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Single-Malt Economics


tedious
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Not strictly a question about the liquid itself or its qualities, but hope you'll indulge me.

 

My local retailer (Binny's) is currently offering Laphroaig 18 Year Old for ~$60.  Typically goes for more than $100.

An even more extreme example: a couple of years ago, Spec's was offering Aberfeldy 21 Year Old for $40 (currently retails at $150 plus).

 

I'm curious as to how such enormous discounts are possible.  The two options I can think of are:

 

1. The regular store margin is enormous (and perhaps there is usually some kind of "minimum advertised price" deal in play to protect the brand's premium)

2. The distributor and / or producer heavily discounts from time to time to get the product to a wider audience in hopes of making new "regulars"

 

I like the product, but know next to nothing about the economics.  Any of the industry folks here have any insight?

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Probably capricious pricing is the thing... single malts can sit on the shelf and have to get more expensive to pay the "rent"... or they could decide it has to go (and not come back) for a fire sale price... You're also looking at the capriciousness of foreign exchange rates.  Back when the dollar was strong, I grabbed a case of Bowmore for something less than $210... still drinking it and smiling...

Christopher D. Holst aka "cdh"

Learn to brew beer with my eGCI course

Chris Holst, Attorney-at-Lunch

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Interesting replies, thanks.  Perhaps I'm naive, but I'd hope that the big names wouldn't knowingly dump obviously sub-standard product - the conglomerates behind them seem to spend an awful lot on building the brands.  It's undoubtedly true that higher-end stuff can move slowly.

 

I'd love to know the typical price at each step in the chain of, say, a $60 single malt.  But I don't imagine the participants would be in a hurry to tell me (and I appreciate J_Ozzy's point - discounts / kickbacks / promotions etc may make a real "per bottle" price hard to determine).

Edited by tedious (log)
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