Month: August 2017

By @LondonLiquor

As secondary market prices have soared in the past few years, all manner of whisky auction sites have sprung up to cater for demand. Major UK players with an international reach include Whisky.Auction, Scotch Whisky Auctions, Whisky Auctioneer, Whisky Hammer, Just Whisky, and Whisky-Online. Royal Mile Whisky's plans to enter the fray in the next month or so show the industry isn't going away anytime soon. Indeed, the UK has emerged as something of a global hub for online whisky auctioneering, no doubt aided by the strict restrictions on alcohol sales in the US.

The proliferation of whisky auction sites is not surprising: their commission-based business model can be lucrative. A Bitter Truth 24 Year Old Single Barrel Rye Whisky sold for £4600 in March netting the site a cool £1157 in commission and auction fees. Not an insignificant sum for facilitating the sale of a single bottle. With thousands of bottles going under the hammer each month, there's real money to be made.

And the benefits flow both ways. Auctions offer consumers the opportunity to buy and sell 'dusties' that haven't been seen on retail store shelves for years. British Bourbon Society members rave about 1980s and 1990s Wild Turkey obtained at auction.

So far, so good. But there are a few areas of concerns.  

First, are auctions doing enough to weed out fakes?

Second, do auctions offer a fair marketplace? Rumours abound of questionable business practices on certain sites, including credible claims that sale prices are artificially inflated to generate additional commission.

Third, are auctions doing anything to combat the 'flipping' of brand new whisky releases at many multiples of RRP? While not as obviously toxic as fakes and artificial price inflation, flipping is bad news for consumers who want to drink new releases as @The_Bourbonator explored on the BBS Blog back in January.

In sum, can consumers trust UK auction sites? Let's find out.

Fakes:

High profile cases of Scotch whisky and Wine forgeries have emerged all too frequently over the past few years and the past few months have shown that American whisky is not immune. In June 2017, an individual was revealed to have been purchasing empty bottles on eBay before refilling and reselling them on US-based Facebook groups. This hit the close-knit bourbon community hard as he had been a well-known figure and prolific seller, shipping over 1200 packages in 24 months with 77% of those packages containing more than one bottle. The total number of fakes is not known. Next time you see empties of Pappy Van Winkle and other hyped whiskies selling on eBay for over 100 dollars, you know why.  

So, it's risky to buy whisky from platforms that don't have robust anti-forgery measures in place. Auctions sites fortunately appear to be taking their responsibility to weed out fakes seriously. Whisky.Auction is one of several auction sites with a clear anti-forgery policy. Their discovery of a sophisticated whisky forgery operation in February 2017 suggests its being applied properly. Whisky Auctioneer's website also features a detailed policy on fraudulent whiskies that adopts a commendably cautious approach: "[w]hisky auctions are on the front line in combating whisky fakers and here at Whisky Auctioneer we frequently reject whiskies that are either not authentic, or that we simply deem questionable or problematic".

Taking a step back, whisky auctions can't win the battle against forgers alone. Upstream action is also urgently required: distilleries need to start doing more to combat fakes. Anti-forgery technology originally developed for the wine industry has fallen in price and it's hard to see why it couldn't be used on high-end whisky releases. Even Ralfy incorporated anti-forgery measures into the bottles of his excellent Port Charlotte Meteorite Single Cask release! BBS Members, bars and restaurants can also all play a part by destroying or defacing high-end empties.

Unfair markets:

All auctions expressly ban shill-bidding. To take Scotch Whisky Auctions' Bidding Policy as an example: "Sellers are expressly forbidden from bidding on their own bottles. Any bottles found to have been subjected to this will be withdrawn. Anyone found to be "bidding up" the prices of bottles will be removed from the site and banned from Scotch Whisky Auctions".

That's all well and good in theory but the devil is in the detail. Few auction sites provide any information on their business practices or the ethical guidelines by which the auctions are run. For example, most auctions don’t disclose whether employees are permitted to bid. But employee bidding raises clear conflicts of interest given the potential asymmetry of information between employees and other bidders.

Let's imagine a scenario where a bidder puts down £1000 on a bottle of Pappy Van Winkle 23 Year Old and sets a 'maximum auto-bid' price of £1800. Maximum auto-bid prices are accessible to employees who place a bid of £1790, ostensibly because they want to purchase the item, but with the real aim of automatically increasing the maximum bid to £1800. The bidder ends up paying an inflated price while the auction pockets greater commission. Far-fetched? Not really. I've received credible information that at least one site turns a blind eye, to put it charitably, to this type of behaviour.

To get greater clarity on this, we contacted multiple auctions to ask whether appropriate safeguards were in place to ensure a fair marketplace. The responses were not reassuring. While conduct of the type mentioned in the above scenario would run contrary to internal Staff Codes of Conduct and, in particular, the prohibition on shill-bidding, employees were generally permitted, and in some instances actively encouraged, to bid on auctions despite having access to information on other bidders. BBS Members: be extremely wary of setting auto-bids.  

Royal Mile Whisky Auctions has chosen to do things differently. Its recently announced 'strict ethics policy' adopts a commendable position: "Staff of Royal Mile Whisky Auctions or any partner/subsidiary companies are not permitted to sell or bid on our auction website […] Bidders know they are bidding in a fair marketplace, and not competing against the company providing the auction service itself, or the staff that work for them. All bidders have the same information when choosing to bid". A refreshing approach.

Flipping:

Back in January, @The_Bourbonator noted that "auction sites voluntarily implementing a policy of not selling new releases for at least 12 months is perhaps wishful thinking but at least such a step would force flippers to take a longer term financial risk than they do today".

Well, take a bow Royal Mile Whisky Auctions: "Royal Mile Whisky Auctions will not accept for auction any limited edition whiskies within one year of their release […] Whisky fans know that prices are not artificially being driven up, especially those new releases being ‘flipped’ immediately after release". This is an excellent initiative that, once again, marks Royal Mile Whisky Auctions out. None of the other auctions have implemented comparable policies.

Ultimately, however, flipping is another issue that can't be tackled by auctions alone. It requires a co-ordinated response by distributors, retailers and consumers. There have already been a few steps in the right direction. Notably, Milroy's of Soho and Hedonism have both collaborated with Hi-Spirits to put on events where Pappy Van Winkle is sold at RRP provided the buyer immediately 'defoils' the bottle to prevent resell. You can read more about these initiatives, which took the form of a tasting raffle and a tasting competition (won by BBS' very own @MCRBourbon) on the BBS Blog.

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So, we asked at the start whether consumers could trust UK auction sites. The jury is still out in my opinion, particularly in respect of those auction sites that fail to disclose their business practices and/or the ethical guidelines, if any, by which they operate. This enigmatic approach could ultimately backfire on the whole industry: why should consumers blindly stump up substantial commission and fees when it's not clear whether the market is fair?

Auctions need to become more transparent or they risk losing consumer confidence. While it's still very early days for Royal Miles Whisky Auctions, their decision to enter the auction market arena with a 'strict ethics policy' is a commendable development. Indeed, Whisky Auctioneer has recently made its Code of Ethics publicly available for the first time. Although arguably not as far-reaching as RMWA's, it's certainly a step in the right direction.

Here's hoping there's now a shift towards 'ethical auctions' across the industry, with a greater focus on transparency and self-regulation, before a couple of bad apples ruin it for everyone.

Words by WhiskyPilgrim

Between us we’ve a pretty formidable “US whiskies tasted” rap sheet in the BBS. So it really isn’t often that almost none of us have tried any of the pours at a tasting. But on Saturday 29th July we trooped over to the inimitable Lexington for just such a rare occurrence.

The distillery behind these untasted whiskies was Reservoir, a craft setup based in Virginia. In fact it was complete serendipity that led to the event in the first place; BBS founding member @edkingUK happened to meet distiller Dave Cuttino in Gerry’s Wines and Spirits a while back, and, as is often the case with the BBS, one thing led to another.

Reservoir take an unusual direction with their whiskies, in that the flagships are all 100% mashbills of their individual grain. So they’ve a 100% wheat, a 100% rye, and a bourbon made from 100% corn. (Perfectly legal; what would make it a corn whiskey as opposed to a bourbon would be if they were using uncharred or refill casks).

David had generously added three limited edition treats to the lineup, and agreed to talk us through all the whiskies via skype.

Confession time: before the event I had my doubts. Especially of the wheat whiskey. I’ve been tasting a lot of craft whiskey lately, both for the reviews page, and out of personal curiosity. Quality and style has varied immensely, but the one relative constant was that young wheat-recipe kit was generally slightly unripe, unready, uncompromising stuff. So with no corn whatsoever keeping the wheat in check, how was Reservoir’s going to taste?

Well, first of all, let’s talk about Reservoir’s casks. They’re tiny. I’m talking miniature. Your standard bourbon barrel weighs in at about 53 US gallons, which in real money is about 200 litres. The casks at Reservoir are less than a tenth of that. What’s more they’re charred to within an inch of their lives. The upshot of which is that they flavour the whiskey at breakneck speed.

So, glasses filled and passed around: what did we think?

“Good grief.” That’s what I thought. “This is not the young wheat that I know and don’t love.” Instead, it’s super barrel-focussed, heavily intense on flavour and as clean as a whistle. No distracting spirit acetone here; this was a story of caramel and char and orange and brown sugar. Big on flavour; perhaps not the most complex beast in the world, but with a nice balance of the sweet and the savoury, and bags of intensity. Absolutely not what I was expecting, and seriously tasty.

On to the bourbon, where things continued to impress. A shade more one-dimensional than the wheater for my taste; sweet corn and caramel with not too many layers, but again that big flavour intensity and personality; again that influence of small casks. Opinion differed on the favourite, but I’d say three-quarters of the room were team wheat. Still, if you taste this bourbon without context, it’s a cracker.

The rye was the standout though. Reservoir make an intense style of whiskey, and when it came to the rye that intensity reached its peak. More of that orange; seemingly a theme with Reservoir – perhaps the result of their Armagnac still. Mainly though, this was about the fresh ryebread and nutmeg and caramel and marzipan. Pracically popping with flavour and spice, perfectly structured and supported by alcohol levels. Awesome stuff.

Being 100% “varietals”, David encouraged us to do a little of our own blending, and there were certainly those in the group whose pour of the day was a mix of the wheat and the rye. Personally I was more of a fan of them individually, but mixing was still a delicious exercise, and a great new direction for a whiskey tasting to take. Nicely reflected the spirit of experimentation and sense-of-fun that Reservoir seem to be about, and David’s enthusiasm for his whiskies was palpable and infectious.

The mixed-mashbill whiskies that followed were an intriguing bunch. Hunter&Scott, a wheat-recipe bourbon, was more along the lines of what I’d expected at the start. A little more acetone; less influence of cask. Some brioche and bananabread on the nose, but slightly overwhelmed by estery grain. Still tasty, and the palate had a nice, silken caramel aspect, but this one was probably my least favourite of the day.

Holland’s Ghost is a brand new release and a bit of a curiosity. Single barrel bourbon finished in a stout cask. It’s a collaboration between Reservoir and local restaurateur Mac McCormack, with the stated aim of replicating the flavour profile of Stitzel-Weller-era Pappy Van Winkle. Right. Well. Erm...

For my money they should do away with that rather ambitious mission statement. Holland’s Ghost was really excellent stuff on its own merits. By my mileage the most complex of the whiskies we tasted, though oddly felt less intense than the opening trio, despite being higher proof. There was a real creaminess to it, and even an aspect of chocolate orange crème to the nose. Perfumed stuff, with a wisp of smoke on the palate amidst the creamy caramel. Something to sit with in an armchair at the end of the day, rather than something with the directness and intensity of the rye or the wheat.

Finally the Grey Ghost, one in a series of special releases by the Reservoir chaps, for which they play around with mashbills a little. This one was 80% corn, 20% rye apparently. The most “classic” bourbon profile of the day, though with a strong rye accent of crunchy, woody rye. Lots of char influence and a delicious balance of sweet cinnamon and dryer nutmeg on the palate, all overlaid with thick caramel and that splash of orange.

In short, Reservoir’s lineup seriously impressed me. Most of the bourbon I’ve been tasting in the last month has been from craft distilleries, and this was right at the top of the tree. In fact I preferred it to every craft whiskey I’ve had this month besides Balcones True Blue Craft Strength. The rye and the Grey Ghost in particular were outstanding, and I was absolutely gobsmacked at how well they’d managed the wheat, but really the whole range was more or less rock solid. Hunter&Scott was the only one that I’d personally take or leave, but it certainly had some big fans among the group when preferences were compared at the end.

I don’t know how these whiskies are going to be priced when they arrive in the UK. I’d like to see the core range around the £50 per bottle mark, at which rate they’d be no-brainers. Peeking at US prices makes me think I’m being a little optimistic though – I guess we’ll just have to wait and see. But the bottom line is that I’m looking forward immensely to seeing them this side of the pond, and if you get a chance to give them a taste, don’t pass it up.

For what it’s worth, my order of preference was: Rye, Grey Ghost, Wheat, Holland’s Ghost, Bourbon, Hunter&Scott. Though I can’t speak for anyone else, and the Wheat and Holland’s Ghost are probably tied. Maybe someone needs to send me a bottle of each so I can properly make my mind up...

Huge thanks to David for staying with us so long on skype and taking us through the range. What he thought of the spectacle of 15 or so BBS-ers becoming increasingly “enthusiastic” on the strength of his whiskies I’ve no idea. But it’s always fantastic to meet the people behind the pours, and hopefully we’ll see David and Reservoir in the UK again soon.

A cracking tasting all round then, after which, in true BBS and Lexington fashion, we proceeded to behave responsibly for the rest of the afternoon, and nothing particularly noteworthy happened whatsoever...

On to the next one. Once we’ve all recovered from getting so responsible.

Thanks to David Cuttino, Reservoir, Stacey Thomas, the Lexington staff and the BBS founders for another cracking event.