How 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 recently sold at auction for an astounding $52,500 in New York, far surpassing pre-sale projections and breaking the brand’s previous record.
With a 99 out of 100 rating by the World Spirits Championship, Pappy Van Winkle’s Family Reserve is the #1-rated bourbon in the world.
There’s enviable enthusiasm surrounding the coveted “Pappy” family brand. The history behind the brand offers a masterclass in marketing with extraordinary insights that can apply to any industry.
Eight savvy marketing maneuvers behind the Pappy Van Winkle brand
- Establishing a distinguishing feature
- Honoring brand promise
- Thinking long-term
- Satisfying an underserved market
- Adhering to a strategy of scarcity
- Defining product positioning
- Applying pricing methodology
- Capitalizing on street marketing
First, a little backstory
In the late 1800s, just out of college, “Pappy” Julian P. Van Winkle traveled Kentucky by horse and buggy, selling liquor for Louisville wholesalers W.L. Weller & Sons.
He was a top performer with success enough to partner with a co-worker and buy up the operation when W.L. Weller passed away.
Even before this, the two salesmen were making whiskey on the side at A. Ph. Stitzel, a distillery that produced their bourbon at a higher level to yield a premium product.
In time, Pappy and his partner purchased Stitzel, too, and merged the Weller wholesaler and Stitzel distillery.
Pappy opened Stitzel-Weller Distillery on Derby Day in 1935 and 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.
1. Pappy’s distinguishing feature
Bourbon is a distinctly U.S. product. About 95% is made in Kentucky.
Fun fact: 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%. Traditionally, rye was used as the second grain, and malted barley rounded it off.
The thing is, rye wasn’t native to Kentucky. Little of it was grown in the state. Distillers shipped it in from the Midwest.
In contrast, Pappy opted for a grain abundantly available in his state to bring a different product to market. He chose native Kentucky wheat as his secondary grain—making his bourbon a bit smoother and more complex.
Pappy introduced wheated bourbon to the masses and created a product unique to Kentucky.
The brew was around, but he was the first to produce it on a grand scale.
2. Pappy Van Winkle’s Brand Promise
Principled, larger than life, and unfettered, Pappy set a high bar. He abided by unwavering production standards that 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 straightforward honesty and simplicity:
“We make fine bourbon, at a profit if we can, at a loss if we must, but always a fine bourbon.”
His granddaughter, Sally Van Campbell, said, ““He believed in making fine bourbon. That was his bottom line. And he believed that if you made it right, everything else would take care of itself.”
Surprisingly, it would be thirty years after his death before the first bottle of bourbon that bore the name “Pappy” hit shelves.
3. Long-term thinking
In its heyday, during the 1950s and 1960s, Stitzel-Weller Distillery produced 800,000 cases a year of bourbon.
By the 1970s, cheap bourbon flooded the market, and the family distillery was sold.
Pappy’s son, Julian Van Winkle, Jr., 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.
In the 1980s and 1990s, bourbon hit yet another rough patch.
The younger generation wasn’t keen on drinking what their parents drank. Vodka and rum were becoming increasingly popular.
When Julian Van Winkle, III, Pappy’s grandson, inherited the business, it was little more than a small distribution company.
But Julian, now third in line at the reigns, saw the opportunity.
Hardly anyone was selling aged bourbon. Let alone aged wheated bourbon. It was a niche Julian could fill and dominate.
This venture would allow him to remain faithful to the brand’s roots and honor Pappy’s promise to never compromise on quality.
Building a business around aged bourbon would be a long game. It would require a substantial investment of time and money to earn even a chance of big dividends further down the road.
Julian was 32 years old, with a wife and four young children, when he took over the family business after his father died: “I didn’t know if I could make it work or not. But it was the only thing I knew how to do, so I kept at it.”
4. Tapping into an underserved market
Julian began buying up old inventory of his family’s bourbon from struggling distilleries and other brands that had been sitting in barrels for years.
In the mid-1990s, Julian launched the Pappy Van Winkle label and began releasing his aged 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, he released the world’s first 20-year-old bourbon. It was a risk. At the time, no one had ever sold bourbon this old.
Julian can remember the moment his fortunes turned.
His Pappy scored a then-unheard-of 99 at the 1998 World Spirits Championships.
Julian says, “After that, the phone started ringing off the hook, and we were short—didn’t have nearly enough of it.” [CNN]
It wouldn’t be long before Pappy Van Winkle would become the world’s most sought-after brand of bourbon.
5. Pappy Van Winkle’s strategy of scarcity
The Pappy that’s 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.
Julian says, “We only release stock once a year because we’re a small company.”
“Julian plays a different game than every other brand. He followed Pappy’s belief to always bottle less than you can sell.” Wine Enthusiast
By limiting supply, the brand has an air of exclusivity and demand increases.
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.”
The strategy is ideal for small businesses that go head-to-head with larger competitors. Julian says, “Companies often get into trouble when they try to grow too fast. If you make a great product and keep production low, you’ll never get stuck with big inventories when the economy turns tough.”
“That’s been the downfall of a lot of bourbon producers,” according to Julian. “They just make too much of it. It loses all its cachet and is not as special.”
6. Pappy Van Winkle’s product positioning
Like his grandfather, Julian sticks to the high-end market.
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 brands on the American market.”
Pappy knew where his product fit in the marketplace and had no interest in competing with cheaper bourbons.
His would be a top-shelf bourbon brand closely associated with heritage and positioned as the epitome of luxury and craftsmanship.
7. Pappy Van Winkle’s pricing methodology
Julian shared, “It was hard for our family to stay in business because putting away bourbon for so many years costs a lot of money, and it’s just sitting there for 10 to 23 years, so it’s an expensive deal.”
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.
You see, if a barrel of bourbon has been aging for ten years, the owner pays the barrel tax ten times.
On a side note: By 2026, Kentucky will gradually phase out the bourbon barrel tax, eliminating it altogether by 2043.
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.
8. Street marketing
Julian was running a small operation on a shoestring budget. He rolled up his sleeves and pounded the pavement to get the word out about his whiskey.
Like his grandfather, Pappy, he was bootstrapping this endeavor.
Before social media, with little to no marketing budget, Julian, along with his wife, Sissy, would use what were back then unconventional methods to promote the brew.
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 image hanging above a make-believe fireplace—to attract potential distributors.
Through all the trials and tribulations of the whiskey business, the Van Winkles have managed to build a brand with worldwide name recognition.
It took unquestionable resilience, a lot of sweat, and a bit of luck to shepherd the family business through hard times for the next generation.
In his book, Pappyland, award-winning journalist Wright Thompson writes: “Indeed, Julian and his wife Sissy have been working closely with their four children to create a solid succession plan.”
Julian’s son joined him in 2021 to help run the business. And his triplet daughters created Pappy & Company, a bourbon-inspired lifestyle brand.
“We have all been working for two years or so on a family succession plan for both the dry goods business and our whiskey business,” Julian said. “It is not easy. But we are learning how to do it right.”