Bourbon As The New Economic Barometer
As is true with many things in life, perception often trumps reality—especially when it comes to politics.
For example, numerous stories in the news this week about California’s improvements on homelessness don’t match the optics on the ground. For many of our state’s citizens, the actual statistics of the situation are irrelevant. What matters are the numerous tents they pass under the overpass each morning on their drive to work.
It reminds me of Tip O’Neill’s famous line: “All politics is local.” The immediate world around us often carries more weight than the national average.
Sunny reports about the advances of the American economy are no different. Despite the gains made against inflation and the improvements on unemployment, many Americans don’t feel like their lives are getting easier. The New York Times summarized this sentiment quite well in a recent op-ed, writing: “In short, people may have more money. But it has become harder to buy the services they need and more expensive to buy the goods that they want.”
In other words, the reality of the statistics doesn’t match the perception of the market.
Potential homeowners know this situation well. Having finally saved enough cash for a down payment, many are finding that high interest rates have now pushed their monthly mortgage far beyond their budget. That, or they’re competing for the purchase against pools of hedge fund investors who have no interest in living there.
Which brings me to Bourbon.
About a decade ago, when shortages of coveted American whiskey labels began to impact everyday consumers, many distillers began increasing production and expanding their operations to keep up with demand. Bourbon drinkers were irritated, but somewhat comforted by reports that a solution was in the works. “In ten years, we’ll be able to buy as much Weller and Blanton’s as we want,” I heard many consumers tell one another.
Ten years later, does it feel like the market has improved?
From my vantage point, it seems worse than ever. Even with the expansion of production and the increase in volume by a number of Kentucky distillers, the amount of people who want these bottles has ballooned beyond expectation (even though the amount of people actually drinking them may be decreasing). Much like with real estate, financial speculation is preventing any return to normalcy. So while the reality may be that more bottles of coveted Bourbon labels are available today than in 2013, actually securing one of those bottles is harder than ever.
Because supply of these whiskies remains low, prices are higher than ever in many places—due to demand and the fact that distributors tie retail allocations to the purchasing of everyday products, forcing retailers to bundle or raise prices to offset the additional costs. While expansion was supposed to alleviate this issue, the perception on the street is that nothing has changed. In many instances, $80+ for a bottle of Bourbon that once cost $40 has become completely normalized, angering both the consumers who drink those whiskies, and the retailers left to deal with that blowback.
In essence, the continued scarcity is a customer service problem, and consumers have recently let American businesses know that their customer service blows. A recent Wall Street Journal article noted that the American Customer Satisfaction Index fell to 73.1 in 2022, the largest decline in the index’s 28 year history.
The aforementioned New York Times op-ed accurately points out: “People are struggling with mortgage interest rates, housing shortages and pricey grocery bills. They’re also consuming to make their lives work: on things like restaurants, travel, delivery services and on-demand help — which are necessary for balancing work and life demands.”
Historically, the price of gas has been the national barometer of a successful economy. The higher the price of petrol, the angrier Americans become. That being said, we may soon find Tesla-driving, remote-working, upper-middle class citizens replacing that gauge with a bottle of their favorite Bourbon, nostalgic for a time when life seemed more affordable, despite any gains they may have made over the years.
If Biden can get Blanton’s back down to $50 in most markets, he just may win re-election.
-David Driscoll