[SPEAKER_00]: Let's talk about the bourbon secondary market.
[SPEAKER_00]: It's either doing one of two things.
[SPEAKER_00]: It's either collapsing or it's correcting, right?
[SPEAKER_00]: But there's no doubt that it's not doing what it was doing.
[SPEAKER_00]: So let's get into it.
[SPEAKER_00]: If you want to find out where the secondary bourbon market is right now, let's take a look.
[SPEAKER_01]: Fighters, this episode is not too encouraged, flip it.
[SPEAKER_01]: Yeah, okay, it's more about understanding what's going on with the secondary market and how that's a reflection of the overall whiskey market and how that's gonna affect you as consumer.
[SPEAKER_00]: And one thing you should know is that the secondary market is illegal.
[SPEAKER_00]: It is.
[SPEAKER_00]: Okay, so we're just gonna start with that.
[SPEAKER_00]: Yeah.
[SPEAKER_00]: So, nothing, everything we're talking about is just discussing something illegal that's been happening and has always been happening and has still probably happening and that's just what it is.
[SPEAKER_00]: We don't encourage anyone to get involved in it.
[SPEAKER_01]: Yeah, so private sale of liquor between two individuals is illegal unless somebody has a license.
[SPEAKER_01]: To the extent that if I were to bring you a bottle of wine and give it to you, technically, I have broken the law.
[SPEAKER_01]: This.
[SPEAKER_01]: Now, obviously, that's not how it's enforced.
[SPEAKER_01]: And you
[SPEAKER_01]: There has been this whole market that's operated outside of regular Tory scrutiny, right, because the transactions are small, they're dispersed.
[SPEAKER_01]: It's hard to know who has jurisdiction over the transaction because often there's a person in this state that's selling a bottle to a person in this state.
[SPEAKER_01]: and who even knows how they got there and all of that stuff.
[SPEAKER_01]: And so because the regulatory authorities, they're not sure who has jurisdiction, they have limited resources, the size of the actual crime is actually relatively small.
[SPEAKER_01]: This is in a legal behavior that's been commonly tolerated.
[SPEAKER_00]: Right.
[SPEAKER_00]: Yeah, it's one of those things that everyone knows is legal unless you're doing it in a certain manner and a certain volume You've been able to fly under the radar and just people don't want to allocate their time efforts and energy and money And resources to try to track you down for that one volume sold to several that one guy that was driving back and forth from Virginia and Ohio at a ton of and
[SPEAKER_01]: or not will it upload to OWA yeah well or he was buying well or and bringing it back um but you know even in his case they ended up finding him a small amount of money and let him go because they thought he was this they'd found the bootlegger king pin like uh and turned out he was just using his uh whiskey dollars to buy better whiskey right uh that he was actually drinking but he wanted to drink yeah so
[SPEAKER_01]: They were like, okay, we're going to impound your car and find you.
[SPEAKER_01]: But anyway, so the secondary market, if you don't know the secondary is, it's private sales between individuals.
[SPEAKER_01]: And I would argue, and I think it would be difficult to argue against the fact that it drove up prices, and it created a whole lot of false demand.
[SPEAKER_01]: And the prices have gotten far beyond what the manufacturer suggests retail price.
[SPEAKER_01]: Um, and there was no regulation of it, and so, uh, there wasn't any consistency.
[SPEAKER_01]: It was just like the wild west things were just happening, right?
[SPEAKER_01]: Um, and, and so, I don't know that it's fair to say that it's a full collapse, right?
[SPEAKER_00]: Well, what people typically mean when they're saying collapse, like the prices are down from the peak, right?
[SPEAKER_00]: So, again, if you're looking at the second article, let's just use the
[SPEAKER_00]: Let's just name a stack junior.
[SPEAKER_00]: We were talking about that earlier today.
[SPEAKER_00]: So I remember that during kind of the boom on the second air market, you could see him for like upwards of 300 bucks.
[SPEAKER_00]: $350.
[SPEAKER_00]: I depend on what it was.
[SPEAKER_00]: And now you could probably find that for a lot cheaper.
[SPEAKER_00]: So the prices have started to come down from where they peaked out.
[SPEAKER_00]: Bottles are just not taking as long to sell.
[SPEAKER_00]: Or I'm sorry, they're taking a little longer to sell than then we're before.
[SPEAKER_00]: And there's just fewer buyers at those inflated prices.
[SPEAKER_00]: And so when we talk about the market collapsing, it's not that it's gone away, it's just that it's less active.
[SPEAKER_01]: Well, yeah, but I mean, it has legitimately collapsed for a certain category.
[SPEAKER_01]: Sure.
[SPEAKER_01]: Like four of us as single barrels and people would line up to pay double, get re-triblas.
[SPEAKER_01]: And you know it's funny because I have an acquaintance that runs a local secondary site and somebody had made some comment about liquidating a bunch of someone's with ski single barrels.
[SPEAKER_01]: And he was like, good luck.
[SPEAKER_01]: I mean, like, you can, you can put them on there.
[SPEAKER_01]: No one's gonna buy them.
[SPEAKER_01]: Because there is no foam of left, except for truly the hardest to find bottles.
[SPEAKER_01]: And even those, I pay the most attention to the secondary market when it comes to that type of bottle.
[SPEAKER_01]: And even those, I would say on average, I've noticed reduction in prices by at least 33%.
[SPEAKER_00]: really at least 30.
[SPEAKER_01]: And then even still, it's taking longer for those bottles to sell than it used to.
[SPEAKER_01]: And then when you see people negotiate, right, you're seeing this much larger gaps between what the ask price is and when the offer prices.
[SPEAKER_01]: Yeah.
[SPEAKER_00]: So we all know what caused the skyrocket, hype train to take off at a million miles an hour, right?
[SPEAKER_00]: It was the pandemic, right?
[SPEAKER_00]: That was probably the biggest culprit.
[SPEAKER_00]: As we had this quarantine period where people were huddled up in their homes, either told they had to or just felt more comfortable doing that.
[SPEAKER_00]: They're working from home, you know, work hours kind of shifted during the work day where people were kind of a little more relaxed on the time that we're clocking in and clocking out We have these stimulus checks just showing up, which was pretty cool You never knew when those were gonna come in the mailbox and you're like, all right, great Here's another couple thousand bucks because we have kids and
[SPEAKER_00]: stuck in our homes.
[SPEAKER_00]: All right, and there's that.
[SPEAKER_00]: And then I mean, social media was flooded with people at all times of the day because nobody had anything else to do.
[SPEAKER_00]: And so all these things kind of created the perfect storm of this fear of missing out this like needing to feel like they belong to something and the
[SPEAKER_00]: the whiskey community took advantage of that.
[SPEAKER_00]: Yeah, all right, what can we do?
[SPEAKER_00]: Well, we can sell people alcohol.
[SPEAKER_00]: We can create this huge hype train around certain bottles, allocated bottles, and it just, it really took off.
[SPEAKER_00]: And that's how we got to where we were.
[SPEAKER_01]: Yeah, and I feel like I'm John Q.
[SPEAKER_01]: Public, right?
[SPEAKER_01]: Every time I start to read about trends, I'm like, that's me.
[SPEAKER_01]: You're talking about me, right?
[SPEAKER_01]: And I've noticed, I have tighter disposable income, right?
[SPEAKER_01]: Like I'm not as quick to spend the money as I once was.
[SPEAKER_01]: And part of it also has to do with like a shifting of what I consider great supply of whiskey.
[SPEAKER_01]: You know, like all that foam
[SPEAKER_01]: you know, rare limited edition release of a previously kind of unheard of discillary and all that stuff.
[SPEAKER_01]: And now I'm like, you know what, I'm pretty good with some of the common stuff that I can find.
[SPEAKER_01]: And because there were so many flippers creating false demand in the market, purchasing bottles, almost creating an extra tier to the tier distribution system.
[SPEAKER_01]: Like, you've got a lot of speculators that are like leaving the market.
[SPEAKER_01]: And that's going to impact prices.
[SPEAKER_01]: Yeah.
[SPEAKER_01]: Hey, nice hat.
[SPEAKER_00]: Hey, thanks.
[SPEAKER_00]: Nice landered.
[SPEAKER_00]: Nice rock splash.
[SPEAKER_00]: Thanks, man.
[SPEAKER_00]: Nice travel case.
[SPEAKER_00]: Nice blend topper.
[SPEAKER_00]: Thank you.
[SPEAKER_00]: Nice candle.
[SPEAKER_00]: Nice bottle bag.
[SPEAKER_00]: Thanks, man.
[SPEAKER_00]: That's a nice tumbler.
[SPEAKER_00]: Nice woman's t-shirt.
[SPEAKER_00]: Oh, thanks.
[SPEAKER_00]: Nice extra smedium shirt.
[SPEAKER_00]: Get yourself some nice stands.
[SPEAKER_00]: And get all the compliments that come along with it.
[SPEAKER_00]: shop bourbon real talk dot com the i think what people learned along the way is that there are these they've started to see as they spent that extra money on some of those higher in bottles and they tasted them next to some of their their the bottles they could find on the shelf every day even during the boom
[SPEAKER_00]: If they had to be honest with themselves, they started being like, okay, is it worth it?
[SPEAKER_01]: The quality drinking experience isn't different.
[SPEAKER_00]: It's not, it's, it's so it kind of created this kind of fragile demand type products where it's like, okay, you start having people saying, okay, yeah, that's the overpriced.
[SPEAKER_00]: That's the overpriced.
[SPEAKER_00]: And then, and I think that that would play the big part of helping to kind of settle things down.
[SPEAKER_01]: It's your classic supply and demand scale, right?
[SPEAKER_01]: You just look at it.
[SPEAKER_01]: You got fewer of it at buyers.
[SPEAKER_01]: People have more options, and the prices are gonna come down and things are gonna normalize.
[SPEAKER_00]: Yeah, and I think the reason that feels like a collapse, I guess, Amy, no one who's been around the whiskey industry for a while doesn't can't sit here today and say,
[SPEAKER_00]: it doesn't feel any different than it did in 2020.
[SPEAKER_00]: Right, it does feel that.
[SPEAKER_00]: Right, so everyone feels like something's shifted, something's different.
[SPEAKER_00]: And I think the reason it feels like a collapse of some sort is because compared to where it was, if you look back at where it was, it feels like a complete...
[SPEAKER_00]: train wreck.
[SPEAKER_00]: The hype train was cooking down the tracks and all of a sudden we're do railed.
[SPEAKER_00]: Like it's no longer anything like it was.
[SPEAKER_00]: You know, and margins are different now.
[SPEAKER_00]: Infiltrations here, people are back to work, all this stuff is everyone's back to kind of real life and now it's like no one's really talking about those allocated bottles or chasing recently and stuff like that.
[SPEAKER_01]: You know, you know what's an interesting concept along those lines is shadow inventory.
[SPEAKER_01]: So, like, in real estate markets, like, you know, you would, for instance, at some points here about shadow inventory, which are houses that have to be sold, that aren't currently on the market.
[SPEAKER_01]: But regardless of what's going on, you know, this category of seller has to sell, whether it be like a new construction company or whatever, you know, you have large layoffs in an area.
[SPEAKER_01]: And you know that the people have to relocate for work, so there's a bunch of houses that are coming on the market, or
[SPEAKER_01]: people who were over whatever.
[SPEAKER_01]: That same thing applies to the whiskey industry because there were so many people who got caught up in the high train that bought what would be considered great drinkers, but mid-tier bottles, but they realized like, oh my god, I bought way more alcohol than I could ever drink in my lifetime.
[SPEAKER_01]: Mm-hmm and spent way too much on it right and now they're like oh, well, I'll just sell it because in the past They were like oh, I could just it any time you know, yeah, for me whiskey was same as cash Like if I if I needed to convert my whiskey back into cash it took it took less time They're going to the bank because I could sell it online and have been moan my account like it's yeah, right?
[SPEAKER_01]: And so, I think that one of the things that's interesting about what you just said is that we have the shadow inventory out there of people that have realized like, I don't really like the whiskey enough to have this much.
[SPEAKER_01]: And when they go to sell, they can't.
[SPEAKER_01]: All right.
[SPEAKER_01]: You know, if they got a bottle, papy or a Georgie stagger whatever, but those are the few bottles they want to hang on to from their collection.
[SPEAKER_01]: And then they want to sell all of the mid-level, really high quality, but single
[SPEAKER_00]: Yeah, they're kind of in the same market as the flipers are right now, which I kind of love that I love looking at the flipers now They're like, all right, how's it going for you?
[SPEAKER_00]: How's it going now because you've been making my life miserable for your whole non-the-bottles for so much longer.
[SPEAKER_00]: The margins are way thinner and it's just You know They're really second guessing their decisions to be like okay.
[SPEAKER_00]: I think it's time to bail on this
[SPEAKER_00]: Yeah, because it's just not what it was.
[SPEAKER_00]: Now, the question becomes, is this healthy?
[SPEAKER_00]: Did we need this?
[SPEAKER_00]: Did we need a correction?
[SPEAKER_00]: Did we need a mild collapse?
[SPEAKER_00]: And I think the answer is yes.
[SPEAKER_00]: I think it's really stabilized pricing, because like you said, what it did was create a false, false demand.
[SPEAKER_00]: And, you know,
[SPEAKER_00]: The secondary market is the same place that small store owners are looking to figure out what they're gonna put their prices and their nice little cases for.
[SPEAKER_01]: And so it creates these lifestyles.
[SPEAKER_00]: This higher price and false demand on a product that's really not worth the value.
[SPEAKER_01]: Yeah, I think it's just a return to reality and the truth is is that if the supply demand curve is balanced out there is no secondary market right and so seeing the secondary market go away means that the industry overall is probably getting to a more healthy place.
[SPEAKER_00]: And if you're looking for healthy places to hang out, welcome.
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[SPEAKER_01]: Yeah, and if this is your first time tuning in, we'd love to say you why we do what we do, and it's about committing a connection.
[SPEAKER_01]: And that became a personal mission of mine when I lost my younger brother just so excited in 2014, and I was talking to some of his friends, and I saw that he had started to
[SPEAKER_01]: lose those connections that keep us bound to this world.
[SPEAKER_01]: And at the same time, I was getting more involved in the whisky and enthusiastic as world, and I saw how whisky was a great conduit to help me to make connections and new friends.
[SPEAKER_01]: And it allowed me to cut some toxic relationships out of my life, and I thought to myself, maybe if I could get you connected to whisky, whisky, and do the rest of the job, and get you connected to others.
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