Local Beers as an Illiquid Investment
I’m potentially set for life. Well, maybe not for life, but at least for a couple of days.
I’ve invested in local beers.
With friends, we had several computers going at the witching hour of noon on St. Patrick’s Day, for a chance at two of the available 6,000 tickets required to get you on the property; tickets that give you the right to purchase several bottles of the 2012 edition of Three Floyd’s legendary Dark Lord Russian Imperial Stout. Tickets sold out within three minutes, but within an hour the $15 tickets alone — which only let you in, you still have to purchase the beer — were being auctioned on eBay for $495 a pair. Bids for the tickets were running over $800 per pair at last check. That’s a potential 2,666.7% return in one day. Even Bernie Madoff couldn’t pull off that kind of return.
But I’m not selling the tix. I want the beer.
Last year, after being lucky enough to acquire a couple of tickets, I spent several hours in line in Three Floyds’nondescript industrial park in Munster, Indiana. It was a fun time — some described it as a mini-Woodstock.
I left with four bottles of the precious Dark Lord Russian Imperial Stout. $15 each. Similar bottles are listed on eBay now for between $50 and $100 per bottle. At the low end, that’s a 333% return. I consider myself very lucky if any of my accounts at Fidelity Investments do even one-fifth as well.
EBay’s policy on these sales is that the value of the item is in the collectible container and not its contents, the container has never been opened and any incidental contents are not intended for consumption, the item is not available at any retail outlet, and the container has a value that substantially exceeds the current retail price of the alcohol in the container.
In the words of Monty Python, “Nudge, nudge, wink, wink, say no more.”
But it’s not limited to Three Floyds. My Goose Island Rare Bourbon County Stout (paid $42 for the bottle) is now listed for $78, an 85% return. A bottle of Bell’s Hopslam, for which I paid $18 for a six-pack two months ago, is now going for $34, an 89% return (or 1,133% on an annualized basis). And the Bell’s Batch 10,000, which was also $18 a six-pack, is now listed for $15 a bottle, a 500% return.
We’re fortunate in our region to have Ratebeer’s three best breweries in the world: Three Floyds, Founder’s and Bell’s. Because if you’re going to invest in beers, you need to get less-common releases from well-known breweries.
Which brings me to the basic principles of beer investing:
1) Buy beers from breweries that have good cachet. In addition to the three above, New Glarus and Goose Island (especially Bourbon County Stout releases) frequently get premiums for their limited releases.
2) Invest in only big, high-alcohol, age-worthy beers. No one wants a 1997 bottle of Old Style.
3) Buy limited releases. The harder they are to get, the better. Anyone who can get through during the three minute window to get Dark Lord Day tickets, and then wait in line for a couple of hours to buy the beer, deserves a significant return for the time and effort.
Other breweries have caught on to the Dark Lord Day model; it’ll be interesting to see if they can get as much traction out of the one-day-only style of selling their beers.
It doesn’t always work, though. I still have a couple of bottles of Small Animal Big Machine, a collaboration from Half Acre, Pipeworks, and DeStruisse. It’s a great beer — I had to wait in line to get it — but there’s no online market for it. I’m guessing that Half Acre, Pipeworks, and DeStruisse don’t have the name recognition of Three Floyds et al among beer collectors. I might actually have to drink it.
Hey, I might even give you a bottle or two … in return for a generous annuity.