Tuesday, March 15, 2016

The Whiskey Appraisal Racket

Photo courtesy of Luther / whiskeyid.com
I am asked all the time what this or that bottle of whiskey is worth. My answer is always the same; it is impossible to say. I will even go so far as to advise that anyone willing to appraise a bottle of whiskey for you is not to be trusted.

This is why.

In the USA, valuations of whiskey are problematic because the secondary market is illegal except for the rare licensed auction. You can't sell alcohol legally without a license. There are no exceptions. And just to be extra clear, trading is the same as buying/selling for legal purposes.

This is primarily a state law matter, although it offends Federal law as well. Primary enforcement, such as it is, comes via each state's alcoholic beverage control authority. Enforcement is lax but that doesn't change the facts. The entire secondary market for beverage alcohol is illegal.

Sales take place all the time, of course, but because they are illegal they aren't publicly reported. When they are reported it is informal, without documentation. Without a reliable record of recent sales to reference, accurate valuations are impossible. Anyone who tells you otherwise is either uninformed or dishonest.

People will hazard guesses based on what information there is and from their own experience but even when it is done honestly and with the best of intentions, it is not like appraisals in other fields. Without a reliable record of past sales it is impossible to estimate value accurately.

That said, and understanding that you have to view skeptically any attempts at valuation, some people do take an honest stab at it. I usually advise folks to start with Bottle Blue Book. They have their limitations, as I've already explained, but they are honest about them. Check out the site.

One criticism: They need to do a much better job of explaining their methodology and making that information easy to find. The best thing they have on the subject is here.

Most people who have something they might like to sell have no idea how much it could be worth, whether $50 or $50,000. A resource like Bottle Blue Book can give you a rough idea, which is all most people want anyway.

This is all presented here for the purpose of providing accurate information about the situation as it now stands. I support the legalization of secondary sales but it is unlikely to happen. Alcohol regulation hasn't changed much in 80 years. Prohibition sentiment is still with us, so constructive dialogue is difficult. State legislatures have been persuaded to modernize laws regarding alcohol production and primary sales on economic development grounds but no one has effectively made a similar argument for normalization of the secondary market.

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