Profits and Losses

FOMO should not rule your whisky journey.

It has been a nailbiting and momentous week here at Scotty’s Drams HQ. I lost my job as the premier hypocrite of the Strathspey and Badenoch area, when my Macallan Folio 5 did sell at auction and I made the grand total of £37.20 after taking auction fees into account. I don’t even have the title of the worst flipper in the world, as at the same auction, some people were taking losses over £230 on their Macallan Easter Elchies Black 2019 release – one of the many Macallan releases that did not have numbers confirmed and turned out to be a lot more than people anticipated.

In other auction action, I submitted a bundle of whisky miniatures to a couple of auctioneers, and the items at Whisky Auctioneer in Perth did a lot better than anticipated. I had the opportunity to buy around 50 nips from a guy locally who was selling them on behalf of his mother, as they belonged to his late father’s estate. I paid £50 for them, as I didn’t really have time to inspect them properly and I had no idea of what they were worth. Imagine my surprise when the total hammer price was £211! With me being me, (and the local area as well as the whisky world being very small), I had told him that if it made much more than £50, I’d give him the profits, so nobody could think I was taking the mickey or taking advantage of people. Believe it or not, I do want Scotty’s Drams to be known to have a smidge of integrity! It has been a great result for myself, but especially to the recipient of the extra cash and I am glad it is going to a good cause.

The final thing that I want to point out for this week was the news that retailers were slashing the prices of the Game of Thrones editions as released by Diageo in collaboration with the HBO series. The Whisky Exchange and Master of Malt were offering around 30% discount on the 9 bottles, and I had seen on line that another retailer were said to be offering 40%. You can imagine the response on the social media channels about people who feel conned that they paid significantly more to collect the series. I will remind you that I warned about this in my article I wrote about the Game of Thrones whisky set back in November 2019. Click on the link if you want to be reminded of what I said.

I’ll not go over old ground, as this will make the article unnecessarily long. However, I can understand the angst of people who feel conned, but why did they pay so much in the first place? They believed the hype of a limited release that was never really going to become rare – not in the next 40 years or so anyway……. I bet the person who paid £1400+ for his set at auction feels especially aggrieved, especially for one of two things – a lowering of the retail price will crash the auction price. This is definite for the short term and most likely for the medium to long term. Why do I think this? It is only the truly gullible or those who cannot get it any other way will pay more on an auction site than it costs at retail. Secondly, now the retail price has dropped, potentially many are going be offloading it ASAP if they don’t want to drink it, thus probably ensuring a very easy supply to secondary market at auctions. Additionally, because of such a large price drop, the perception of quality has been damaged and any last vestiges of thought about the range being a collectable commodity that will make healthy profits have been blown away.

We have to also remember that people thinking it was a limited edition were conned into thinking this, or what is much more likely that they chose not to look at the facts. This whisky was released in massive numbers, probably tens of thousands of bottles per each edition. Coronavirus is still rarer than GoT whisky. The only way it was limited was that Diageo has probably set a limit in the time for these products to be marketed. I doubt they consciously limited the production over that period, given the amounts in circulation.

Let us put that into some sort of perspective – in December last year Bruichladdich released 3000 bottles of their Octomore X4 series. This is the quadruple distilled single malt, that is part of a series that has been released as spirit and at 3 years old. When it was placed in their online shop, the website crashed as people tried to get hold of a bottle. I was lucky, and after 4 hours trying I managed to get 2 bottles. Still, when you look around, you can still get hold of it at auction, albeit at substantially more than the £150 release price. I bought 2 as I intend to drink one and put the other alongside my other X4’s as a collection. Even at 3000 bottles, which is only around 10 casks worth of whisky, this is not especially rare. How much less rare is the GoT whisky? I do hope that you have got my point here, as we now have to expand on what probably drove the demand.

I came to this thought based on another article I had read online. Another blog / review site I like reading during my online wondering is The Dramble. Indeed I recommend it. It has a collection of writers, although most of the content is written by its co-founder Matt Mckay. He recently wrote an article about the Talisker Distillery Exclusives, and he raised an interesting point about these distillery exclusives, and how some people feel this is unfair as they are missing out if they can’t get to the distillery. I had to laugh as they certainly missed the point of exclusives. Matt touched briefly on the FOMO fanbase. For those of you who aren’t as hip and down with the kids and street language, I can tell you that FOMO stands for ‘Fear Of Missing Out’.

Let us face it, some of us do have moments of fear that we are going to miss out on something. I am no different. Back in those dark, dark days when I was on the Macallan mailing list, I entered the ballots and crossed my fingers. I never wanted to flip any bottles – I wanted to own something that would be worth a bit of money in the long term. Of course I was trying to avoid paying the money the secondary market would eventually command. So it comes to pass that I guess in the case of the Folio 5, I have to be honest with you and I took my eye off the ball. The unforced error of not really noticing there was no commitment to limit the numbers to the same level as usual was a mistake many had made. After all, no numbers were officially confirmed for Folio 4, and it was accepted around 2000 bottles were released. Surely Macallan wouldn’t do the dirty and release 20,000 bottles, ensuring 18,000 could not collect the full set? That’s exactly what they did.

The problem I feel with limited releases (and I speak only as an enthusiast with no part in the whisky industry) is that too many people have seen the profits that some people have made and are now only too keen to buy a whisky and hopefully make the same profit. Those with little experience also misunderstand the meaning of limited release. A limited release can still have hundreds of thousands of bottle released as long as it’s only sold for a fixed time. Releases such as Ardbeg’s annual release, coupled with pretty much anything Macallan releases on a limited basis normally initially makes money and drives the flippers and those determined to obtain a bottle to buy and sell in a frenzy similar to that when a lamb is dropped in a pool of piranhas. This has perhaps provoked people who do not normally buy whisky as an investment to perhaps want a piece of the action. It is a very dangerous game to play with no knowledge and people have, and do get financially burnt by it. I’ve been buying and selling whisky for 6 years now at auction, and I know – even I get caught out sometimes, but I accept the swings and roundabouts of what I collect.

The only way such a release of whisky could ever hope to become rare and expensive is if people drink it. And while with GoT this is still theoretically possible, the whisky released was never the best products the distilleries were capable as of and there was just so many bottles released. I’ve tasted a couple of the GoT editions, and they are pretty so-so. Not bad but not good either.

So why have the prices dropped so far? I would guess that now Game of Thrones is completed and no new episodes are to come, the series has dropped out of immediate public consciousness and now they are not buying it in the same amounts. My limited experience with retail in other areas would suggest this creates excess inventory to get rid of and to do this then the easiest way is to drop the price.

Fear Of Missing Out – not having the whisky from your favourite TV show, or not being able to collect it in order to make a profit at a later date is probably what has driven this release. Possibly a bit of intrigue to see how each edition ties into each family in the story. But to be fair, it isn’t just limited to the gimmicky release that GoT obviously was. It is the same with every release from Macallan, Ardbeg, Bruichladdich amongst others. Our admiration for the brand, our desperate desire to have something no other collector has, or at least have it first, or to even just get a couple to flip so those desperate enough can get their hands on it blinds us to some harsh economic realities if we don’t take into consideration the realistic supply an demand in the future.

And here is the crux – FOMO often takes our attention from the most important thing – the whisky itself. Consider that in the whisky world that fully missing out is a rare thing – what’s on the market will eventually come around again, at least in the secondary market, and when it reappears, it may come back cheaper. FOMO is driving a monster in the whisky market which has the risk of eating itself, something those who have felt cheated over Game of Thrones are now realising, but it can be applied to those who overpay for anything. I’ve seen Macallan Folio 5 auction for a hammer price of £900. If that person failed to win the original Macallan ballot, how silly do they feel now when they could have bought mine at auction for £320 rather than overpaying the first flipper that came along? The signs of the greatly increased out-turn were all there when they were appearing on auction sites before the Macallan Ballot was complete, so why would you pay nearly 4 times the RRP?

Marketing is something that we as whisky geeks that we all have to be aware of, as it so often promises something and very often does not meet our full expectations. Fair play to Diageo – they shifted shed loads of non-premium whisky at non-premium prices and those who know very little about whisky or have duller palates are suddenly exposed to nine distilleries in the Diageo stable. Where they will not get people continuing to buy GoT bottles as it is limited, they will then most likely start buying the more profitible (for Diageo) releases from these distilleries after they made GoT fans more aware of their offerings. Diageo really couldn’t lose from this venture.

The important thing to bear in mind is that if we are true whisky geeks, FOMO should never really guide us – our palate should in the first instance, but I have to admit that I can miss this myself, and often become a bottle chaser, which is an unhealthy habit. FOMO and bottle chasing can and does lead to missing out on other things, though you often miss that point as well. How ironic.

For those amongst you reading this who have more experience than me, I hope that you are nodding your head in agreement, for you know the truth that things will eventually come back around. You may have to wait somewhat. I have that feeling with the Dailuaine I lost out on in the week previous to last. We have to move on….

In summary –

  • Don’t always believe the hype on new releases.
  • Never plan on making money, and only spend what you can afford to drink. That is what you might be doing if the price crashes
  • Make sure you know how many are being released
  • Don’t be afraid to miss out. There are thousands of fantastic whisky expressions out there, and because you don’t have one, this means you have money for another.

Yours In Spirits.

Scotty

Index of tastings here

Index of articles here


This is written as a hobby, and I appreciate your likes and shares, either on WordPress, or why not visit one of my other social media channels. Lets spread the whisky love!

Scotty’s Drams encourages responsible drinking. To find out the facts about drink, and where to find help if you need it visit Drinkaware.co.uk by clicking on the link.

Flipping Hell!

It’s not nice to sit under the Sword of Damocles.

We come to Friday once more, and I am looking for a thought to provide you all with this week. It has been quite a week for me with a lot of stress. A couple of weeks ago, my car was involved in a minor collision and this was the week it was going in for repair. I’m lucky enough to have an insurance company that are quite generous when it comes to providing a hire car when mine is off the road, so I was lucky enough to be given a Toyota Aygo.

Lucky? No. These small cars are really only good for the city. I have driven an Aygo over one hundred miles from Aberdeen to home over twisty country roads and let me tell you that it wasn’t fun. Given we have had really bad weather and have a good blanket of snow, I opted to pay a little bit extra and get something bigger. I was given a Vauxhall Insignia which was a lovely car to drive but a bit longer than I realised. When backing the car in front of my garage, the sensors must have been covered in dirt from the slush on the roads, and the net result was that I backed the car into the garage door. Conclusions – car not a mark; the garage door seemingly a write off.


The car before a trip down the A9. Nice and clean only for another 30 mins.

Of course, the weather was bad with snow and heavy winds, and the garage roller door was out of the guides on one side so I got plenty of fun with some hammers, spanners and pry-bars to get the door back into the guides. I didn’t care at that point if the door would ever open again, as long as I could get it wind and watertight once more. But I knew eventually that I had to make a hard decision – do I leave the door as is, for I don’t use it that often, or do I pay for a replacement? After paying a 4 figure sum just before Christmas for a new oil tank, I wasn’t really wanting to take the hit of a new electric door. I knew that the choice of doing nothing could become very inconvenient. Sadly, it was realistic to say that a new door was the only option and I had a £1500 bill staring me in the face. It was unexpected that when my local friendly garage door supplier turned up a couple of days later that he didn’t give me a quote. Thankfully he was able to repair the door in such a way it will survive another couple of years given the amount of use it gets. All ends well. I still haven’t had the dram to celebrate the avoidance of financial disaster!

So what has this got to do with whisky? Well, last Friday my package from Macallan turned up, the recently balloted Folio 5 which is part of the Archival Series. Costing £260 including postage, I entered the ballot without knowing too much about the whisky I was hoping to win. However, this is not that uncommon with Macallan releases nowadays. But, given the fact that previous Folio releases have been about 2000 units and usually keep at a price well above the purchase, then I thought it would be a safe bet.


Macallan Archival Series Folio 5

Well, after the ballot was concluded, with my whisky contacts and on various forums, I noticed that quite a lot of people had actually won a bottle in the ballot. Far too many for my liking. Research suggested that Macallan had done the dirty and possibly released 20,000 units. This is a bit of a kick in the teeth, as it would mean 18,000 people will never be able to collect the full collection, and the value of the other four editions is now going to smash through the roof as those who do wish to collect the full series will be forced to pay for a much rarer whisky. This can only get worse as future editions are released (there are still 19 releases to go).

Of course, caveat emptor should be the phrase first and foremost in mind, but I feel in whisky terms I have metaphorically smashed the car into the garage door and have a tough decision to make in terms of what to do with this whisky. It may serve me well to give you another metaphor that would sum up my feelings adequately, I felt like the pigeon who didn’t notice there was glass in the french windows, and is now lying stunned on the patio waiting for the neighbours cat to get me.

To be honest, I bought it with the intention of not collecting the full set, but keeping it back to sell at a later date when the price settled. I had no intention of flipping it, as you should know by now my views on flipping. In the back of my mind, my thoughts were that if there was only 2000 made, I might be able to swap it for a Folio 4, which has the music of James Scott Skinner on it (I used to play the fiddle, so it was relevant). But now I am stuck with a bottle that I feel doesn’t fit my collection policies, won’t necessarily increase in value and I’ve no interest in drinking. And £260 isn’t a small amount of cash to splurge for no return.


Book with marketing blurb

And now I have to face the difficult decision – do I flip it, do I keep it and hope for the best, do I sell it to somebody that didn’t get one at a price that covers my costs, or do I drink it? I’ve opened more expensive bottles but I’m just not interested in Macallan. I’ve drunk too many insipid drams in recent times to be opening an NAS that cost so much. It should be nice to be in the position that I am to own such an item, but the responsibility of what to do with it hangs like the Sword of Damocles above my head, pretty much like it did with the garage door.

I’ll be honest with you, I am really tempted to flip it. I feel really let down by Macallan’s marketing practices, and I have since removed myself from their marketing data base. This has been the final straw that has broken this donkey’s back. I have had deep misgivings about the brand for some time, and this is one of the articles I have been trying to write for some time, but haven’t managed to articulate my thoughts in such a way that is readable. It seems I am not the only one, and have seen quite a few articles saying similar things. I also have written a diatribe against flippers, but again, the article is just too rough to be released without offending people. The possibility of being a hypocrite also fills me with dread.

So what’s it to be? To flip or not to flip. #sipdontflip – as in last week’s review? Or sit tight and take the loss in the meantime and hope it gets better? Let me know your opinions, either by commenting on Facebook, or below this article.

Yours In Spirits

Scotty

Index of tastings here

Index of articles here


This is written as a hobby, and I appreciate your likes and shares, either on WordPress, or why not visit one of my other social media channels. Lets spread the whisky love!

Scotty’s Drams encourages responsible drinking. To find out the facts about drink, and where to find help if you need it visit Drinkaware.co.uk by clicking on the link.

Photo Credits

All Photos – Authors Own