Is it possible to invest in bourbon? Jason Brauner of Bourbons Bistro enlightens
By ANDREW DEWSON | March 18, 2014 6:00 am
Considering Kentucky has a population of less than 4.5 million, its contribution to global culture is pretty significant, even if we do say so ourselves. Birthplace of KFC, of many of the world’s most valuable and successful Thoroughbred racehorses, Muhammad Ali, George Clooney and Billy Ray Cyrus, no less. Oh, and bourbon.
So given the explosion in popularity (and the auction prices) of collectible Scotch and Irish whiskey, is it possible to invest in our own version? And by invest, we mean actually buying the stuff, not shares in Brown-Forman. What should budding collectors look for?
Insider Louisville spoke to Jason Brauner, owner of Bourbons Bistro on Frankfort Avenue — listed by Whisky Magazine as one of the world’s best whiskey bars and where you can sample about 136 different varieties of bourbon — to find out.
Insider Louisville: So I know you’re from Louisville, but not everyone around here is a bourbon fanatic. How did you get so into this?
Jason Brauner: Like many people my age in Kentucky, the smell of bourbon, if not the taste, was a constant accompaniment to my childhood. I remember making highballs for my grandparents, great aunts and uncles during family poker nights, and in fact my great aunt worked at the National Distillery just down the road from my family home from the age of 14 until the distillery closed in 1977.
Bourbon has always been a part of my life, and when I moved into the restaurant trade it seemed a natural progression for it to be a big part of my ambitions, both as a restaurant owner and as a collector and investor.
IL: OK. Now, I’m a foreigner, so walk me through the basics of bourbon.
JB: Well, bourbon is a type of whiskey just like the Irish, Scottish or Canadian versions. Each has their own unique characteristics that come about through variations in the distilling process and the raw ingredients that go into each bottle. People think bourbon has to come from Kentucky, but in fact bourbon can be made and labeled as such anywhere in the USA, it just so happens that 95 percent of the world’s bourbon is made in Kentucky.
IL: Is there actually a legitimate investment market for bourbon?
The market for good quality, small-batch bourbon has been growing rapidly over recent years, but as a pure investment bourbon remains some distance behind most other varieties of whiskey. A new bottle of Scotch, albeit a very large fancy bottle of Scotch, recently sold for more than $600,000 at auction. The most expensive new bottle of bourbon, no matter how fancy, isn’t likely to set you back anything more than a couple of hundred bucks. If you can find a bottle of Pappy Van Winkle’s Family Reserve you might have to shell out a little more, but good luck finding one.
IL: So if I fancy starting a collection with an eye on selling it at some point in the future, how should I go about getting started?
JB: Most distillers – surprisingly there are only 10 currently in operation in Kentucky compared to over 100 in Scotland alone — produce small limited-edition commemorative versions of their standard brands that come on sale in September and October, and the bidding process for these productions has become incredibly competitive.
Getting ahold of these small-batch bourbons is fairly straightforward – most distilleries will happily put buyers on a waiting list, particularly useful as the actual release date varies from year to year depending on the distillery timetable. However, these waiting lists don’t move very fast as distillers tend to have long-term relationships with reliable buyers. For most private buyers, the best approach is to find a good bourbon retailer and get on their waiting list. They should have familiarity with the product and a longstanding relationship with the distiller.
IL: That’s getting started – what about getting into it in a more serious way, perhaps by looking for bottles that are very rare?
It goes without saying that rare bourbons are always hard to find – people don’t just buy and keep them, they buy them and drink them. So there is an ever-decreasing supply, particularly if you are looking for older bottles. As a general rule of thumb, anything with a tax-stamp, which stopped being a federal requirement in 1980, is collectable, and anything from the Prohibition era is particularly desirable. I recently sold a bottle of Prohibition-era bourbon for $3,500 that I bought for a fraction of that price from someone who found several old bottles of bourbon in his grandfather’s basement and just wanted rid of them. So it helps to really know what you’re looking for.
Investors and collectors should always look out for military bourbons, particularly those made for the U.S. Navy, which, in true naval tradition, received bourbon for “medicinal” purposes even during Prohibition. And it would be wrong to assume that because these bourbons were produced for the military that they were of inferior quality – a bottle of 1950s Navy-issue Old Fitzgerald is one of the finest bourbons I have ever owned or tasted.
IL: Is there anything else collectors and investors should look out for?
JB: Bourbon went through some rough times during the 1960s and ’70s, when the social revolution meant younger people were less interested in drinking what they saw as a drink their parents favored. As a result some producers started selling bourbon in collectible porcelain decanters in order to stimulate demand, many of which have become collector’s items even if the bourbon they contained was drunk many years ago. So it’s not just the bourbon itself that has a market – even empty bottles can have some value.
IL: What about keeping it in good condition once you’ve found it and bought it? Do I need to build a bourbon cellar?
JB: Keeping bourbon is pretty straightforward, much more so than keeping wine. Once bourbon is out of the barrel and in the bottle, its flavor is not going to change over time, unlike wine, which can alter dramatically once it’s in the bottle. Over time the phenolic compounds that give wine its flavor can alter in the bottle, and that’s typically not the case with bourbon or any other kind of whiskey.
So long as it is kept in a relatively low-humidity and low-sunlight place, bourbon should taste the same today as it will in 20 years time, so there is no need to invest thousands of dollars in a cellar or temperature-controlled storage. Of course, that lack of flavor alteration means that, to some people at least, there is less point in keeping bourbon and more point in drinking it straight away.
IL: And what if I decide to liquidate my investment? Not by drinking it but by selling it?
JB: I am not an investment expert, but I do know that there is no point in buying anything if there isn’t a selling market too. Here in Kentucky there will always be a market for rare bourbons, and increasingly that market is going global.
If I was looking to sell rare bourbon, my approach would be to visit whiskey bars here in this state, high-end hotels and places where expensive bourbon is sold by the shot. That’s where you will be able to work out what your bottle might be worth, and you might find some very interested buyers too. There are also web chat-rooms and forums, and you’re likely to find a much more competitive buying market there than on Ebay.
IL: What’s the final word on bourbon as an investment?
JB: The bottom line is that for people who are thinking about getting involved in the bourbon market as an investment opportunity, doing as much homework as possible will pay long-term dividends. It will also help if you like the product, so start by finding out if you like bourbon or not… but if you’re investing, it also helps if you don’t like it too much.
Do your research, build up contacts with people who have the same interest, and be prepared to wait. Like the best bourbon, the best money will be made by investors who are patient.
Jason Brauner’s Top 3 Investment Bourbons
Parker’s Heritage 27 Years Old
Distillery: Heaven Hill
Expect to Pay: $80 – $100
Colonel E H Taylor Barrel Proof
Distillery: Buffalo Trace
Expect to Pay: $100-$120
Booker’s 125th Anniversary Edition
Distillery: Jim Beam
Expect to Pay: $200+