Friday, May 24, 2013

Mark Brown on the Bourbon Shortage

Here is more detail about the bourbon shortage discussed here on Wednesday, courtesy of Sazerac President Mark Brown. (Sazerac owns the Buffalo Trace and Barton 1792 distilleries.)

On pricing: "Costs have been increasing for energy and raw materials like corn," says Brown. "Any price increases we are implementing, or contemplating, are primarily tied to recovering those cost increases, as opposed to changing any brand’s position."

On brands: "Each and every brand has a specific sales forecast out through its product age plus several years and therefore has its own allocation of whiskey," says Brown. That means for, let's say Eagle Rare Single Barrel, a 10-year-old, that they have allocated existing whiskey stocks based on meeting sales forecasts for 10+ years. If actual sales exceed the forecast in any of those years, shortages could occur, but since forecasts and inventory allocations are periodically adjusted based on actual sales, adjustments to production are made the only place they can be, in the current year.

On staffing: "We are actually ahead of the curve since we anticipate the need to manage sales, allocations and stocks increasing more so in a year’s time from now," said Brown in response to comments here and elsewhere that Buffalo Trace should have hired its new inventory manager sooner.

On the press release itself: "We felt it was time to explain why folks are already seeing gaps on the shelves (i.e. Weller 12) and from our vantage point why those gaps will be occurring on various brands for some time to come," says Brown. "We have had extensive debates about what to do about the supply / demand imbalance and our conclusion is that the best thing to do is stay the course with each brand’s position in the market and spread the available supplies out as evenly as we can."

It should be noted that this is an issue throughout the entire whiskey industry. Sazerac is now on-the-record as to how it intends to deal with the matter. If any other producers decide to weigh in on the subject, you'll read about it here.


Anonymous said...


Toured Barton 1792 Distillery (Bardstown) in Mid-March (this year).

Tour guide mentioned milling, distillation, fermentation, and filling barrels were due to stop March 21st for "2013 Summer Shutdown".

IF shortage is that drastic why not keep distilling longer into "actual" summer.

Guess they don't want to read "Crystal Ball" that far into the future !*!*!

Chuck Cowdery said...

Mark Brown didn't say, but could have, that each distillery is run as needed to support the brands it produces. Neither Barton 1792 nor Buffalo Traces operates at anything close to full capacity. To quote Dave Backus, former master distiller at Dickel, "if you drink it all, we'll make more."

Anonymous said...

Energy prices going up? Don't they primarily use natural gas (which has dropped dramatically)?

Anonymous said...

Last years drought had negative effect on grains used for Bourbon.

Grain prices probably up with quality down.

Bourbon requires Top-Of-The-Line grain.

Animal feed and corn for ethanol (gasoline additive) able to use lower grade grain.

Bourbon Drinkers hope farmers have excellent harvest Fall 2013.

Anonymous said...

"Anonymous said...
Energy prices going up? Don't they primarily use natural gas (which has dropped dramatically)?"

Don't under estimate the energy costs that impact transportation. When gasoline prices go up, the price of everything goes up.