The Endless, and Expensive, Quest for Rare Objects
— September 10, 2016
By Adam Alter
There’s a reason bourbon drinkers love Pappy. While most high-quality bourbon sits in a barrel for between eight and twelve years, Pappy ages for as much as twenty-three years. A bottle of top-shelf twelve-year-old bourbon sells for around a hundred dollars. Because the bourbon has aged for twice as long, two hundred and forty nine dollars, the list price for a bottle of Pappy twenty-three-year, doesn’t seem all that unreasonable.
But few people manage to buy Pappy at its list price. Unlike Jim Beam, which releases seven million barrels of bourbon each year, the Van Winkle family releases only seven thousand. The demand for Pappy is so high that most bottles are bought by resellers. On the resale market, bottles of Pappy twenty-three-year go for as much as four thousand dollars apiece—sixteen times their list price. That extraordinary markup presents a mystery for economists. Pappy Van Winkle isn’t sixteen times better than its competitors. Instead, the bourbon’s rarity seems, in itself, to be a source of its value.
Read the full article as published in The New Yorker.
Adam Alter is an Associate Professor of Marketing with affiliated appointment in the Psychology Department.