All Flippers Go To Hell

And the cry of the Flipper is heard in Hell...

All flippers go to hell.

Starting from the top: what's a flipper? A flipper is someone who takes advantage of a situation that lets them buy a product or item for a price that's below the market price, and then immediately re-sells it for a profit. You may have heard of people "flipping" homes, maybe seen "Flip This House." When people flip homes, often it involves some work and money; cleaning, clearing brush, relatively minor construction or repair. That's a different proposition, and I don't think of those people as assholes; they're doing some smart work, increasing the value of their asset (or taking away a negative from it; same thing), taking a fair amount of risk, and then profiting from their work. 

No, I'm talking about beer and whiskey flippers. These are the folks who pick up rare or hyped bottles and immediately turn about and sell them at a jacked-up price for substantial profit, legally or illegally (most states don't allow the sale of alcohol beverages, even so much as one bottle, without a license). 

How come they can get those bottles, and you can't? They may happen to live near the release point of a limited edition bottling (Chicago for Bourbon County Rare, Tampa for Cigar City Hunahpu's Imperial, Craigellachie for the Macallan Easter Elchies bottlings, and so on), or they enter store lotteries to buy Van Winkle bourbon at the quite reasonable list price, or they take a day to follow delivery trucks around to scoop up all the bottles of an allocated beer or whiskey that they can talk ill-informed retailers into selling immediately... Whatever the reason, they buy cheap (and usually the maximum allowed), and then sell as dear as they can. 

They also suck, a lot. If you're a flipper, look in the mirror and see what a huge jackass you are. Sure, you're the capitalist ideal: buy something at a low price in one market (the release point, the store lottery, the unprepared retailer), then move that product to another market, the secondary gotta-have-it-can't-get-it market, and sell it for a substantial profit. It's the way trade makes money, it's how it's worked since the first trader picked up some pretty seashells off the beach and walked inland to trade these amazing magical talismans for racks of smoked meat and bales of furs. He took a risk -- maybe they wouldn't like the seashells, maybe they wouldn't have anything to trade that he wanted, maybe another trader got there first and satisfied the need, maybe he'd get attacked and robbed (or killed, maybe by wild animals) on the journey to or from the secondary market -- and if the risk worked out, he made a profit. 

Only this is more like the Dutch traders who stoked the fire under the tulip bubble in the 1630s (yes, I know that tulipmania may have been exaggerated, but it's an example most people know about). There's trade, and then there's mania, and where there's mania, there's someone who's going to take advantage of it. And once mania starts, the other risks start to diminish in the light of getting stuck with the expensive commodity if the bubble collapses. But with the Internet helping things along, flipping moves so fast these days that getting stuck with a non-salable bottle is just not that likely. And as we like to point out, you can always drink it. 

I first realized there was a potential flipper market in beer back when Troegs first put Mad Elf in the big 3-liter bottles, and John Trogner told me that one day a woman came in and bought ten of them, at $60 each...and she didn't even drink beer. Just thought they would be great gifts at her office. And Stephen Beaumont then pointed out (wish I could find where; little help?) that prices and availability were going to become a problem for beer lovers who wanted the Dark Lord, and the Kate the Great, and the Pliny the Younger, because beer was becoming so hot, so hyped (and it really still is), that others were jumping in. Like this guy:

This wave of crazy demand, some of it from wine drinkers who were not shocked at the idea of paying $30 to $100 a bottle at all, some of it from whiskey collectors who felt they simply had to have a bottle, stoked the prices to the point that the flippers got in. When you look at the payoff, it's sobering. If you can get a bottle of Pappy Van Winkle 23 year old at or near the list price of about $250, you can sell it within two weeks for $2,000 with minimal effort. Even beers can net you $50 to $200, if they're rare enough. Flippers then further fuel the demand by snapping up every bottle, making the quick sales and total clearance that brings panic and desperation on the part of fans, who will then pay even more.

In this way, the flippers are putting upward pressure on the general price of whiskey. Just as the price a whiskey brings at a legitimate auction or the marked-up price at which it sells on a retail shelf affects the planning of the producer for the pricing in the future, so too do the prices that flippers get push the regular retail higher.

Some producers and retailers, bless their hearts, have taken steps to try to stop flipping. These range from simply refusing to sell to known flippers -- ballsy -- to jacking the list price up close to that of the secondary market. That second strategy looks greedy, but I get it: They're making and marketing the stuff. Why should some lower-than-snake-shit flipper profit? Some folks even rat out flippers to the booze cops, and while there's some schadenfreude there, I'll admit, diming someone to the booze cops is Not Cool. Even a flipper. Because the Booze Cops care even less about the booze than the flippers do, and they'll usually destroy the bottles. No one wins.

The thing is, it won't stop. As long as there are people willing to pay the price, because they just have to have that bottle, flippers will prosper. As much as they suck, as much as they're the lowest kind of river-bottom turd, they're not going to go away, because there are people willing to pay the price. I don't blame those people for the flippers' existence; that's not fair. I blame the flippers for doing what they're doing, because too many of them have no idea what's in the bottle, and they don't care, either. If you're buying from a flipper and you're doing it for the reasons the guy in the video had...you're a jerk,

Look, when you flip a bottle, you disrupt the natural flow of the booze from maker to drinker. If you're just helping people who otherwise wouldn't get the bottle, and passing it through for no profit, I got no beef. But if you're only getting that bottle to turn around and sell it? You're a jerk, and you're going to hell.

As a wise Scotch whisky distiller once told me, something I've repeated over and over: "We make the stuff to drink." Stop buying it for resale. Enjoy it.

Liquor Taxes & Santa Claus

From today's Chicago Tribune:

The increases on thousands of products, timed to coincide with the Sept. 1 tax hike, sometimes are double or more the increase in the liquor levy alone. It may take a few weeks or months, but the higher prices now faced by liquor retailers should eventually translate into sharply higher costs for everybody from fussy wine snobs to besotted tipplers. Separately, the nation's largest brewers have also signaled plans to raise beer prices this fall.
Voters are primed to blame politicians for almost anything, so piggybacking price hikes on tax increases is a tried-and-true business technique for deflecting consumer ire over rising costs. "That's pretty consistent with what typically happens," said David Vite, head of the Illinois Retail Merchants Association. "The last time liquor taxes went up, distributors took the opportunity to increase their prices while all the time wailing about the government."
Even factoring in a discount for volume purchases, one area retail chain was paying $20.17 a bottle for fifths of 80-proof Smirnoff vodka, up from $16.11 in August. By itself, the tax hike would have added only 80 cents to the price.

Here's the thing, folks. We hear this same bullshit every time a booze tax increase is proposed: "It's only 80 cents a bottle! You can afford that!" Then when the tax gets passed, everyone is shocked -- shocked! -- to find that the price increase on the shelf is more than 80 cents.

Could we grow up? Here's how it works, and it's no mystery. When a producer/importer sells a new product to a wholesaler -- at, say, $10 a bottle -- the wholesaler will take that product, increase the price (called the "mark-up") by a certain percentage (which, in some states, is set by law; in some states, Pennsylvania for instance, the state is the wholesaler for spirits and wine, and marks up everything 30%) and charge that to the retailer: $13 a bottle. That's how the wholesaler makes money, and covers their costs (warehousing, trucks and delivery, records-keeping, marketing, advertising, taxes, etc.). Now, the retailer will mark up the bottle again, say 20% (note that a bar will achieve something like 100-150% mark-up; they have higher expenses, and, well, they've found that we'll pay it), so now it's on the shelf for about $15.60.

This is how retail works. This is how it's done, how it's been done for centuries: "Buy cheap, sell dear" is the rock-sold basis of business. And when the price increases at the top of the process -- the producer/importer level -- it increases at every step, just as it did when the original price was set. That's how it works.

Governments almost always add booze taxes at the producer/importer level. It's easier to attach them and collect them there...but it's inherently deceitful. Because you're adding a cost at the top of the process, knowing that it's going to increase as it comes down. Add 80 cents to a $10 bottle, and it's not going to be a $16.40 bottle on the shelf; it's going to be a $16.85 bottle on the shelf. 'But it was only an 80 cent tax increase!" the naifs in the press cry. 'Why is the price up $1.25?!' And the blame magically comes off the government.

Guys... it always happens. Producers will sometimes choose to 'eat' the tax increase -- Corona brewer Grupo Modelo famously swallowed the federal tax increase in 1991, and their sales boomed as a result -- but wholesalers and retailers almost never do, and they never "pass through" the increases without adding their mark-up. Why should they? It's just another price increase, and if they don't make money on those price increases, they're not going to be keeping up with the inevitable increases in their costs...and they'll go out of business.

Do producers piggy-back price increases on tax increases? Of course they do. If there's anything people, customers, hate more than price increases, it's prices that seem to go up every other month. It works much better to chunk the price up more once a year, and if the government's forcing your price up, that's the time to put your price increase in, and try to blame them for all of it (why not, they're trying to shaft you). As for the legitimacy of price increases in a faltering economy, as for the morality of it...well, craft beer's up, single malts are up, vodka's still up, bourbon's up. If we're buying more of it, that takes a lot of the power out of the legitimacy argument.

Look, I don't like price increases any more than you do. Contrary to what some people might think, I really do buy most of what I drink. But when I'm paying $6 pound for American cheese for my kid's lunches, and $7 a pound for farm-raised salmon, I don't know that these price increases are that out of line. Supply and demand, after all: the demand for champagne has slumped, and producers are cutting production and prices, for example. The demand for craft beer and whiskey go up, prices are going to go up. Again, that's how it works.

It simply does not work that companies make money by ignoring increases in their costs, or by increasing prices just enough to cover those costs without making a little more themselves. If you want to argue about how much more those prices should go up, well...take it up with St. Thomas Aquinas.

Bottom line? Tax increases on booze cost you more than your legislators promise you they will, because they knowingly lie (or at best, they misrepresent). But even more so, taxes on booze are inherently unfair, as are all excise taxes, because they tax one part of the population based on what they buy. Not how much, not on what they do with it, but what they buy. As I always say: if your proposed government program is an overall good for all the people -- like roads, police, courts -- then let all the people pay for it. If it's only good for some people, let them pay for it. Don't make me pay for it just because I'm having a beer with dinner.

And Now...whiskies that are over-priced

John Hansell's What Does John Know? blog has a good -- if somewhat inevitable -- companion post to last week's "What Are The Good Whisky Values?" post. This one asks which whiskies are over-valued. It's just been posted, but there are already some trends appearing in the comments. Early front-runner: Johnny Walker Blue.

OMG! HOPSLAM!!!!

So...I got an e-mail from a friend who will remain nameless, taunting me that Isaac Newton's was tapping a keg of Bell's HopSlam today at 11:30. He was taunting me because I'd mentioned how ridiculous the hype on this beer has become over on BeerAdvocate.

Okay, I think to myself, I'm going to go try some of this stuff. No way I was going to drive all the way to Media, or Norristown, or Limerick to try it, or drive up to Shangy's to buy a $60+ case of it, but Isaac's? A 10 minute jaunt? Sure.

I got my glass, and a cloudy thing it was. Big wafts of sweet hop, pine, citrus, the whole thing blowing up in my nose. Big sweet/bitter mouth, a massive mainline of malt electrified by hops. Yup. Double IPA.

Big deal. Look, guys, this is a good DIPA. No argument there: if you like that kind of thing, this is a good one. But it's just good. It's not awesome, it's not Pliny. Stop squealing and peeing yourself. It's hype, and you're propagating it.



I left Isaac's and bought a case of Nugget Nectar for Cathy, kind of a 'you're back at work, and you're pretty damned great' present for her new job. Besides, she'd finished off a case of SNCA and a case of Hop Wallop since December, I gotta keep her away from my work beer. I had a bit of the bottle she had with dinner. Damn good, real hoppy, great beer. But I'm not twitching about it.

It's funny. The same people who bitch about how much craft beer costs, and how outrageous the prices are, are the ones who will drive all over hell's half-acre to get one particular beer, scream about it on-line, and buy it up whenever they see it. Do you get it? You're the real reason the price is so high. Ironic, ain't it?

No knock on Bell's; love their beers, and this is a good one. But phenomenal, outstanding, extra-terrestrial? No.

WhiskyFest Holds the Line

John Hansell just confirmed on his blog (check the comments in the linked post) something we'd talked about at the last Malt Advocate staff meeting: there will be no increase in prices for WhiskyFest 2009 tickets in any of the three cities. We recognize the problems of the economy and you, the people in that economy, and that there are many competing attractions for your whisky dollar. We're doing what we can to bring you the very best whisky festivals in the world at a price you can still afford. Cheers, hope to see you there.

Pints, prices, and punters

I wanted to get back to the "cost of beer" talk we've been skirting. By 'cost of beer,' I mean retail cost of a glass of draft beer, not cost of ingredients, or cost of bottled beer in stores. Those are sufficiently different topics that tackling all of them would take more time and room than I care to take here...maybe some other time.

I've been thinking about what it is we get in the U.S. when we order a "glass" of draft beer, because while a lot of this discussion (and that's a polite word for it) has centered on the price of the standard "shaker pint" pour, some of it focuses on just what is being poured: is it a pint? 14 ounces? Less? Seems like something that's on peoples' minds, so let's have a whack at it.

First, let me short-circuit any mistaken ideas: I do get a fair number of beer samples, but it's bottles, sent to my home. I pay for over 95% of my beers in bars and brewpubs, so I do have a good idea of what things are running out there, like the $6.50 I paid for a shaker pint of Molson Export at the Hard Rock Cafe in Montreal last summer (I only mention that because it was so lame, and so expensive, and so annoying).

That out of the way, here's my main thought. As I've mentioned all too often, I have a diesel Volkswagen. I love it. But when I go to fill up, the price of diesel is all over the map. Gasoline prices rarely vary by much; the competition is too intense. If the price is high, there's a reason: better service, the station doesn't sell that much and makes most of their money off their garage, local suckers, whatever. Auto diesel, on the other hand, is not something you find at every station, or even half of them; competition is lower. I've seen prices vary by 30 cents a gallon or more at stations within half a mile of each other.

Beer prices follow a similar profile. When it's the price of Bud Light, or Heineken, beers that are commonly available, you'll find a pretty close level price. It's not price-fixing; people are just aware of what the 'other guy' is charging. But when it's the price of a rare Belgian import, or a craft that's new to the market area, bars charge what they believe the market will bear. Their ideas of what that is may vary as much as $3 a glass.

Up until recently, they could do so with little push-back from drinkers; folks just ponied up the bucks. Now, however, the economy's in the dumper, money's tight, and more and more customers are starting to balk, and ask why, particularly why is one bar charging $4 and another charging $7 for the same beer.

What exacerbates this is that there is no tradition in the U.S. of stating what amount you're getting in a "glass of beer." We've only started saying "pint" fairly recently, and I'd guess it's because we're aping the Brits in an attempt to appear more worldly than we are, kind of like that annoying affectation of referring to the Atlantic Ocean as "the Pond." We ask for a "pint" of this and a "pint" of that, only we're really asking for a glass of inderminate measure.

What we seem to mean is the "regular" 14 oz. "shaker pint," right? How do you want a bar to advertise those glasses of beer? "14 oz. glass"? "Shaker 'pint'"? "Glass o' beer"? "Medium beer"? All are wrong or suspect. You don't get 14 oz. of beer in those glasses unless you've got no head, the reason for fill-lines on Euro glasses. There are several different volumes these glasses come in, and none of them are exact. Besides, a shaker glass is not a pint, so even if you put quotes around it, calling it a 'pint' is incorrect and misleading. A "glass" or a "medium" beer can be any amount the bar wants to pour.

What is it we want? "Fair" measures and prices, standard glassware? Is the standard going to be some kind of calibrated shaker pint? Because I know some beer geeks who will hate that, hell, I don't mind the shaker pint and I don't like the idea: let a million glasses bloom! We just don't know how much draft beer we're getting unless we go to a standard, and I don't see that happening.

What I can see happening is bars being held up to the same scrutiny that Don Russell forced on the concessions at the Vet back in 1998: tell the customer what you're going to pour -- 7 ounces, 12, 16, 18, 22, whatever -- and then pour that much. And if an inspector comes in and orders a beer, and it comes up significantly short (I'd say an ounce is significant), that gets reported somewhere that people will actually see it, and the bar is fined.

Tell me what you're selling me, then deliver that. I don't think that's such a big deal. Then when I have to decide whether I like your place enough to pay $7 for 12 oz. of beer...at least I'll know it's 12 ounces I'm talking about. It's a place to start. Because until you know what it is you're comparing, you're just making meaningless noise.

Whatever happened to...

...the furor about expensive draft beer? In the first half of 2008 we got Jeff Alworth's Honest Pint Project, Andy Crouch's upset rant (vent? screed? tirade?) about prices, bunches of posts on the beergeek sites, and ink in BeerAdvocate and other beer rags, all about prices being just too damned high!! And now? It's all gone away. Why no more complaints about prices? Is it because gas dropped by more than half from its ridiculous mid-year high and no one cares anymore? Is it because a lack of business has brought prices down? Is it because someone got to the ringleaders, promising them free beers if they'd just shut up? (I have no proof of that, and no reason to even suspect it, but it's never stopped anyone from saying shit like that about me, so what the hell...) Is it maybe for the same reason that I haven't written anything new on my PLCB rant-site since October?

Dunno, but the silence is deafening.

While We're Talking Whiskey...

John Hansell has a good post going over at his blog What Does John Know? about where the good values are in whisk/ey these days. It's engendered a lot of discussion. Answers so far: cask strength and 'mid-range' Scotch whiskies, and bottled-in-bond bourbons (although there's general agreement that bourbon is a deal, compared to Scotch whisky). Drop on over and have a look, contribute.

Kind of neat sidebar: the one guy who made a comment, Ethan Prater? He came up and introduced himself at the Gala tonight. I suppose I could be creeped out by such an intersection of Net and flesh worlds, but he seemed to be a genuinely nice guy, so, well, I'm not. Good to meet you, Ethan.

Damn. I gotta get to bed.