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I have received a lot of responses on my blogs about the prices of whiskey per bottle lately. I thought I would write something about the pricing of bottles here rather than answer the comments.

Whiskey pricing has gone up in the last 20 years or so. The distillers must make a profit or they go out of business. They base the suggested retail price on several factors. 

The first is taxation. They have to pay taxes to the government and that is usually about 2/3 the cost of the bottle. They have the federal tax of $17.50 per proof gallon plus state and local taxes. They also have the cost of aging and, in Kentucky, that is more expensive than any other state because they have a tax on aging barrels they have to pay every year. Older whiskey means less whiskey to bottle as the angel’s share takes whiskey from the barrels. I have been with Julian Van Winkle when he was purchasing barrels from Stitzel-Weller and some of the barrels we looked at were empty and others had only a few gallons of whiskey in the barrel. 

Next, there is the rarity factor. If they only made a limited amount of barrels, the distillery needs to charge more than a mass-produced whiskey.  

Then there is the distributor and retail mark-up. These people are not in business for charity, so they intend to make a profit. 

Finally, there is inflation. As costs of making the whiskey go up, the distillery must price its whiskey to keep up with inflation. These increases include not only the costs of materials, but also the wages of the workers. All of these factors play into the final cost of the whiskey.

Now the retail price the distiller is asking for a bottle is not always the price the consumer pays. For example, Julian has a price (MSRP) of $399.99 per bottle for Twenty year old Pappy Van Winkle and $499.99 for the Twenty-Three year old Pappy Van Winkle, but you rarely see it on the shelf for that price. Retailers mark up the price based upon demand, which is high and the bottles are rare for the reasons I stated above. I know of one retailer who quit carrying the brand because he said he made so many customers mad because he only received three bottles and he had so many customers who thought that they should have been able to purchase a bottle from him and he only had three bottles. When demand is high, the retailers charge more because they find that consumers will pay more. 

So what is a fair price? I saw a YouTube video where the Bourbon Judge stated that $10.00 per year of age is a fair price. If that is the case, then a four year old whiskey would be $40.00 and a ten year old whiskey would be $100.00 per bottle. That is high in my opinion. You must consider other factors. A mass produced whiskey should probably be at a price of about $5.00 per year whereas a limited edition whiskey should be a higher price—and, it all depends upon consumer demand. If the consumer wants the bottle, they will pay what the retailer asks for it, if not, the bottle will sit on the shelf.

Whiskey prices are higher now than they have been for years. I suspect that some of the prices will go down because of the present whiskey glut, but that does not mean they all will. You can still get excellent whiskey for about $20.00. Old Forester and Old Grand Dad are prime examples of whiskeys in that price range. You will pay more for some artisan distilled whiskey, but that is because they don’t have the economy of scale that the major distillers have. The more you make, the cheaper it becomes per bottle. You can get good whiskey at a reasonable price.

Photos Courtesy of Rosemary Miller