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Wine & Spirits

As Bourbon Booms, Thirst for Rare Brands Breeds Skullduggery

SALEM, Ore. — Buttery, smooth, oaky. These are characteristics of the best bourbons, and a growing cult of aficionados is willing to pay an astonishing amount of money for these increasingly scarce premium American spirits — and even bend or break laws.

Premium spirits have always been expensive and sought-after. But a surge in interest in high-end bourbon has made finding that elusive bottle even more difficult. Distillers have upped production to try to meet increased demand, but before the whiskey reaches stores and bars, it must age for years and even decades. Scarcity has changed what some fans are willing to do to obtain the most sought-after bourbon.

In Oregon, a criminal investigation is under way after an internal probe concluded several state liquor officials used their clout to obtain scarce bourbons, including the holy grail for bourbon fanatics: Pappy Van Winkle 23-year-old, which can sell for tens of thousands of dollars on resale markets. That brand is so popular that it found itself at the center of criminal investigations in at least three other states, from Virginia to Pennsylvania to Kentucky.

A collection of bottles of whiskies and Kentucky bourbons are displayed at “Seven Grand,” a whiskey bar downtown Los Angeles Saturday, March 4, 2023. (AP Photo/Damian Dovarganes)

The cases underscore how demand has reached a fever pitch. A limited number of Pappy Van Winkle 23-year, produced by Old Rip Van Winkle Distillery of Frankfort, Kentucky, goes to each state. In 2022, Oregon received just 33 bottles.

“The average person cannot get good bottles,” said Cody Walding, a bourbon aficionado from Houston who has been on the hunt for Buffalo Trace Distillery’s five-bottle Antique Collection. He hasn’t been able to find any despite making connections with liquor store managers. He believes he’s years away from success.

“Like, to be able to get Pappy Van Winkle or Buffalo Trace Antique Collection, unless you’re basically best friends with a store manager, I don’t even think it’s possible to get those, ” he said.

In a Los Angeles bar that Walding visited last week, one shot of Pappy 23-year cost $200.

Supplier sales for American whiskey — which includes bourbon, Tennessee whiskey and rye — rose 10.5% last year, reaching $5.1 billion, according to the Distilled Spirits Council of the United States. Revenues for makers of super-premium American whiskey grew 141% over the past five years.

In Oregon, the price of a bottle of Pappy 23-year-old bourbon is set by the Oregon Liquor and Cannabis Commission at $329.95. But finding Pappy 23-year-old on a store shelf would be almost as hard as finding a mythical Sasquatch in Oregon’s forests.

The commission says that of last year’s allocation of Pappy 23-year-old, 25 bottles went to bars, restaurants and/or liquor stores, three were reserved as safety stock to replace any damaged product and five went to “chance to purchase,” a lottery started in 2018. The odds of winning Pappy 23-year-old were 1 in 4,150.

Utah and Pennsylvania are among other states that also use lotteries for coveted liquor. Two men in Pennsylvania each bought a bottle of Pappy Van Winkle after winning the liquor lottery in different years. They tried to sell their bottles on Craigslist, but undercover officers posing as buyers nailed them for selling liquor without a license.

A bottle of Pappy Van Winkle,12-year-old aged bourbon is shown at Seven Grand, a whiskey bar downtown Los Angeles Saturday, March 4, 2023. (AP Photo/Damian Dovarganes)

In Virginia, an employee of the state’s Alcoholic Beverage Control Authority downloaded confidential information about which state-run liquor shops would be receiving Pappy Van Winkle and other rare bourbons. An accomplice then sold the intel to Facebook groups of bourbon fans. In September, the now-former employee pleaded guilty to felony computer trespass, received a suspended prison sentence and a fine, and was banned from all Virginia liquor stores.

In Kentucky, an employee of Buffalo Trace Distillery was arrested in 2015 for stealing bourbon, including Pappy, over several years and selling it. The caper became part of “Heist,” a Netflix miniseries, in 2021.

Bourbon, in particular, has a rich American heritage. It’s been around since before Kentucky became a state in 1792 and is where the vast majority of bourbon comes from. In 1964, Congress declared bourbon “a distinctive product of the United States,” barring whiskey produced in other countries from being labeled as bourbon. Today, some of the best-known Kentucky bourbon distilleries are foreign-owned.

In the 1960s and ’70s, bourbon had a reputation as a cheap drink. Then came a change: Targeting Japan, Kentucky distillers developed single-barrel and small batch versions in the 1980s and 1990s, which later blossomed in the United States, said Fred Minnick, who has written books on bourbon and judges world whiskey competitions.

A bottle Pappy Van Winkle 23-year-old is shown at the Far Bar, located in the historic Far East Building in the heart of Little Tokyo in Los Angeles on Saturday, March 4, 2023. (AP Photo/Damian Dovarganes)

“The distillers were starting to wake up — there was an interest in the whiskey, because the culture itself was beginning to change,” Minnick said. “We were going from a steak-and-potatoes nation to foie gras and wagyu.”

Minnick lovingly describes what it’s like to sip a great bourbon, which obtains sweetness by absorbing natural wood sugars from charred oak barrels.

“It begins at the front of your tongue, walks itself back, will drip a little bit down your jawline, a little bit like butter, very velvety,” Minnick said. “Caramel is one of the quintessential notes, followed by a little touch of vanilla.”

Some of the world’s top beverage companies that own major brands include Kirin (which owns Four Roses), Beam Suntory (Maker’s Mark, Jim Beam, Knob Creek, Basil Hayden), Diageo (Bulleit, I.W. Harper), Sazerac (Buffalo Trace, Van Winkle, Blanton’s) and Campari Group (Wild Turkey).

They boosted bourbon production with multimillion-dollar expansions and renovations, but there’s still not enough of the best stuff to go around.

In Oregon, that scarcity led to the headline-grabbing scandal that drew attention to the state’s system for distributing rare spirits.

Six Oregon Liquor and Cannabis Commission officials, including Executive Director Steve Marks, acknowledged they had Pappy or another hard-to-get bourbon, Elmer T. Lee Single Barrel, routed to liquor stores for their own purchase. All six denied they resold the bourbons.

The internal investigation determined they had violated an Oregon statute prohibiting public officials from using confidential information for personal gain. Gov. Tina Kotek sought Marks’ resignation in February, and he quit. The other five are on paid temporary leave. An investigation by the state Department of Justice’s Criminal Division continues.

Patrons toast with whiskey at the “Far Bar,” a gastropub with American and Asian food, located in the historic Far East building in the heart of Little Tokyo in Los Angeles on Saturday, March 4, 2023. (AP Photo/Damian Dovarganes)

In his responses to the commission investigator, Marks denied that he had violated Oregon ethics laws and state policy. However, he acknowledged that he had received preferential treatment “to some extent” in obtaining the whiskey as a commission employee.

Old Rip Van Winkle Distillery’s suggested retail price of Pappy 23-year-old is $299.99. Because of its extreme scarcity, it can go for a lot more on the resale market.

In December, a single bottle of Pappy 23-year-old sold at Sotheby’s for a record $52,500. Two other bottles auctioned for $47,500 apiece. All three were originally released in 2008.

Despite Pappy 23-year-old’s red-hot popularity, Minnick is not a big fan.

“Right or wrong, the Pappy Van Winkle 23-year-old is absolutely the most sought-after modern whiskey, year in, year out,” Minnick said. “I personally think that the 23-year is hit-and-miss. It’s typically over-oaked for me.”

 

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