Whisky, the secondary market and auction sites – how to fix a broken system

Words by @The_Bourbonator

[This blog post represents the views of @The_Bourbonator and not necessarily those of the British Bourbon Society]

Ten years ago, I watched a television program about how eBay enabled you to sell anything. The presenter proved his point by flogging a piece of old blue fishing rope he had found on a beach in Truro to a man in Croydon who needed something to tie up his tools. Fantastic I thought at the time: online auctions connect people and their needs, whatever and wherever they may be. Fast forward to 2017 and online auction sites have become a trusted method of buying and selling all manner of things, including whisky. Indeed, in the past couple of years, a whole load of online auction sites have sprung up specifically catering for whisky. Is this a good thing for whisky drinkers?

If you're looking for 'dusties', categorically yes. I recently purchased a Wild Turkey 1997 release from an online whisky auction site. Being an old release, finding it on the shelf at a reasonable price was impossible so auction was the only way to go. The price was good, the service was slick and the bottle arrived a few days later. There was also the reassurance that someone at the auction site, who hopefully knew what they were doing, had checked over the bottle to make sure it wasn't fake. No complaints there. 

Where it all starts to get a bit grey is when bottles that have only just been released are instantly resold online for many multiples of the RRP (or MSRRP if you’re American) on the secondary market. Now, I fully accept it's a free market: a seller can sell their property for as much as the market will bear, a buyer is free to pay as much as they want and, of course, the auction house will take a cut of the sale proceeds so everyone benefits? Taking this all at face value, yes but this doesn't mean the current system is good for whisky drinkers. The ability to quickly and efficiently re-sell bottles online using auction sites has undoubtedly contributed, at least in part, to the sad rise of ‘flipping'. Rather than bottles being bought to drink, flippers will clear the shelves of interesting releases with the aim of immediately on-selling for a quick buck. This creates artificial supply shortfalls and means whisky drinkers end up having to chalk up far more if they want to drink limited releases. This doesn’t sit right with me.

A secondary market will always exist as long as demand outstrips supply, which for the foreseeable future will always be the case for limited edition bottlings but should it be as easy as it is now to flip new releases? What I find difficult to stomach is seeing bottles of the 2016 Buffalo Trace Antique Collection continuously appearing on auction websites for many multiples of their retail value. Flipping means that limited edition bottles are increasingly only available to those with very deep pockets.

Should our beloved spirit be associated with this type of practice? If you agree with me that it shouldn't, what can we all do to stop bottles being flipped as short term investments? Here are a few practical suggestions for consumers, retailers and whisky auction sites that would make things fairer.

1. Consumers: don't buy new releases at secondary prices! If you get hold of a limited edition bottle from a store, share it with your mates. If the demand isn't there, flipping will go away.

2. Retailers: implement clear and transparent stockholding policies on how limited releases will be sold. These could include limiting sales of limited releases to one bottle per customer and immediately releasing stock rather than bunkering it only to release at a later date with a significant price hike over the RRP/MSRRP. Master of Malt has previously been complimented on this blog precisely for having such a policy, which is described on their website here and here. MOM's creative way of selling limited releases, by the dram, raffles and auctioning them for charity, isn't to everyone's taste but it does disrupt flipping. Royal Mile's recent decision to clarify their stockholding policy is another step in the right direction. A clear stockholding policy is particularly important when a retailer and whisky auction site are owned by the same company, given the obvious risk of bottles bypassing the store and being sent straight to auction.  

3. Online auction sites: auction sites voluntarily implementing a policy of not selling new releases for at least 12 months is perhaps wishful thinking but at least such a step would force flippers to take a longer term financial risk than they do today.

To sum up, auction sites are great to find dusties and other bottles that are not available to purchase through normal channels, but seeing newly released bottles being flipped just makes me despair. American whiskey, once thought of as a drink of the layman, is now increasingly likely to be found in a lawyer’s office in a crystal decanter. I can’t imagine Harvey Spector doing the Kentucky Chew with Fred Noe!