American Gray Market Whiskey Trading: A User’s Guide #Merica

WHY TRADE?

I can’t think of a better time to discuss whiskey trading than just after Independence Day weekend. There may be nothing more authentically American than trading whiskey. We fought a little war with Britain for, among other things, the freedom to trade whiskey with whoever we want without unreasonable tax or tariff. In place of currency, the frontier was settled on whiskey trading. I think whiskey trading is a good thing; in fact, I believe it is essential. The liquor distribution system in the United States is dysfunctional. That combined with the rising demand and shrinking supply in the whiskey industry; it is difficult and often impossible to find the bottle of your desire. If you can’t find a bottle on the shelf at retail price, there are only three options for acquisition:

1. Begrudgingly order a 2 oz pour at a high-end restaurant at about 4x retail value while some novice bartender waxes poetic on the epic flavor profile and limited allocation. Of course, you already know this, and you count to ten to not cut him off in a rage before his monolog is complete. “I could buy a bottle for that price…if I could find it.” You order through your gritted teeth or slip down the menu for another option, on principle. I recently was offered a 2oz pour of Booker’s Rye for $120. The bartender tried to sell me on it and after pleading his case, I ordered a Buffalo Trace, neat for $8.
2. Pay in blood for a bottle on the gray market, typically at 2-10x retail price. There are a few bottles that warrant a kidney. See Brett Atlas’ post, “Red, White and Gray: Realities of the Bourbon Market.”
3. Trade the bottles you don’t want and may already have for the one that got away. And this is the American Way.
   I have an abundance of stuff I don’t want and can get easily that you want. You have an abundance of stuff that I want, and I cannot get easily that you don’t want. Fortunately, I don’t have to load that stuff up on a camel and hike clear across Asia to trade it with you. We can negotiate like gentlemen through email or text message and arrange the transfer of goods to a mutually beneficial end. For a trade to happen, both sides must see value in the transaction. In the whiskey world, taste and preference variations create trade opportunities. If I can, I typically buy at least two of everything I find at retail. I recently found on the shelf a High West Yippee Ki-Yay and then tried it at a friend’s house before opening my bottle. I hated it. I now have a bottle sitting in the bunker that I will probably never open and drink. I could sell it. I probably could degrease my engine with it. Or I can trade it. Anyone interested?

WHERE TO TRADE

The usual suspects are Bottlespot and Craigslist where you can create a listing, and interested parties can message you through the website to inquire or negotiate about your offering. I was concerned for their retirement accounts after introducing a couple of friends to the Bottlespot website. It is alluring to go on a buying frenzy, like a middle-aged contestant on Supermarket Sweep. Patience is a virtue.

Sometimes I’ll see a post and fire off a quick inquiry. “Interested in trading?” On principle, I prefer to trade than to buy because I know I am giving something to a whiskey drinker, not a whiskey flipping opportunist. If a trade can be arranged out of existing stock, I have managed to keep cash in my pocket and increase the enjoyment of my bunker all for a few dollars of shipping and handling.

Bottle Blue Book recently got into the action too. I use their weekly email updates to check out the latest TTB filings, and the website is a good ballpark valuation tool for secondary trades; more on that later. They recently added features for your profile for “Bottles I Have” and “Bottles I Want.” I started clicking on bottles on both features as a high-end inventory tracker and a sort of online wish list. Then I got an email…”I see you want Parker’s Heritage Collection #1. I have it.” Let the negotiations begin. I started with a kidney and went up from there.

With the rise of whiskey tasting affinity groups, I have heard of Instagram and Facebook as launch points for trades. Y’all heard about the Facebook? I hear it is a new website. I’m not on it. But if you see anything interesting on Instagram, send a message and see if they have an extra up for trade.

VALUATION FOR TRADE

Beauty is in the eye of the beholder, and the value is subjective. At some point in any trade, I am wondering if I am making a bad deal and I think several benchmarks can help guide emotional dickering.

The retail pricing match-up is a good starting point. For example, if I am trading a bottle of 1792 Full Proof with an MSRP of $44.99 for Elmer T. Lee with an MSRP of $39.99 then I am in the ballpark. I happen to slightly favor Full Proof for Elmer T. Lee right now and happen to have greater access to Elmer T. Lee than 1792 Full Proof in my local retail market. So this would be a good trade for me. Many of you may be reading this and thinking “That guy is CRAZY! I would TOTALLY trade my 1792 Full Proof for his Elmer T. Lee” and that is why trading is ideal.

If I only look at retail pricing and ignore secondary market value, I may be selling myself short of the trade value of my extra bottle. For example, Pappy Van Winkle 15-year has an MSRP of $79.99 yet will trade on the secondary market for $750+. With secondary market consideration, I might be able to trade an $80 retail bottle of whiskey for 2-3 bottles with substantially higher retail value. A good friend this past week was able to trade an Old Rip Van Winkle 10-year (MSRP $49.99) and a Weller 12-Year 750mL (MSRP $26.99) for a Booker’s Rye 13-Year (MSRP $299.99). This trade was equivalent on a secondary market basis, but my friend made off like a bandit on the retail pricing comparison, saving $243.62 in cash out of pocket. What made this trade happen is that Booker’s Rye is reportedly not being distributed to retail stores in Tennessee, so Booker’s Rye is a unicorn for the Volunteer State. His trade compadre has never tried any variation of the Pappy Van Winkle family and was thrilled to get his hands on a bottle of Old Rip. Win-Win trade. Secondary market valuation can be determined by searching listings on Craigslist and Bottlespot or checking the Bottle Blue Book website. The values aren’t always accurate, but it’s kind of like a Zillow estimate for the whiskey world to get you in the right ballpark.

Trading is about negotiation, and I often offend people with my starting ask and sometimes that is on purpose. Please don’t act like my pretentious high school prom date. Just because you have a nice bottle, doesn’t mean you can be difficult. If you don’t like the offer, respond with what will make it work, and we’ll go from there.

TRADE EXECUTION

There is no New York Whiskey Exchange to ensure that bottles are transferred to the respective parties in good order. That is one hell of an opportunity, though. Until the Mark Zuckerberg of the whiskey world emerges to build a trading platform to ensure safe delivery, we are left with traditional shipping methods and the goodwill of the whiskey community to ensure delivery. So far I have not been disappointed. Once I have boxed my collectible bottle in bubble wrap and often set inside a secured box with packing peanuts, I will drop it off to the local FedEx/UPS location and send a tracking number to my trade partner via text or email. Then it is a waiting game until I receive a corresponding tracking number back from them indicating my package is on its way. The tracking numbers don’t go live until the packages have been picked up for delivery so don’t panic if it takes a few hours or a day for the tracking number to become active. I would recommend getting references and a cell phone number if you are skeptical. You can always require an in-person trade, too.

I hope you will all put those good bottles of America’s Native Spirit to use. Drink ‘em if you got ‘em. Trade ‘em if you won’t. It’s frankly un-American to let good whiskey go to waste.