Courtesy of buffalotracedistillery.com

This article written by Robert Haynes-Peterson was originally published on AskMen.

“In 2000, it was selling for $175 a bottle." Jonathan Goldstein, of Manhattan's well-stocked Park Avenue Liquor Shop, is discussing the significant retail price hike over the past few years for Pappy Van Winkle's Family Reserve 23-Year Bourbon. "Now it's going for $500 or $1,000 or more. It's almost a tenfold price increase in 14 years."

The WTF factor on "Pappy's" rise from old guy bourbon to celebrity stalker-worthy status has created its own mythology: a swirling miasma of online conspiracies about price gouging, near-black market auctions and unscrupulous middlemen. What's the story? Is the rumor (that we totally just made up) true that you must commit a blood sacrifice to even taste the stuff?

To bring you up to speed, Pappy Van Winkle's Family Reserve is a rare, very small-batch wheated bourbon aged a long time and produced by Julian Proctor Van Winkle III ("Pappy" was his grandfather) and the Old Rip Van Winkle Distillery (a distillery in name only). Van Winkle also produces Old Rip Van Winkle 10-year bourbon and a 13-year rye (neither are "Pappys"). The brand is now owned by the Sazerac Company (which owns or is tied in with a whole slew brands, including Blanton's, Fireball and George T Stagg), and is produced and bottled at the company's Buffalo Trace Distillery in Kentucky, to the Van Winkles' specs.

Old Rip Van Winkle crafts six expressions in total, and all of them are popular these days. Only three of them fall under the banner of "Pappy" Family Reserve: a 15-, 20- and (the holy grail) 23-year bourbon. Neither Van Winkle nor Buffalo Trace will talk details about all the source whisky in the Family Reserve (you'll find tons of speculation on the web), but one thing is certain: at least some amount of the 23-year includes whisky from the legendary Stitzel-Weller distillery that Van Winkle's dad and grandpa owned until 1972. The distillery, established after prohibition in 1935, shut down in 1992 and is currently owned by spirits giant Diageo, home to their Bulleit Bourbon brand (though Bulleit is not distilled there). In February Diageo announced that it’s establishing a visitor center on the property, and rumors have been flying this past winter about new whisky being made on site.

When Van Winkle II sold the distillery, he took several barrels of the good stuff with him (Van Winkle III bought up more when the distillery closed), and a component of the Stitzel-Weller whisky ends up in the 23-year. It's impossible to underestimate the mystlque of this distillery's production among aficionados. At WhiskyFest NY last fall, one tasting seminar featured several ultra-rare whiskies from defunct distilleries in Scotland and America, but none elicited more of a reaction than a Stitzel-Weller whiskey specially bottled for the show. Even at 137 proof, it was complex, with notes of honey, lime soda, lumber, chocolate-covered cherry and candied lemon.

Beginning about five years ago or so, demand for the older Family Reserve expressions began to grow exponentially. We'll get into the why, but the upshot was, prices for the stuff at the end market (bars, liquor stores and auctions) went through the roof. What had been a well-respected but fairly under-the-radar bourbon suddenly stole the boozy spotlight from everything else. The label's become so coveted that in October of last year, thieves made off with an estimated $26,000 (wholesale) worth of the brand's bourbon and rye, including almost 200 bottles of the 20-year Reserve. For a brand whose annual production is so small that most bars and liquor stores are lucky to get a couple of bottles each year, that's a huge chunk of inventory.

Prices have gotten so out of control that Fred Minnick, author of Whiskey Women: The Untold Story of how Women Saved Bourbon, reports on his blog that he's personally seen bottles of the 23-year sell for $5,000 and found online postings of bottles in the $6,000 range. Even the empties sell for $100 or more on eBay.

But here's where things gets weird: The wholesale price hasn't risen all that much over the years. A spokesperson for Sazerac notes that, "We make a suggested retail price for all of our products, but cannot legally do anything else." According to an NBC report on last year's heist, the 20-year Reserve wholesales for $130. At a liquor store, that would normally translate to roughly $200 to $240 a bottle. Instead, hopeful buyers face lotteries and auctions at these same stores, driving prices into the stratosphere. At bars like The Twisted Tail in Philadelphia, a single ounce of the 23-year-old liquid gold sells for $25 (when it's available — a January tasting sold out in 15 minutes) and at New York's whisky-centric Flatiron Room, their January tasting of all six of the label's expressions cost $225 per person, selling out almost instantly.

Why the mania? It's something of a perfect storm.

First, thanks to the overall renewed interest in fine spirits and cocktails over the past decade, people have rediscovered bourbon in a big way. Brands like Maker's Mark and Buffalo Trace helped upgrade a category that was considered something of an old barfly's go-to hooch, and because bourbon can only be called bourbon if it's made in America, craft distillers began producing their own versions across the country.

Demand quickly began outstripping supply (the stuff's got to age, after all, and for a long time no one made much of it). Even new brands become scarce commodities. Even more scarce? Single-barrel and limited edition releases. Special blends like the annual Woodford Reserve Master's Collection or the Four Roses 2013 Single Barrel command both high prices and fanboy-level salivation, as do hard-to-find small releases like Eagle Rare 17-Year or Black Maple Hill.

Second: it's damn fine bourbon. Even those who like something else better (personal preference comes into play) or who consider the current mania overrated have nothing bad to say about the juice in the bottle. Between that and the Stitzel-Weller connections, the baseline for liking this stuff is already pretty high.

Third, the brand began scoring big at national and international competitions like the San Francisco World Spirits Competition and the Ultimate Spirits Fest in New York. It won a James Beard gold medal in 2011 (basically the Oscars of the culinary world). Media began covering the adulations, and celebrities and Wolf of Wall Street-style guys started craving it. As when a hip-hop luminary raps about his favorite gin, the buzz was enough to spark an uncontrollable thirst among those with means, whether they care about whiskey or not.

So. Think of Pappy Van Winkle Family Reserve, if you will, as the Beanie Babies, Ken Griffey Jr. Rookie Card or Tickle Me Elmo of booze. Sure it's a great product and will bring you lots of joy, but is it worth investing your life savings and months of your time just to score a bottle?

"It's frustrating as hell," says Goldstein. "It's a phenomenon that's been going on for a couple of years, and we literally get inquiries every day of the year. It goes so far as people having their AmEx Black concierge service calling us, and professional 'hunters' thinking that we're not getting calls or have a higher allocation than we do."

Ah… allocations. There's the rub. For most of America, there exists a remnant of post-prohibition legislation called the three-tiered system. You have distillers who can't sell their product directly to stores. You have distributors — mostly very large and powerful companies — who can buy from producers and have huge portfolios of brands to sell. And you have the retailers, the bars and liquor stores who sell to you and me. In addition, each state and county controls who sells the stuff, along with imposing huge sin taxes and tight local regulations. Overseas, you have tariffs and even more government intervention. So that's at least three tiers of profit margins involved.

It also encourages the concept of allocation. For new brands or large brands with new product, it generally means that states with the most receptive customers, most media, best bars or loosest laws are going to get priority. Tequila generally launches in the Southwest, with premium vodka and party drinks in New York, Miami and Las Vegas. But for coveted and rare product, the allocations can be manipulated for other purposes — and once the brand decides what regions it wants to focus on, it's up to the distributors to get it in bars and stores.

"It's not up to the distiller at that point," says Goldstein, "it's up to the distributor. They're the ones putting a careful watch on things. It's frustrating because we were big early supporters of the brand, and probably one of the instruments of getting it as popular as it is." Park Avenue Liquors even did an exclusive 18-year cask release in partnership with Van Winkle. "The thought of even trying to do that now is impossible. Now, if we get 12 bottles across the board of Pappy product… well, that's what we've got."

New whiskey destinations, like the three-month-old critical darling M. Wells Steakhouse in Long Island City, New York, can't even score the stuff. "We haven't established ourselves well enough to be included in the allocation," according to beverage manager Molly Superfine-Rivera.

For the bourbon conspiracy theorists (it's a thing), this web of buyers and sellers, the seemingly subjective allotment system, along with the undisclosed contents of each bottle of Pappy make for a swirling world of intrigue. How much is Sazerac or Old Rip Van Winkle gaming the system with premeditated short production and possibly vindictive allocations? Do the sales teams at big distributors force retailers to make giant purchases of cheap Texas wine or broccoli-flavored vodka in order to be eligible for even one bottle of 15-Year Reserve? Are the retailers reselling their own product on some sort of black market? What happens when the Stitzel-Weller component runs dry (projected to happen in 2015)?

The questions swirl, and you can find forum comments in blogs around the Web of retailers cackling over their bottles of stashed Pappy. Those in the forums voice concern that the recipe for the spirit has changed since Van Winkle III contracted with Buffalo Trace in the early 2000s, or that before long even the 23-year will have little to no Stitzel-Weller sourced bourbon in it. But the consensus among retailers and writers in the know is that Van Winkle, at least, is running an above-board ship, making serious whiskey in small quantities to preserve its integrity and quality.

"I think a high-profile product like Pappy Van Winkle would have very, very strict standards of quality," says George Reilly, owner of The Twisted Tail in Philadelphia, which boasts an extensive whiskey line-up. "A reputation like theirs takes a long, long time to garner, but it can be ruined in a swift second."

So where is the price hike and allocation craziness starting? There are rumors of retailers being required to take on tens of thousands of dollars of other, less-desirable inventory to score the bottles. It could happen, but Goldstein doesn't think that's a particularly common occurrence. "You would think, if that happens, we would be in line for higher allocations based on the huge volume of some products we move." Goldstein says for their part, they try to honor the loyalty of long-time customers, but they don't maintain any sort of list "because it disappointed too many people. If you get a call from us offering a bottle, take it."

In the end, the mark-ups and frenzies seem to rest largely with the retailers, although the distributors can also set their own prices. There seems to be no limitation on how high a liquor store owner is allowed to mark up a bottle (which is why you'll find it selling anywhere from $300 to $3,000 depending on the relative "greed" of the retailer). "If a guy tells you he'll pay you X amount of dollars, you're probably going to take it," says Goldstein.

Pappy Van Winkle Family Reserve is a "wheated" bourbon. That means in addition to the requisite corn component (at least 51%), the grain mash includes at least some wheat as a component, in place of the more common rye. This tends to produce a sweeter, less spicy bourbon ("wheat is sweet, rye is dry" goes the saying). In addition, it's aged many years longer than your average label (which might sit in barrels four to six years) meaning it’s mellow as hell, and stored low in Buffalo Trace's warehouses for fewer temperature swings and slower aging. All that said, there are lots of bourbons out there you might try when the bartender laughs at your casual request for Pappy.

Paul Clarke, longtime whiskey writer and the new Editor-in-Chief for Imbibe Magazine, explains: "Pappy Van Winkle is justifiably treasured by bourbon drinkers, but it's hardly the only exceptional bourbon on the shelf. I love Pappy, but I'm also fond of the annual Parker's Heritage Collection releases from Heaven Hill ($80). It's easy to find and won't wallop your wallet."

And there are many more options: Diageo recently released Barterhouse 20-Year ($75) and Old Blowhard 26-Year ($150), two selections of whiskies discovered in the Stitzel-Weller warehouses and part of the new limited-edition Orphan Barrel series. Jefferson's Presidential Select Single Barrel 18-Year Bourbon is a wheated bourbon distilled in 1991 and aged in Stitzel-Weller barrels (but only 132 bottles were made). And Old Weller Antique Kentucky Straight Bourbon is also wheated. It's only aged around seven to 10 years, but at $20 to $30 a bottle, it's an affordable alternative.

Still want to get your hands on the good stuff? Here are a few hints and tips from the experts:

• Head to Kentucky. According to the marketing folks at Buffalo Trace, the Bluegrass State receives more of the Van Winkle whiskies than anyone else.
• Don't go to Idaho: the state runs the liquor stores there and, according to Louisville Magazine, recently turned down its Van Winkle/Pappy allocations for the foreseeable future to avoid headaches and mobs.
• Make friends with your local bartender. Some bars stash their bottles, selectively pulling them out for aficionados, the polite and repeat customers.
• If it's a bar that specializes in whisky, join whatever tasting clubs they might offer. At The Twisted Tail, Reilly says club members get the heads up on new arrivals.
• Make really good friends with your liquor store owner. While some use lotteries, auctions or other frustrating systems, others simply have dedicated whisky fans sign up on a special wait list or give their best customers a call.
• Focus your hunt during October and September. That's when the latest batches are released to the retailers. After that it's scarce pickings.
• Be patient: The company says it may double production… in about 10 years.
• And if you must live large, head on over to the XS Nightclub in Las Vegas, where they just launched a $5,000 "Five Star" cocktail. The drink consists of Louis XIII Rare Cask 42.6 Cognac, Pappy Van Winkle's Family Reserve 23-Year, Martini Gran Lusso 150th Anniversary Vermouth, D.O.M. Benedictine "Black Monk" 500th Anniversary Edition and bitters.

Be sure to check out Robert Haynes-Peterson's recommendations for great bourbons that you can actually get your hands on.