it would not affect the taste of the bourbon. Nonetheless, he’s making a trip to the liquor store to stock up before the watered-down product arrives.

Daniel Gross at the Daily Beast explains why watering down the bourbon is not a good idea.

The textbook answer to rising demand in the face of limited production capacity would be to raise prices. That might alienate some customers. In his blog post, Bill Samuels Jr. noted that the company doesn’t see this as a good move. “Some people are asking why we didn’t just raise the price if demand is an issue,” he wrote. “We don’t want to price Maker’s Mark out of reach. Dad’s intention when he created this brand was to make good-tasting bourbon accessible and to bring more fans into the fold, not to make it exclusive.”

But when goods are in high demand, a secondary market tends to develop (think of sports and concert tickets) and the price that people pay tends to go up anyway. By virtue of its scarcity, it is going to become somewhat exclusive, at least for the next few years. Why should Maker’s Mark let retailers and bartenders capture all the value that will arise from this temporary scarcity?

I don’t think worrying about the retailers’ and bartenders’ short-term profits is the issue, as much as they’re risking damage to the brand name. If they insist on keeping the price the same (absurd, really), then a temporary shortage is a small price to pay to keep the brand name from being damaged in the long term. It might have even encouraged more demand.

Update! Thanks to my friend Kelin Olson who brought to my attention Maker’s Mark has changed their minds, sparing America from the Great Bourbon Revolt.

Rob Samuels, Maker’s Mark’s chief operating officer, said Sunday that it is restoring the alcohol volume of its product to its historic level of 45 percent, or 90 proof. Last week, it said it was lowering the amount to 42 percent, or 84 proof, because of a supply shortage.

“We’ve been tremendously humbled over the last week or so,” Samuels, grandson of the brand’s founder, said of customers’ reactions.

The brand known for its square bottles sealed in red wax has struggled to keep up with demand. Distribution has been squeezed, and the brand had to curtail shipments to some overseas markets.

In a tweet Sunday, the company said to its followers: “You spoke. We listened.”

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