Tuesday, November 11, 2008

How Much Is This Bottle Worth?

Maybe it’s the fault of Antiques Roadshow, or eBay, but everybody seems to think their house is full of hidden treasures. The most common question I receive, after, "what’s the best bourbon" is, "I found this old bottle of such-and-such, how much is it worth?"

Unfortunately, the true answer to either question does not usually satisfy the person who asked it. I like to say that the best bourbon is free bourbon. My answer to the second question is equally as oblique but not as witty. It contains a lot of 'maybe' and 'it depends.'

The secondary sale of American whiskey and distilled spirits in general is a rapidly changing field, complicated by the fact that, in the United States, it is illegal to sell alcohol without a license. There are collectors, they do buy and sell, and prosecutions for such transactions are rare, but the at-least-technical illegality of it all keeps the marketplace from being more orderly and transparent than it is.

At present, most of the action is on the auction web site eBay and perhaps on some of its many imitators.

Because of these difficulties, it is almost impossible to appraise a particular bottle of American whiskey. A precondition for assessing the resale value of anything is a sufficiently active and open secondary market for the type of object being assessed. The appraiser has to have knowledge of recent sales of the same or similar objects in order to estimate what a future sale might bring. It’s no more complicated than that but without that market information you can’t make appraisals with any confidence.

At present, the secondary market for American whiskey is too small and fragmented for anyone to be able to make an accurate assessment of any potentially collectible whiskey’s resale value.

My information regarding prices is based on personal contact with actual collectors. The most desirable and valuable whiskeys are pre-prohibition, prohibition-era medicinal, and post-prohibition whiskeys from distilleries that are now closed. A fourth category is limited editions from present day distilleries. Bottles in all of these categories re-sell for between $100 and $1,000 each. Although pre-prohibition whiskey is generally the rarest and most valuable type, hundreds of dollars have been paid for bottles produced as recently as the 1970s.

When you are paying hundreds of dollars for something, as opposed to thousands, you usually just trust your instincts and take your chances. It’s hard to justify much investment in authentication at those prices. In the world of Single Malt Scotch collecting, where prices are much higher, fakes have been a problem.

In American whiskey there are two very active but equally idiosyncratic subsets, Jack Daniel’s collectors and Maker’s Mark collectors. Both producers encourage collecting (but not, of course, any illegal activity) by issuing many limited edition commemorative bottles.

It might be fun if the law made it easier for collectors to openly engage in the buying and selling that is the essence of collecting, but that seems unlikely given prevailing attitudes about alcohol.

1 comment:

ACDetroit said...

Once again Chuck, fine job!
It does amaze me that Makers and Jack can put out an inferior product (in their price range, in my opinion)and do so well in the market today. Are consumers really sold on just Marketing these days or does anyone ever try anything new? I was the Makers Mark kid with blinders on years ago...I have since grown.