Whiskey

A Better Whiskey Club

A theory on how to handle allocation, reduce bottle-flipping and get whiskey in the hands of enthusiasts.

Whiskey enthusiasts have a real problem these days.

Used to be that you could walk into any ordinary store and find allocated bottles just sitting on the shelf: BTAC, Elmer T. Lee, Pappy – you name it. It’s something that’s talked about a lot in the whiskey community and it almost has an air of folklore about it, knowing how difficult it is to find the exact same bottles these days. If not for the pictures pre-2017, then we might not even believe that it was ever true. But there they are, almost jeering at us while we stand huddled together – hopefully not too closely these days – eagerly awaiting the man with the megaphone to call out our lottery number. While we spend thousands of dollars per year at our local store hoping to be given a ‘break’ on pricing from the shop owners we have developed relationships with. To be completely frank, it’s a terrible method and as enthusiasts, we have been trying everything we can to get our hands on these great bottles. For most of us, to no avail.

Let’s look at things from the shop owner perspective.

Some shop owners have been trying to get creative to solve this problem, too. My take is, that they believe it’s bad business when someone has spent thousands at their store and comes up empty handed come bottle hunting season. They can expect that person to likely try their luck at another store. At the same time we need to realize that they are business owners and the fuel for a business to operate and expand is cash – grown from the margins on the products they sell.

They’re in a pickle when it comes to the shady operations of the 3-tier distribution system. In short, they need to order pallets of razor-thin margin items (Fireball, cheap vodkas, etc) in order to get these rare bottles at the end of the year. Distributors are going to give dibs to the stores who sell more of the items that the suppliers (distilleries) want to move or promote. From their perspective, they are missing out on potentially higher profits by upselling these low margin items on their endcaps when they could instead be making more money on ordering and upselling higher margin items. In essence, the shop owners are interested in ‘cashing in’ on those rare bottles when they finally receive them to make up for the potential extra profit that they could’ve gained throughout the year.

Whiskey clubs have been a relatively new way that shop owners can reach whiskey enthusiasts and gain a deeper following. It helps customer relationship in a few ways:

  1. It increases the likelihood that regulars or locals are actually getting the rare bottles as opposed to bottle hunters who swoop in and grab bottles which leaves the regulars empty-handed
  2. It properly rewards those who have spent money throughout the year and supported your particular business
  3. It makes it more likely that the bottle will go in the hands of an actual enthusiast who will open and appreciate the bottle vs. a flipper who will just walk in with a wad of cash, buy rare bottles and sell them for a profit on the secondary market

but perhaps most importantly, it generates more interest in their stores as a place that cares about the whiskey they select and how they choose to give out the rare bottles. It’s certainly a trust play that rewards loyalty. Again, shop owners’ number one concern is to make as much money as they possibly can – which is the aim of essentially every business that exists. Every decision must be weighed and every option should be considered in order to achieve that goal.

Let’s look at things from the whiskey enthusiast’s perspective.

We all want those rare bottles, don’t we? They are usually rare because they are great whiskey and for most of us the goal is to enjoy and share those incredible bottles. We create relationships with shop owners in the attempt to get our hands on these Unicorns, and in my experience, true friendships have grown as a result. We spend hundreds, if not thousands in a particular store, in order to be on the short list when the allocation lot comes in. Unfortunately however, it’s still rather difficult for us to acquire them when whiskey hunting season begins. And that’s for a few reasons:

  1. There are a lot of other enthusiasts who want those bottles as well, which is obvious.
  2. There are flippers, who show up with wads of cash, who ‘outbid’ our attempts to get them.
  3. Despite spending thousands and growing relationships over the year, we get a ‘deal’ that includes bottles 300%-1,000% over retail anyways, which is out of our reasonable price range.

And that’s really been the hardest part for us personally. The first reason is totally understood – there are more interested parties than there are bottles that come in. But it’s really tough when the other two things happen. To be honest, we’ve been so upset ourselves by the third one, that we’ve decided to write off some stores entirely and look for others who might be willing to be more reasonable in their pricing for these bottles.

Bottom line is, there’s not really a silver bullet to take care of this issue while allocation exists. While supply is lower than the demand for these items, we will find ourselves in a situation where there’s simply not enough to go around.

Points-based systems have been more of a smaller and seemingly experimental format for whiskey clubs, which seems to work quite well (check Maria’s Marketplace in Canton, MI). Both whiskey enthusiasts and shop owners seem to benefit from a whiskey club that utilizes this system. It’s great, but if it’s based solely on cash coming through the door, it also has its limitations. For the whiskey enthusiasts who cannot spend several thousand dollars but still want a crack at the bottles, they are left out in the cold and may possibly try their hand at another shop.

The hard truth is, most of us don’t have the spending power to be among the top 10 of your customers throughout the year. We believe that there has got to be a better way.

A better whiskey club

The better whiskey club goes off of a points system and a retail price allocation model, like the one Maria’s Marketplace has – but with a twist. It’s not based solely on what a customer spends, but rather includes other things that will help the store promote and generate more foot traffic. Here are a few ideas for ways to enhance your whiskey club:

Points can be awarded for club referrals.

Want to get more people in the store? You’re going to want to get more word-of-mouth out there. The nice thing about the whiskey community is that it’s incredibly supportive, collaborative and helpful. Members are really just trying to share their passion and knowledge for whiskey, and when someone from the whiskey community says that a shop is really great and has an awesome club, they will listen. And if it means that they will get a better chance at these rare bottles then you can believe they’re going to take advantage of that. This means a new member who will be visiting you on a regular basis, spending money on bottles and generating more money for you throughout the year.

How to quantify: The new member will have to specify who referred them, if anyone, when they sign up for the club.

Points can be awarded for social media promotion.

One of the best ways to get out there is to have exposure on social media. Why not reward members who take the time to promo you over other stores? It’s a great way to advertise your business without spending a dime on social media advertising.

How to quantify: Make sure each member specifies their handle and desired platform when they join the club. When they feature a product they purchased from you and tag you in that post, you give them points.

Points can be awarded for helping with barrel picks.

Another benefit of knowing whiskey enthusiasts is the fact that they, well, know their whiskey. Which is a great thing to leverage. They can help you pick your barrels with their knowledge of profile, their ability to taste different notes and general understanding of what the enthusiast would like in a given expression. While all palates are different, you should be able to identify a consensus that will help you get a more informed decision. Further, these enthusiasts will probably promote the barrel when it comes in because they’ll just be geeked to have been involved in the decision to choose the barrel.

How to quantify: Make sure to note which members came in to help choose the barrel and give them points.

Points can be awarded for helping with whiskey club events.

It’s a really awesome thing to hold a tasting or a special event that allows whiskey enthusiasts to get together and share their love of the spirit. If you decide to do so, we are willing to bet there are enthusiasts willing to help you with everything from planning to moving tables (in person events being post-COVID, of course). If they do, assign the help with a point value as a way of thanking them for their help.

How to quantify: Jot down the club members who had a hand in making the event a success. Assign them some points.

Points can be awarded for opening bottles at the store.

It’s a thorn in the side of shop owners when they sell bottles for a reasonable price and then someone puts them up on the secondary market and makes that extra margin that the shop owner decided not to make. Not much is worse than that happening. Good news is, if your whiskey club member is going home with it, it’s likely that they will drink it (and even share probably). But you can always have them get more points towards next year if they open up that fancy bottle in front of you. We get it- not everyone wants to do that. We even like to take fancy pictures of our bottles before we crack ’em open. But they have a choice if they want to get a jump on points for the next year or not.

How to quantify: Ask the club member if they’d like to open the bottle before it leaves the store. If they do so, award them some points.

Points can be awarded for dollars spent at the store.

This is the obvious one and we added it because it’s the easiest way to quantify what affected your store’s bottom line. Some stores already do this, which is a great way to reward those who have been loyal customers throughout the year.

How to quantify: Be sure to track how much each whiskey club member spends throughout the given year.

It allows everyone to play the game.

Bottom line is, this gives everyone a chance to be in the running for a bottle. Maybe your club members can’t spend enough to be in your top 5, but their efforts may land them in getting one of the nicer bottles if you get an allocation of 10-20 bottles. In the end, these things will severely limit the amount of flippers and will give shops a veritable army of supporters and promoters.

Just selling the rare bottles at retail is enough to get the whiskey community’s attention. Creating a system that allows everyone to play the game will be an absolute game-changer.

Meet the author
Homebar staff member
Kevin
Kevin is the founder of Homebar.io. His enduring love for trying out different cocktail recipes and home bartending for friends is what led him to create Homebar. In addition to being a (very) amateur mixologist, he’s also a huge whiskey enthusiast and bottle collector. When he’s not voraciously learning about spirits and cocktail-making techniques, you can find him spending time with his family and his Golden Retriever, Molson.

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