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How Ohio hopes to tackle spirits ‘flipping’

To combat illegal reselling – known as flipping – an Ohio state senator is proposing that certain bottles be opened and resealed at the point of purchase.

Ohio forbids selling spirits on the secondary market, but it still happens
Ohio forbids selling spirits on the secondary market, but it still happens

In the US, certain states “control” the distribution of alcohol, releasing rare and sought-after bottles of whiskey at their suggested retail price either through a lottery or on a first-come first-served basis.

Ohio is one of 17 control states, and while the system is intended to protect consumers, Democrat state senator Bill DeMora is concerned about illicit activities that have emerged in response to it. Allegedly, not only are customers illegally reselling the bottles, but stores are tipping off favoured patrons about when these allocated drops will occur.

“I hear stories every week,” DeMora says, noting he loves Bourbon. “It’s just not fair and something needs to be done about it.”

In October, he introduced Senate Bill 320, which would require Ohio retailers to open and reseal allocated bottles at the point of purchase to prevent them from landing on the secondary market – a broken seal would cast doubt on their authenticity. “My entire goal is to stop the flipping of liquor, the illegal selling on the secondary market, and to make it fairer for every Ohioan that wants to try to get some of this Bourbon,” he says.

Jeff McMullen lives in the greater Cincinnati area and hosts the whiskey-focused podcast, Bourbon and Ballz. He says certain bottles, like Weller Special Reserve, are readily available at a fair price but to get other ones, such as Michter’s 10 Years Old, people will camp outside the store before the release date. Shortly after, he says, you see the allocated bottles listed for resale online.

“The online group setting is kind of like the parking lot. They’ll be out in the car taking a picture and selling the bottle, at usually two, three times MSRP price. It just depends on how hot the bottle is,” he says. Allocation drops can be chaotic, and there is no guarantee of getting what you want. “[Grocer chain] Kroger will drop 700 bottles, just various stuff. They’ll have over 1,000 people show up,” McMullen adds.

McMullen and his crew discussed DeMora’s bill on air, finding it ridiculous at first, but after digging into it, he says it makes some sense. McMullen finds the secondary market useful, and says prices have come down since the pandemic. Like DeMora, he believes that the issue goes beyond individuals flipping bottles for gain.

“What needs to be monitored, closer than the consumer trying to find a bottle, are some of these retailers holding back and selling the cases themselves,” McMullen says.

Since the bill was introduced at the end of the legislative session, DeMora will need to resubmit it, and he says he is open to solutions, calling initial response mixed.

“I don’t know all the answers. I talked to several other people that have podcasts and that are collectors, and I told them all that I’m willing to listen to anything that they have,” he says. “People have to talk about it before someone’s going to do something about it, and I think that has occurred.”

DeMora has other ideas, too, such as scanning IDs and limiting allocated purchases to once every 30 days, creating a database of good-faith collectors, and caging allocated bottles with only the Ohio Liquor Control Commission capable of unlocking them at allotted times. While DeMora is hopeful that the bill will gain bipartisan support, there is less enthusiasm more broadly, especially about the opening-and-resealing provision.

Jane Bowie, founder of Kentucky-based Potter Jane Distilling and former blender at Maker’s Mark, says exposure to the air shouldn’t affect the quality of the whiskey, but it does lose value in other ways that would be detrimental to brands and customers. “Distilleries work really hard on packaging, especially for small-volume, high-demand offerings, and opening the original package does impact some of the lustre, especially when gifting comes into the equation,” she says. “Recorking is not ideal. Breaking a wax seal is not ideal.”

There is also a notion that brands don’t entirely mind when their products hit the secondary market. It is out of their control but can help fuel brand mystique. “We obviously don’t condone people reselling bottles, but there’s also the reality that every whiskey producer knows, which is the secondary market exists because of interest in the Bourbons we make,” Bowie says. “If it disappears because there isn’t enough interest in Bourbon to warrant it, we’re all in for a much bigger problem as an industry.”

Smaller producers

But that isn’t to say that the system is beneficial to everybody. Often, retailers are incentivised to carry a brand’s full range of products to receive the allocated items, pushing smaller producers off the shelf.

“It is long past time to revisit how the system runs, top to bottom,” Becky Harris says. Harris owns the Catoctin Creek distillery in Virginia, also a control state, and is the former president of the American Craft Spirits Association. To her, it is all connected, the sought-after bottles, the marketing and social media influence that inflates them, the politics of retail, and the enterprising people at the tail end of the equation.

“It’s something that’s highly coveted, so people will do what they want to do to get it. I don’t know that you can legislate that away, unless you make a single platform across the whole United States,” Harris says.

DeMora also calls for law enforcement to crack down further on resellers, proposing a large fine for flippers. But to Harris’s point, people will find a way, including going out of state to purchase bottles, which DeMora and others say has happened.

Plus, as McMullen points out, open bottles hit the secondary market all the same. “They’ll buy it. They’ll taste it, they don’t like it, they’ll sell it,” he says. “So it’s not going to stop too much of that.”

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