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An Open Letter to Liquor Stores

An Open Letter to Liquor Stores

Dear Liquor Store Owners Across the Nation,

Over the past few weeks, I have visited nearly seventy liquor stores spread across a four-state region cross-cutting the central part of the U.S. in an effort to develop some data on what I hear across so many bourbon-related groups online about liquor stores these days - "retail prices are simply out of control." My stops ranged from grungy holes in the wall that admittedly looked pretty sketch to big chains in major cities and local "ma and pa" shops in small towns. One thing rang true across most all of the stores I stopped at was that any bourbon that was en vogue had elevated pricing.

We all know that the average rule of thumb is that the distributor is going to mark up their products 25-30 percent and in turn you as a liquor store owner do the same. Business is business and you, just like the rest of us, need to put food on the table and a roof over your head. As I wiggled my way through the country finding myself at a small liquor store outside of the Chicago suburbs, I was however astounded to find a bottle of Old Rip Van Winkle priced 3,140 percent above the manufacturer's suggested retail price (MSRP). As another example, I saw multiple bottles of Stagg ranging from a 360-500 percent markup over MSRP. Although this isn't price gouging which has a specific legal definition, this type of premium pricing in many cases above elevated secondary pricing is in a realm all its own - what we might even call "tertiary pricing."

At the end of the day, I understand the "S" in MSRP stands for "suggested" and you have complete control on whether you'd like to ask the MSRP or 1,000 times the MSRP for any specific bottle. That said, I urge you to rethink this strategy of pricing bottles well over MSRP - it's a losing strategy. Maybe you do sell one of these elevated priced bottles and realize some extra coin from that transaction - an unintended consequence however is that you're simply pissing off your regular customers, potential new customers and at the end of the day losing business.

Instead of creating your own personal bourbon museum, you should use these more coveted bottles to build your customer base. Last I checked, you're in the business of selling bourbon, not curating it for display purposes. Most bourbon drinkers are not prone to spend significantly above MSRP, and I, like them, vote with my dollar, and I'm far more likely to push my business to a store that I know isn't significantly marking up their products and where I know that my business is recognized and valued. Point systems, lotteries, or simply offering these bottles to your regulars will help you build your business value. Bourbon is a hot market, and I can only imagine how annoying it must get to hear "do you have any Blanton's?" fifty times every day. That said, you're in business to make money, and the long game is - or rather should be - to build a loyal customer base that will support consistent returns over time. Please consider that how you approach pricing and offering of coveted bottles of brownwater will make your business look like you're either preying on customers or rewarding customers. I think it's clear which side of the coin is the most beneficial for your business model moving forward.


If Bourbon is Your Thing...

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