Why Pappy Van Winkle Is So Damn Expensive

A line of tents snakes in front of a boxy Alabama liquor store. It’s early November, just after dawn, and the tents and tarps are covered in rain, but space heaters hum at the ever-faithful’s feet. If the weather is a torment, then so is the wait. All these people want is a little brown liquid; a few milliliters of bourbon.

It’s a Sisyphean task, all this queuing and waiting. The chance that even one of these people will lay their hands on the liquid gold that is Pappy Van Winkle’s Family Reserve bourbon is so minute they’d have a better shot at winning a Powerball. Hell, stores in some states have resorted to a lottery just to decide who gets to buy a bottle during the once-yearly release. And, by the time the bourbon does reach consumers, the recommended retail price of $50 to $250 has gone up  $700 to $3,000.

What makes this bourbon such a big deal that celebs like Anthony Bourdain swoon, criminal masterminds hatch elaborate schemes, and retailers gouge? First, we must understand bourbon -- and history.
 

Fundamentally, bourbon is whiskey, which is derived from a fermented mash of grains, such as barley, rye, and corn. Bourbon is made exclusively in the US from at least 51% corn. (But not more than 79% corn mash.) To be classified as bourbon the whiskey must also spend at least two years in heavily charred oak barrels, and be no more than 160 proof. Besides the grain mash, only water is allowed in bourbon.

While most bourbons are made from corn, rye, and barley, Old Rip Van Winkle uses corn, wheat, and barley in its reserve product. This uncommon wheated recipe gives the whiskey a softer, sweeter profile with more caramel notes.

Pappy is rich in lore, scandal, and history, too. The Old Rip Van Winkle Distillery started off in the late 1800s when Julian Van Winkle, a salesman with W.L. Weller and Sons wholesale bought the house and then the distillery that made whiskey for Weller -- A. Ph. Stitzel Distillery. In the early 1920s, while most spirit producers were closing shop during Prohibition, Van Winkle got a stranglehold on the booze biz by nabbing one of just six US permits to produce medicinal whiskey. (Because remember kids, bourbon cures.) So, when Prohibition ended in 1933, Van Winkle had the kind of back stock needed to create an aged bourbon whiskey. And others had none.

By 1935, Van Winkle had created Stitzel-Weller Distillery, which he opened on Derby Day and continued to run until his death 1965, at which point Julian Van Winkle Jr. took over. They made W.L. Weller, Old Fitzgerald, Rebel Yell, and Cabin Still whiskeys as they went. But in 1972, like a feud straight out of Dallas, family members who were shareholders forced Julian Jr. to sell. Uncowed, he turned around, resurrected a pre-Prohibition label -- Old Rip Van Winkle -- and began making new bourbon with whiskey stock he’d squirreled away during the sale of Stitzel-Weller.

And so, the brand-new Old Rip Van Winkle Distillery was born around a recipe from before Theodore Roosevelt was president, with whiskey already aging in barrel. Even at its youngest, Pappy Van Winkle was old.

Today though, some 44 years later, scarcity drives demand -- and huge profits. Preston Van Winkle, great-grandson of founder Julian and Old Rip Van Winkle’s marketing manager, says the distillery has increased production every year since 2002 (when it joined forces with Buffalo Trace, which now produces all the company’s whiskey) and bumped up scheduled increases in 2005 and 2006, but clearly not enough to flood shelves. So, the black market takes over.

“Retailers are the ones taking the big margins,” says Van Winkle, “and they are doing that because they see what happens in the gray and black market.”

They may purchase a 15-year Pappy Van Winkle Family Reserve bourbon for around $35 or $40, but retailers are selling it for $785 to $1,400. And that’s just the 15-year-old bourbon. According to Bottle Blue Book, which tracks private sales, the average market price for a 2014 Pappy Van Winkle Family Reserve 23-year bourbon is $1,604. Why buy Superbowl tickets, a motorcycle, or a lagoon in Belize when you could buy booze? Last December, a 2009 bottle of the 23-year-old sold for $2,280, and a 2004 bottle of 23-year sold for $4,000 at auction. Even Old Rip Van Winkle bourbons that don’t have the Pappy label get priced up. In New Jersey one retailer has a 10-year Old Rip Van Winkle Handmade bourbon for $450 -- a markup of nearly 1,400% over its cost.

So someone is making money off Pappy, even if it’s not by the truckload. And although the distillery won’t release its production numbers, Buffalo Trace admitted that production levels for 2015 were lower than usual -- including nearly half as much of the 20- and 23-years as in 2014. That means that unlike most liquor, stores get allocations by the bottle, not the case.

Granted, a bit of bourbon -- known as the angel’s share -- evaporates from every barrel of bourbon while it’s aging, but that certainly can’t account for such low levels. But whether the loss in production is going to cherubs or thieves the company won’t say. Pappy has been associated with multiple bourbon heists over the years, a big one of which occurred in 2013 when over 200 bottles went missing from the Buffalo Trace Distillery. The case was finally cracked last year but to date there’s no indication that all the bottles will ever be recovered. Those that have been though, have been ordered destroyed. As to whether or not the loss of 20-year-old bourbon affected Pappy allocations, Van Winkle can’t comment, saying only “it’s an ongoing investigation.”

Still, just because most of us won’t be drinking Pappy anytime soon doesn’t mean it’s time to switch to gin.

“What I recommend for someone looking to drink a Pappy alternative depends on the person,” says R.H. Weaver, director of cocktails and spirits at Husk in Charleston. “The first person will be drinking Pappy for the name; the second for the distillery; the third because it’s a wheater.”

Those who want the name are out of luck, but for those who know the history of Stitzel-Weller and are looking for something older, he recommends Old Weller Antique. It’s aged, was born in that house where Van Winkle got its start, and is produced today by Buffalo Trace -- alongside Pappy. As for the wheaters, he recommends Maker’s Mark -- it’s a wheated whiskey -- or Heaven Hills Rebel Yell. Until 1972 Rebel Yell was a Stitzel-Weller sauce, after all.

Paul Clarke, author of the book The Cocktail Chronicles, has similar suggestions. For starters, there’s the W.L. Weller, part of Buffalo Trace’s Antique Collection which has the same mashbill as Van Winkle, and is made at the same distillery as Van Winkle, but is put in different barrels in a different location. Some barrels are picked for Van Winkle and those that aren’t go to Weller. Still, it’s nearly as hard to come by as Pappy these days. A Willett line of whiskeys is also beloved by bourbon geeks, and similarly short in supply, as is Four Roses Single Barrel.

“For a long time, the best secret in bourbon was Eagle Rare,” says Clarke. Eagle Rare is also made at the Buffalo Trace distillery, but with a different mashbill than Pappy or Weller. “It’s an excellent bourbon that for a long time was the best bargain on the shelf, although as with all of these, word got out and it’s increasingly harder to come by.”

Meanwhile, across the country, distilleries hoping to create the next bourbon phenom are buying up charred barrels and putting whiskey down with a bedtime story. New York’s Widow Jane is hoping to build its reputation on the sweet, sweet water coming out of a limestone mine. (Taste it and you’ll get the rocky hints of minerality on nose and palate.) In Tennessee, Orphan Barrel is seeking barrels of bourbon sitting forgotten at long-lost distilleries, further aging them, and releasing each under its own label. And Blade and Bow, which operates out of the original Stitzel-Weller Distillery, won best in show for straight bourbon at the 2015 San Francisco World Spirits competition. You can find that straight bourbon in the $50 range.

So while you may be hard-pressed to get your hands on Pappy, there are good bourbons out there to be had. Just don’t forget to set aside a few years' worth of annual bonuses. You know, in case you win the bourbon lottery.

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Julie H. Case is a freelance writer and editor who specializes in wine, travel, lifestyle, and science and technology as it impacts real life. You can find her at JulieHCase.com.