In case you missed it over the past decade the bourbon business has been on a tear, and although some folks would suggest that the bubble is about to burst, it feels like that’s unlikely. I know I’m not going to be putting down my Glencairn anytime soon. Bourbon alone pumps $9 billion into Kentucky’s economy every year and distilleries continue to invest in expansion projects. At the start of this past year, producers had a record inventory of 12.6 million barrels of bourbon in rickhouses in Kentucky alone (of course, Kentucky is home to about 95% of the overall industry). Those barrels aren’t for today, a month from now, or a year from now, they’re mainly a hedge for the future, with an expectation that in four to eight years they’ll be bottled up and sold.
New distilleries however continue to pop up alongside the big names as well with what appears to be an ever-expanding market with a growing appetite for America’s native spirit. Absent however coming into a windfall from a rich relative or winning the lotto, most Bourboneur’s won’t be opening their own distillery. In this post we explore several ways however that the average Bourboneur can invest in the bourbon boom.
Distilleries when producing bourbon have significant capital locked up in their barrels, which sit for years with that value sequestered. To help continue to fund growth, distilleries will sell newly filled barrels to various investment groups like CaskX or Estate Barrels. These groups fund purchases from a pool of investors to buy barrels at wholesale. The wholesale price of a newly filled barrel today is somewhere near $1,500 dollars; compare that to selling a two-year-old barrel and there is a realization of nearly a thousand dollars of profit. That is of course providing you’re able to buy into barrels that will be in demand a number of years down the road, aged well, etc. etc.
As mentioned earlier, a multitude of new distilleries continue to pop up, looking to take advantage of the ever-increasing thirst for bourbon. Ads on my Facebook show up on the regular looking for investors in distillery x, y, or z so expect that it won’t be hard to find someone with their hands out looking for additional liquidity in what is certainly a capital-intensive undertaking. These opportunities exist rather commonly in part, given that many in the banking industry aren’t eager to finance an endeavor in which in the case of default, provides some uncertainty about recouping the investment.
If you’re looking for a quick and easy plug and play on the stock market vis-à-vis the NYSE, there’s not a lot of choices. This type of investment vehicle is the avenue most Gen Z and millennials are taking more frequently than older investors, according to a recent article which highlights roughly 70 percent of Gen Z and millennials make a trade at least once a month, compared to 50 percent of Gen X and just 24% of baby boomers.
For those who want to add some bourbon related exposure to their portfolios, Brown-Forman (BF.B) is probably the most notable option with familiar brands such as Woodford Reserve, Jack Daniels and Old Forester to name a few. Constellation brands is another option (STZ), which has a whole basket of varied spirits under its umbrella, including even a cannabis company, but on the whiskey front includes High West. Lastly, Diego (DEO) is another option, and includes loads of familiar brands ranging from Guiness to Tanqueray, but on the bourbon front includes Bulleit and Blade and Bow.
There’s a whole pile of folks out there who have created large collections of rare or desirable bourbon bottles in their own personal bourbon bunkers. I don’t think that in many cases these are thought of in the investment sense, but some certainly are. Take for instance, during a recent doctors visit the woman I encountered at the front desk who began discussing her cache of rare bourbon bottles she’s saving to cash in when she retires. There are more folks than you’d think who see long term value in collectible bourbon.
Online platforms like Baxus have recently emerged which create an online platform to authenticate and market rare bottles and will even host your collection for you in a climate controlled environment so your teenage kid doesn’t pop open your Old Rip 25 and drink it with their friends…with some coke. Shiver.
Whether you’re selling off your collection, swapping bottles to trade up, or buying that one bottle you need to complete your set of B.L.A.N.T.O.N.S. you need to ensure you’re doing so from an informed position. The Bourbon Blue Book is a totally free solution that saw over one million searches last year alone. Updated weekly, it tracks the secondary value of nearly 3,000 coveted bottles of brownwater.
Coming in the week ahead we’ll be launching our web app which you can add to your home screen. The new app will incorporate all the existing features available on Bourboneur as well as an expanded offering of tools and resources to help Bourboneur’s everywhere become whiskey wise. Want to keep up with Bourboneur and our upcoming launch, bottles drops and more? Join our community of thousands by scrolling down and subscribing to our weekly email list – you can also find us on Instagram, Facebook, and yes, even TikTok. Show us some love and give us a like on your favorite platform, or all of them and keep up with all the Bourboneur happenings!