We last talked about this when we knackered up the release of the Buffalo Trace Antique Collection back in November, but, well, there have been quite a lot of comments on the product page we’ve set up for the Yamazaki Sherry Cask Release Japanese Whisky (we don’t censor these, remember).
First things first – before you read any of the below, please take the time to familiarise yourself with our stockholding policy. This has been in place for many years, and is unchanged since we published that post back in 2013. Every single bottle of this that hits our warehouse is made available for sale immediately, not hoarded.
Now – a brief precis of the ‘situation’.
Yamazaki Sherry Cask is a hotly anticipated release, which we absolutely love. We first reviewed it back in 2010, and in 2014 Jim Murray voted it the world’s best whisky. This led to incredible demand for this particular expression for 3 reasons:
1) Whisky Lovers want to try it
2) Whisky Collectors want to own it
3) Speculators want to flip* it
If you fall into category (1) above – we like you, and you can be in our gang. We want to do everything that we possibly can to help you try the whisky.
If you fall into category (2) above – we do like you – you’re just richer than us, and we’re a bit jealous of you.
If you fall into category (3) above – good luck to you, but we’re not going to go out of our way to help you make easy money.
This is an aside, but for what it’s worth, we don’t really believe that Category 2 exists. It’s long-term parking for categories (1) and (3).
Now – this year – we’ve been given an allocation of one case of six bottles of this release. It’s a very small allocation. We’re not going to whinge about this – it’s an ultra-limited product, and we’re very grateful. However, we’d be very, very confident that we could sell 6,000 bottles in a few days if we had it. This leads to a pretty big problem. Roughly 999 out of every 1000 people are going to be very disappointed.
We’ve spent a lot of time thinking (arguing) about how to deal with this, and in the end we’ve come up with a solution that we believe does the most good. It’s also, and please see the paragraph above for the reason, very definitely a “least-worst” option, rather than a ‘good’ one per se.
The solution is this:
We’re going to split up the allocations of all the super-hotly anticipated releases into three ‘piles’:
A) Stock that we send over to Drinks by the Dram to turn into 3cl samples (drams) so that as many people as possible can try it
B) Stock that will be sold via lottery on the product page
C) Stock that will be sold via auction on the product page
In the instance of this particular line, we’re going to dram 4 bottles, auction 1, and lottery 1.
Given that each bottle we split into drams potentially allows 23 people to try the whisky – we’re going to try and satisfy demand for this first and foremost – especially as it caters massively towards those of you in category (1).
We also want to make some stock available via lottery, as, well, it’s something that a lot of you seem to want. It’s only fair to say though, that we’re not huge fans of this ourselves, as we don’t really agree with the whole lottery model for reasons we’ll go into shortly.
Now, almost everyone (actually, make that everyone) says that they just want to try the whisky and they’d never ever consider selling it on at a massive markup. Oh no sir. Also, unrelatedly, would you like some butter? I have some here in my mouth, unmelted.
Ahem. Anyway, it turns out some people are horrible filthy liars and what they actually want to do is make a fast buck and keep the money in order to buy scratch cards and a yoda-dog-suit for little Tigger.
So, in order to filter out everyone but the people who really do want to try it, we’re going to be writing the following all over the back label of the bottles won at lottery:
“I, [your lucky winning name], hereby swear not to sell this bottle – but to drink it with my chums. May my taste-buds and olfactory bulb shrivel and die if I should break my word.”
See category (1) – told you we liked you.
And so, finally, to auctions.
Ya see, auctions are wonderful things because they’re really really good at doing one thing – revealing the true market price for something.
People can (and indeed love to) argue all day about what the right price for something is, but, while that’s a fun way to pass an afternoon, it really isn’t necessary because all you need to do is auction it. The price it sells for is, by definition, the market price. Yes, yes, we know markets aren’t perfect and there are lots of little things which can nudge the hammer price up or down on the day, but you know what – even with all those wrinkles it’s still damned close to the true market price.
When something is released for £200, and immediately shoots up to £1000 on the secondary market, you know what isn’t the true market price for that product? £200.
£200 might be the RRP (recommended retail price), it might be the price in the press release, it might be the price at which the shop you tried to buy it at sold it to all their favourite customers (or employees, or friends) before you got there, but it’s not the market price.
Also, just so we’re clear on this (because it’s really important) – there is absolutely no obligation on a retailer to sell any product at any particular price – it’s up to them to price things as they see fit. Moreover, it’s downright illegal for any supplier or brand owner to attempt to exert any influence over the price at which a retailer sells – there are serious consequences for complicity in price-fixing or breach of competition law.
We hope you agree that the status quo, where a product walks out of a shop one day for £200, and up onto an auction site the next at 5 times that is nothing short of eat-your-own-hands-off-insane.
Now – this said – there’s an inherent problem with us as a retailer using our best judgement to determine the price at which bottles such as this should be sold – and we’re sure you’ve all guessed it – there’s often serious disparity between the price at which a producer (be it a distributor or a distillery) releases a whisky, and the actual value of that bottle at retail. The reasons for this are open to interpretation, but our guess is that the producer’s reasons/motivations broadly fall into three categories:
1) Those that apply a ground-up pricing model (using their cost price and a fixed margin). That Boutique-y Whisky Company is one example of this. There are many more.
2) Those that got the demand projections wrong, and are in the process of closing the gap to correct the disparity. Diageo’s Special Releases are a great example here. Have a look at the prices of the Special releases Port Ellen over the last few years. This whisky (Yamazaki Sherry Cask) is, we believe, another example of this.
3) Those that are playing a very clever game – intentionally undervaluing the product in order to create a buzz around the release, which generates huge publicity, and a ‘halo’ effect around the rest of the range. We’ll stop short of mentioning any names – you know who you are.
In all instances of the above, it doesn’t make us particularly comfortable re-pricing the bottles at £1000 a pop ourselves and pocketing the difference just because the market’s broken.
So – what to do… Well, the sad fact is that someone is going to pocket the difference between the release price and the market price before the bottle gets to you because, sadly, many (if not most) people who get their hands on a bottle at the RRP are going to flip it.
When we’re operating the auction, the possible beneficiaries are:
1) The producer (obviously not – they mispriced it in the first place, or have already priced the difference in as marketing exposure)
2) The retailer (probably not – as discussed above – it makes us feel uneasy**)
3) A worthwhile charity (this one – it’s this one isn’t it?)
And that’s what we’re doing for the auction. All the profit above and beyond the bottle’s RRP will be going to our nominated charity***.
So. That’s our reasoning. And if you take only one thing away from reading this post, please let it be this – if you want a bottle of this you’re going to have to pay the market rate for it. Someone is going to make that margin between the RRP and the market price – your choice isn’t whether you pay a premium, it’s to whom you pay it. It can either be a flipper, or it can be a charity, or it can be a greedy greedy retailer, but if you want a bottle it has to be one of them. We’re sorry – but that’s free-market economics for you.
We think that giving the difference to charity is, very much like democracy, the worst possible system, except for all the others.
We know many of you won’t agree with all of this, some of you will like it, some of you will be absolutely incensed, but our sincere hope is that all of you will see this for what it is – a sincere and earnest attempt to fix a system which is badly badly broken.
Let the comment deluge commence.
The Chaps at Master of Malt
* Buy it at the primary market price of £200-ish, then sell it at auction for loads more.
** In this case “uneasy” is code for “fucking greedy”.
*** For this specific auction, our partner is Malaria No More UK – see this post for a brief insight into our reasons for choosing these guys. It’s their highly intelligent approach not only to problem-solving, but critically to using the money they raise to try and leverage government policy that we admire the most, and, well just look at the results.
Update #1: What’s happening with the Drams?
We’re going to be allocating the drams by lottery (all the drams). We did think long and hard about whether we should auction half of them, but on the basis that the drams are inherently less collectable than the full size bottle, we think that most of the flippers have probably already been filtered out and most people entering are likely to just drink it rather than re-sell it.
Yes, we know some people will probably still sell them on, but we think the balance is far enough towards the drinkers. Of course, if that proves wrong then we can look at scribbling all over those as well in the future.
Update #2: When’s all this going down?
The new functionality should be live mid-next week (it’s still being written and tested, it was going to be ready about 3 weeks ago but you know what software development is like…) and we’ll start with the dram lottery, then we’ll do the bottle lottery, and finally the auction.
There will be plenty of warning and we’ll make a big fuss about it when we have firm dates so don’t worry, you’re not going to miss it. It’s definitely not going to start before Tuesday, and at the moment Wednesday is looking like the most likely day.
Update #3: Lottery and Auction Timeline
All of this will happen on the Yamazaki Sherry Cask 2016 product page:
3cl Drinks by the Dram Lottery: 16:00 (GMT) Thu 25th – 14:00 Mon 29th February
Bottle Lottery: 16:00 (GMT) Mon 29th Feb – 14:00 Thu 3rd March
[Auction Registration will then begin at 14:30 (GMT) Thu 3rd March]
Bottle Auction: 16:00 (GMT) Thu 3rd – 14:00 Wed 9th March
We’ll shout about it on tweetface and Googlebook too.