Third Wave Bourbon
Ten years ago, small boutique brands like High West, Smooth Ambler, and Hudson were just beginning to reach national attention. In some ways, the craze for “craft” spirits, especially craft whiskey in particular predates the rise in legacy bourbon and American whiskey. The idea, which back then was novel, still holds sway. The basic premise was that a small producer with limited resources could build a “show” distillery, then buy bulk finished spirits on the market and bottle it as their own, sometimes blending and finishing, and sometimes not. This was never an official business plan, but as cases of sourced product flew out the door and curious consumers poked their noses into tasting rooms looking for copper, it just kind of leaned in that direction. Never mind the Templetons of the world. For every brand that had their authenticity questioned, there were ten others that got a pass. Fueled by glowing reviews from Jim Murray, the MGP driven bourbons and ryes of a certain age bottled as straight whiskies, seemed to automatically find their way to back bars and retailers shelves. Like the craft beer market fifteen prior, no brand was too small, and consumers and retailers alike seemed to have an insatiable appetite for the new and novel. It was relatively easy to gain coast to coast distribution, and as the big distillers and brands caught up, the first round of “sourcing” craft distillers exited to healthy multiples.
The fact that the majority of exits (Rabbit Hole, High West, Smooth Ambler, Angels Envy, Kentucky Owl) have all been from creative blenders who’ve sourced whiskey or distillation capacity at some level, should have given many craft distillers pause. More traditional craft brands like Koval, FEW, Balcones, and Leopold Brothers while partnering in some cases, are on the whole, whether by choice or otherwise, still on their own. Which brings us to today.
If first wave bourbon was High West and Smooth Ambler, and second wave bourbon is Garrison Brothers, Corsair, and Treaty Oak, then what exactly is third wave bourbon and where is it taking us?
Brands are constantly trying to increase their value. Whether though production capacity, raw sales, or cultural relevancy, there are a variety of ways to make this happen. When it comes to beverage alcohol, there seem to be two emerging trends. Narrative driven brands, which derive their core value from a foundational story, which requires a place, and their own version of terroir. This costs money, and maybe even more importantly, time. How long will this trend last? Like Garrison Brothers, they attempt to identify with a place and a way of life which dovetails nicely into the products they produce and market. This is a fine way to go about building a brand, but it mostly sticks to the playbook of first and second wave.
But now third wave brands are emerging, founded clearly on creative sourcing and blending with total transparency, and a more inward, self-referential ethos, recognizing the growth in their core consumer’s knowledge. No show piece distillery needed, just good juice (mostly MPG and Dickel, or whatever brokers have available) and a way to talk to consumers through new media. Brands with names like Tumblin Dice, Idle Hands, Smoke Wagon, Barrell Craft, and the Pursuit series all qualify as third wave. They know their audience knows their DSP numbers, and follow new releases on the TTB website. They know their consumers know what MGP means. They know these guys (and increasingly women) are all hunters on the secondary market. They love barrel picks and stickers, value added wax dipping and complaining about retailers. The fun and sometimes 4Chanesqe universe that third wave bourbon drinkers inhabit is a combination of social signaling, group think, actual pleasure, and a whole lot of validation circles. It’s inside for sure, but its also wildly creative, relatively democratic, and like the retailer and back bar shelves of yesterday, hungry for the NEW!
Which brings us to the point, while the share of direct to consumer and delivery business will be fought out in the streets between tiers in the three tier system, the consumer has already decided where the new bar and liquor store shelves reside. They are right now, today, as we speak, talking about and creating brand “value” just by posting to a private Facebook group or their personal Instagram account. They are right now doing more to grow a particular brand by creating organic chatter than any liquor store tasting hosted by promo girls from 5-7 on a Friday night. Brands must attract and retain this customer by offering ever more new and novel versions of themselves. The days and attention spans that helped grow the stubbornly single label brand Maker’s Mark into a global icon have been replaced with the far more scattered, but arguably more creative brands of today.
Over the next few years we will see a gold rush of labels. From every type of barrel finish imaginable, to any number of novelty labels, each one in an arm’s race to speak directly and with relevancy to thirsty consumers. So value will be built, and the consumers will choose. Mistakes and missteps will most certainly be made, and more than a few duds will land, but third wave bourbon is here now. Love it or hate it, it’s here.