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As bourbon booms, thirst for rare brands breeds skullduggery

Published: March 8, 2023, 11:38am

SALEM, Ore. (AP) — Buttery, smooth, oaky. These are characteristics of the best bourbons, and a growing cult of aficionados is willing to pay hundreds or even thousands of dollars to get their hands on scarce American spirits — and even bend or break laws.

The first challenge is figuring out which liquor stores have these premium bottles on their shelves – and that’s where inside knowledge can give bourbon hunters a leg up, and potentially get them into legal trouble.

In Oregon, several high-ranking officials at the state’s liquor regulating agency are under criminal investigation after an internal probe found they used their influence to obtain scarce bourbons.

That included the holy grail for bourbon fanatics: Pappy Van Winkle 23-year-old, which can sell for tens of thousands of dollars on resale markets. Top-end bourbons have found themselves at the center of criminal investigations in at least three other states, from Virginia to Pennsylvania to Kentucky.

Premium spirits were always expensive and sought-after, but interest is surging. Distillers have upped production to try to meet increased demand, but before the whiskey reaches stores and bars, it must age for years and even decades.

Each state gets a limited amount of Pappy Van Winkle 23-year-old, produced by Old Rip Van Winkle Distillery of Frankfort, Kentucky.

In 2022, Oregon received just 33 bottles.

“The average person cannot get good bottles,” said Cody Walding, a bourbon fan from Houston. He believes he’s years away from finding Buffalo Trace Distillery’s five-bottle Antique Collection, despite making connections with liquor store managers.

“Like, to be able to get Pappy Van Winkle or Buffalo Trace Antique Collection, unless you’re basically best friends with a store manager, I don’t even think it’s possible to get those,” he said. In a Los Angeles bar that Walding visited last week, one shot of Pappy 23-year cost $200.

Six officials from the Oregon Liquor and Cannabis Commission — including then-Executive Director Steve Marks — have acknowledged they had Pappy or another hard-to-get bourbon, Elmer T. Lee Single Barrel, routed to liquor stores for their own purchase. All six denied they resold the bourbons.

Old Rip Van Winkle Distillery’s suggested retail price of Pappy 23-year is $299.99. Because of its extreme scarcity, it can go for a lot more on the resale market.

In December, a single bottle sold at Sotheby’s for a record $52,500. Two other bottles were auctioned for $47,500 apiece. All three were originally released in 2008.

The Oregon agency’s internal investigation determined the employees violated a statute that says public officials cannot use confidential information for personal gain. Gov. Tina Kotek sought Marks’ resignation in February, and he quit. The other five are on paid temporary leave. An investigation by the state Department of Justice’s Criminal Division is ongoing.

Marks did not immediately respond to messages Wednesday seeking comment. In his replies to the commission investigator, Marks denied he had violated ethics laws and state policy. However, he acknowledged that he had received preferential treatment “to some extent” in obtaining the whiskey as a commission employee.

The practice was allegedly going on for many years and involved not only state employees but also members of the Oregon Legislature, the investigator was told.

Five bottles of Oregon’s allotment of Pappy 23-year-old went to “chance to purchase,” a lottery started in 2018. The odds of winning Pappy 23-year were 1 in 4,150.

Utah, Virginia and Pennsylvania are among other states with lotteries for coveted liquor. Two men in Pennsylvania each bought a bottle of Pappy Van Winkle after winning the liquor lottery in different years. They tried to sell their bottles on Craigslist, but undercover officers posing as buyers nailed them for selling liquor without a license.

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In Virginia, an employee of the state’s Alcoholic Beverage Control Authority downloaded confidential information about which state-run liquor shops would be receiving rare bourbons. An accomplice then sold the intel to Facebook groups of bourbon fans. The now-former employee pleaded guilty to felony computer trespass in September, received a suspended prison sentence and a fine, and was banned from all Virginia liquor stores.

In Kentucky, an employee of Buffalo Trace Distillery was arrested in 2015 for stealing bourbon, including Pappy, over several years and selling it. The caper became part of “Heist,” a Netflix miniseries, in 2021.

Whiskey is a booming industry, especially the high-end products.

Supplier sales for American whiskey — which includes bourbon, Tennessee whiskey and rye — rose 10.5% last year, reaching $5.1 billion, according to the Distilled Spirits Council of the United States. Revenue for makers of super-premium American whiskey grew 141% over the past five years.

Bourbon, in particular, has a rich American heritage. It’s been around since before Kentucky became a state in 1792 and is where the vast majority of bourbon comes from. In 1964, Congress declared bourbon “a distinctive product of the United States,” barring whiskey produced in other countries from being labeled as bourbon. Today, some of the best-known Kentucky bourbon distilleries are foreign-owned.

In the 1960s and ’70s, bourbon had a reputation as a cheap drink. Then came a change: Targeting Japan, Kentucky distillers developed single-barrel and small batch versions in the 1980s and 1990s, which later blossomed in the United States, said Fred Minnick, who has written books on bourbon and judges world whiskey competitions.

“The distillers were starting to wake up — there was an interest in the whiskey, because the culture itself was beginning to change,” Minnick said. “We were going from a steak-and-potatoes nation to foie gras and wagyu.”

Minnick lovingly describes what it’s like to sip a great bourbon, which obtains sweetness by absorbing natural wood sugars from charred oak barrels.

“It begins at the front of your tongue, walks itself back, will drip a little bit down your jawline, a little bit like butter, very velvety,” Minnick said. “Caramel is one of the quintessential notes, followed by a little touch of vanilla.”

Some of the world’s top beverage companies that own major brands include Kirin (which owns Four Roses), Beam Suntory (Maker’s Mark, Jim Beam, Knob Creek, Basil Hayden), Diageo (Bulleit, I.W. Harper), Sazerac (Buffalo Trace, Van Winkle, Blanton’s) and Campari Group (Wild Turkey).

They boosted bourbon production with multimillion-dollar expansions and renovations, but there’s still not enough of the best stuff to go around.

Despite Pappy 23-year-old’s red-hot popularity, Minnick is not a big fan.

“Right or wrong, the Pappy Van Winkle 23-year-old is absolutely the most sought-after modern whiskey, year in, year out,” Minnick said. “I personally think that the 23-year is hit-and-miss. It’s typically over-oaked for me.”