Monday, January 18, 2016

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'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.



Shame the demand and you'll stop the supply. Don't blame only the hookers; call out the johns.

Lew Bryson said...

Good point, but I figure neither side is going to be affected by shaming anyway. I could be wrong, I suppose; that'd be nice!

PivnĂ­ Filosof said...

I can't speak about Whisky, but in the case of beer, producers share part of the blame. They've promoted, and profited, from the Pokemon mentality many geeks have. RateBeer, Untappd and the likes have also contributed to that. Flippers have seen an opportunity, they know they are enough fools willing to pay stupid amounts for a bottle of beer because they "gotta catch 'em all" (btw, I believe many of those fools take more pleasure in acquiring a bottle of that beer, and telling the world they have it than in actually drinking it). Change the collector and the hype cultures and Flippers will have fewer opportunities to profit.

Lew Bryson said...

You could almost certainly make the same comment about whiskey, yes. And as people have noted on a Facebook discussion of the post, producers could price their products at the price the secondary market is bringing, which would cut out the flippers' action. Is that a good solution? Consider: the secondary market price could be seen to represent the "true" price. But this goes back to one of the tenets of my argument here: flippers have driven UP the price through creating an artificial scarcity to the point that I don't believe it is a true price anymore.

It's complicated.

Bryan Kolesar said...

Agree wholeheartedly and unfortunately a rising tide of fools lifts all beer prices. I do my best to shame, as well, but this need to be stepped up! What an unfortunate mess we're in with such a hyper-hyped, self-concerned, must-have consumer culture we have.

Reminds me of before Christmas when I mentioned to someone that I have a Partridge In A Pear Tree from The Bruery, first they asked (with wide eyes and frantic twitching) how many I had, if I didn't want it, and (then proceeding to begin frothing I believe) if I knew how much I could get for it if I sold it online. Then, rolled his eyes and dismissed me when I acted very nonchalant about my possession of it.

I was planning to drink it soon, but now I may hold on to it just a bit longer to see if I can get an even more ridiculous reaction from the next beer jerk.

Albert Brooks said...

So where is the magic number to hold something? I buy a fair amount of things with full intention to flip 5-10-15 even 25 years down the road. I sold a first edition Pappy 23 last year for an ungodly price......and the buyer came to me with the offer. I drank the other one I had.

Is it flipping only within the release year or is there some other time period involved?

Lew Bryson said...

Ya feeling guilty? What you're doing is investing, or collecting. Flippers buy it with no intent of doing anything but selling it quickly for a profit.

Anonymous said...

it's not evil, it's just Capitalism...the market will correct itself, right?

Lew Bryson said...

Well, there's capitalism, there's evil, and then there's just being an asshole. Flipping isn't "evil"; so far as I know, no babies are being roasted on spits, no one's losing their home because of it. It's just shitty behavior that's not in the common good. It drives up the price of a scarce commodity by increasing the scarcity for no other reason than driving up the price.

The market will certainly correct itself. The people who pay the prices the flippers ask are indeed complicit. And there's a third factor involved that I'm going to blog about soon. But generally, this post was about flippers being assholes, of the Martin Shkreli type. ( I'm not trying to find any kind of "solution," because there's nothing one can do except not buy from the flippers.

This whole thing is being driven by two groups: new whiskey enthusiasts (or simply conspicuous consumers) who want to buy THE BEST and don't care how much it costs, and whiskey aficionados who are convinced that they should be able to buy a bottle of anything they want; "whisky entitlement" some are calling it. Well, as I noted in my review of the Germain-Robin brandy yesterday, sometimes you can't, simply because there just isn't enough: there were only 120 bottles of that brandy produced. Only 120 people can buy one. These unrealistic expectations create flippers.

People are also accusing whiskey producers of deliberately under-producing on the prized, hyped whiskeys, ignoring the fact that 20 years ago, those distillers would have been fools to have produced enough to meet today's hugely larger demands. These same people tell us that we're bad people to think we could walk into a liquor store and simply buy a bottle of Pappy or Antique Collection right off the shelves, when only six years ago, that's exactly what we could do. (Example: I posted this two months after the 2009 Stagg release: )

There's plenty of ugly to go around. This isn't my last word on the subject, though it's hardly the biggest challenge facing whiskey.