How more than a century of one family’s bootstrap ingenuity and shrewd marketing built the iconic Pappy Van Winkle brand.
A rare bottle of Pappy Van Winkle’s 23-Year-Old Family Reserve bourbon sold at Sotheby’s in New York for a jaw-dropping $52,500—eclipsing pre-sale projections and breaking the brand’s previous record.
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What’s more, Pappy Van Winkle’s 20-Year Old Family Reserve is the #1-rated bourbon in the world, with a 99 out of 100 rating by the World Spirits Championship.
It’s hard to dispute, the public’s enthusiasm for the “Pappy” family brand.
And the story behind it is a marketing masterclass with invaluable insights for any business.
Whip-smart marketing practices behind the Pappy Van Winkle brand:
- Standing out as different
- Defining the mission
- Thinking long-term
- Tapping a niche market
- Creating demand
- Positioning for success
- Pricing for profit
- Maximizing unconventional marketing
First, a little history
In the late 1800s, just out of college, Julian Van Winkle—later known as Pappy—traveled Kentucky by horse and buggy, selling liquor for Louisville wholesalers W.L. Weller & Sons.
He was a star salesman with enough success to band together with a co-worker and buy up the operation not long after W.L. Weller passed away.
Even before this, the two salesmen were sourcing whiskey on the side at A. Ph. Stitzel, a local distillery.
In time, Pappy and his partner would purchase Stitzel, too, and merge the wholesaler and distillery.
Stitzel-Weller Distillery opened on Derby Day in 1935, and Pappy ran it until the year before he died in 1965.
It would become the most famous distillery in the world and produce what is considered by connoisseurs to be the finest bourbon ever made.
Pappy’s distinguishing feature
Bourbon is a distinctly American product. About 95% of it is made in Kentucky.
Bit of Trivia: There are more barrels of bourbon than people in Kentucky.
To be classified as bourbon, among other things, at least 51% of a whiskey’s mash bill (or recipe) must come from corn. The maker has the liberty to choose the other 49%. And, rye was traditionally used for the second grain, then, malted barley to round it off.
But rye wasn’t native to Kentucky. Little of it was grown in the state. Distillers would ship it in from the Midwest.
To distinguish his spirit, Pappy chose native Kentucky wheat as his secondary grain—making his bourbon a bit smoother, sweeter, and more complex.
He introduced this wheated bourbon to the masses and established a product unique to Kentucky.
The brew was around, but Pappy was the first to bring it to market on a grand scale.
Pappy Van Winkle’s Brand Promise
Pappy set a high bar. His commitment to excellence and uncompromising production standards have informed four generations of Van Winkle bourbon-making.
His image is the hallmark of the Pappy Van Winkle brand today, and his promise is honored and celebrated still for its honesty and simplicity:
“We make fine bourbon, at a profit if we can, at a loss if we must, but always fine bourbon.”
According to Pappy’s granddaughter, Sally Van Campbell, “making fine bourbon was his bottom line. And he believed that if you made it right, everything else would take care of itself.”
Oddly enough, it would be thirty years after his death before the first bottle of bourbon that bore the name “Pappy” hit shelves.
Long-term thinking
Stitzel-Weller Distillery produced 800,000 cases a year of bourbon during its heyday in the 1950s and 60s.
But by the 70s, vodka and rum were becoming increasingly popular. A new generation wasn’t interested in drinking what their parents drank. Ultimately, cheap bourbon flooded the market forcing the sale of the family distillery.
Fortunately, Pappy’s son, Julian Van Winkle, Jr., (who ran the business after Pappy’s death) had the foresight to retain the rights to procure old stocks from the distillery and keep the Van Winkle brand name as a condition of the sale. This would be key to the brand’s success in years to come.
By the time Julian Van Winkle, III, Pappy’s grandson, inherited the business from his father in 1981, it was little more than a small distribution company.
Still, Julian, now third in line at the reigns, saw untapped opportunity.
Hardly anyone was selling aged bourbon. Let alone premium, aged, wheated bourbon. It was a niche whiskey Julian enjoyed and understood well.
It was a gap in the market he could not only fill but dominate.
This bold venture would allow Julian to not only re-envision the brand but also uphold Pappy’s promise to never compromise on quality.
Building a business around aged bourbon would mean a substantial investment of time and money for even a shot at big dividends further down the road.
Julian the Third was 32 years old, with a wife and four young children, when he took over the family business. He wasn’t sure if he could pull it off—or not. But it was the only thing he knew how to do, so he kept at it.
Tapping into an underserved market
Julian started buying up old inventory of his family’s bourbon from struggling distilleries and other brands that had been sitting in barrels for years.
He launched the Pappy Van Winkle label featuring his grandfather Pappy’s now iconic image and began releasing his premium bourbon.
Looking back, he says, “What really kept me going was that I knew I was selling a great product. I just had to convince whiskey consumers of that, too.”
In 1994, Julian released the world’s first 20-year-old bourbon. It was a risk. At the time, no one had ever sold bourbon this old.
Soon enough, he would have the proof that trusting his gut was the right call.
Julian remembers exactly when the Pappy brand took off.
It was in Chicago when his 20-year-old Pappy was awarded an unprecedented 99 out of 100 rating at the Beverage Testing Institute’s World Spirits Championship.
It was the highest rating for a whiskey ever given by the institute.
After that, according to Julian, the phone started ringing off the hook, and he was short—didn’t have nearly enough of it.” [CNN]
It wouldn’t be long before Pappy Van Winkle would become not only the world’s most sought-after bourbon but also its most sought-after spirit—returning bourbon to it’s prominence.
Pappy Van Winkle’s strategy of scarcity
The Pappy distilling and aging today will be ready to drink in 15, 20, or 23 years.
Low production and high demand make Pappy extremely hard to find.
In keeping with Pappy’s conviction to always bottle less than you can sell Julian only releases stock once a year.
By limiting supply, demand increases, and the brand takes on an air of exclusivity.
Julian says, “This can be an ideal strategy for small businesses facing off big competitors. Companies often get into trouble when they try to grow too fast. If they make a great product and keep production low, They’ll never get stuck with big inventories when the economy turns tough.”
“That’s been the downfall of a lot of bourbon producers,” he says. “They just make too much of it. It loses all its cachet and is not as special.”
Pappy Van Winkle’s product positioning
Pappy knew where his product fit in the marketplace and had no interest in competing with lesser brands.
His produced a top-shelf bourbon steeped in tradition—the finest expression of indulgence and craftsmanship.
And like his grandfather, Julian stuck to the high-end market.
According to bourbon historian Michael Veach, “[Julian] had the advantage of purchasing only what he thought was good whiskey and passing on barrels below his standards.”
As Pappy touted in a 1949 speech to his distributors, “We do not like the phrase, ‘We must meet the competition,’ unless you mean the competition of the very best and highest-priced brands on the American market.”
[ Read: Expert Tips from the Golden Age of Advertising ]
Pappy Van Winkle’s pricing methodology
This commitment didn’t come without sacrifice. Putting away bourbon for so many years was hard on the family. It costs a lot of money, and as Julian says, “It’s just sitting there for 10 to 23 years, so it’s an expensive deal.”
The time, craft, and resources that go into producing a product at this level—make it rare, allowing Pappy Van Winkle to command a premium in the marketplace.
Aged bourbon is pricey for a lot of reasons:
- Years pass before it’s ready to drink
- Nearly a quarter of the bourbon evaporates while aging
- Barrels are stored in rickhouses for years
- Year-over-year property taxes are imposed on each barrel.
So the rub is if a barrel of bourbon has been aging for a decade, the owner pays the barrel tax ten times.
Bit of Trivia: Kentucky is gradually phasing out the bourbon barrel tax with plans to eliminate it altogether by 2043.
Pappy Van Winkle’s non-traditional marketing approach
When he was starting out, Julian ran a small operation on a shoestring budget. He rolled up his sleeves and pounded the pavement to get the word out about his whiskey.
Julian would use—what were back then unconventional methods to promote his brew.
He couldn’t afford to advertise, so he got creative.
He orchestrated bourbon tastings, hosted whiskey-paired dinners, and placed Pappy Van Winkle in high-end restaurants where his 23-year-old Pappy would sell for $50 a glass.
At the urging of a colleague, Julian went so far as to pull together a Van Winkle-type study at trade shows and events—with wingback chairs, oriental rugs, bookshelves, and Pappy’s grand image hanging above a make-believe fireplace—all to attract potential distributors.
His Pappy was showing up on the radar with impeccable timing.
Just down the road, the internet would break into the mainstream, and by the mid 2000s, social media would skyrocket.
Both online and off, a surge of word-of-mouth buzz around the Pappy brand would help build customer loyalty and boost revenue to levels never seen before in the industry.
Wrapping up
It took a lot of sweat, a bit of luck, and unquestionable resilience to shepherd the family business through hard times for the next generation.
But, through all the setbacks and adversity, Julian has come out on the other side with a thriving heritage brand that enjoys worldwide name recognition.
In his book, Pappyland, award-winning journalist Wright Thompson says: “. . .Julian and his wife Sissy have been working closely with their four children to create a solid succession plan.”
In 2001, Julian’s son, Preston, joined him to help run the business. And in 2013 his triplet daughters launched Pappy & Company, a bourbon-inspired lifestyle brand.
The Van Winkle’s have all been focused on the pivotal next steps for both the dry goods business and the whiskey business. “It’s not easy,” Julian says, “But we’re learning how to do it right.”
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