More About Flipping

 

More About Flipping

Before we get on with the actual whisky review (which will now be Part 3 of 2!!!), a few guys contacted me via WhatsApp in response to my article about Springbank and “Flipping” and asked me a number of follow-up questions. These can basically be split up into two categories:

1. Apart from restricting the number of bottles per customer, what other anti-flipping techniques are or have been practiced by distilleries around Scotland?

That’s an interesting question because there have been a few experimental anti-flipping techniques tried over the years, some of them have been reasonably affective, others less so.

2. I was asked by both Jews and Non-Jews what the halacha (Torah Jewish Law) has to say about the morality of Flipping.

 

Anti-Flipping Techniques

Confiscating Packaging: A Myth?

There has been a story going round for a few years now (one prominent version places the incident at the Feis ìle Whisky festival on Islay), that in a radical attempt to prevent flipping of Festival Limited Releases, some distillery shops started confiscating the original cardboard protection packaging, boxes and canisters/tubes from customers. Obviously trying to flip bottles to investors without the original packaging drastically reduces its resale value. If this story were true then I can just imagine the mass complaints that this would have generated. There would have been some very angry and frustrated customers I can tell you.

In addition, I was just thinking about how those visiting the island would have reacted who actually needed the protective packaging during transport back to their places of origin, often abroad, as well as from genuine collectors who had shlepped all the way to Islay to get that mint condition release in its original packaging for his or her collection.

When I heard this story, my immediate reaction was one of scepticism. It doesn’t sound legal under the UK Consumer Protection Rights 2015 to demand full payment on a premium collectable item after having confiscated or even (as some versions of the story goes), by intentionally destroying the packaging. The packaging is after all, an integral part of the item’s value. (Any Consumer Rights solicitors out there?)

Anyway, despite doing a Google and some AI queries on multiple platforms I could bring up no actual recorded evidence of this ever having occurred. It’s my suspicion that the story is just one of those many urban myths.

 

Damaging the Neck Seal Myth

Another popular story is that some distilleries have intentionally partially cut or cracked the metal neck-seal at point-of-sale. For a collector, this can mean losing 50% of its value. Understandably, this destructive technique would likewise not go down well with the punters. No one wants their wonderful bottle of rare Islay Malt intentionally damaged, even those who do eventually intend to drink the bottle’s contents.

Again, asking on multiple AI platforms, they all failed to find a single incident of this ever having happened.

 

Hand Written Labels and Digital Name-Tagging

When purchasing Distillery Exclusives, many distilleries such as Lagavulin, Bunnahabhain, Caol Ila, Bruichladdich, Glen Garioch, Deanston, and Balblair, do insist that the name of the purchaser be written on the front label. Some, like Balblair, insist that the buyer writes his/her name on the label in their own handwriting.

Actually, the Marketing people absolutely love this and see this technique as a “win-win” situation. The policy is promoted as an “exclusive premium service” whereby as anyone who has visited one of these distilleries will know, you not only get to fill your own bottle but also the privilege to personalise it and then enter your details along with the bottle number in their exclusive distillery bottling ledger logbook for posterity. Thus, the distillery has created a memorable buying experience. Not only that, the buyer will probably ask someone to take a photo of them signing the book.

What the customer may not be aware of though is that this also acts as an effective anti-flipping device. It works because the assumption is that serial flipping offenders would wish to remain anonymous and the purchasers of these bottles don’t want some guy’s name on their prized bottle.

 Hi-Tech Solution?

If you are a tech minded person then you’d be already thinking that there must be a much more efficient Hi-Tech version of the “Manual Signature” technique, that is the “Digital Tagging” System whereby the individual bottle is directly linked to the purchaser’s ID. However, as I will now explain, technology is not always the best solution.

This would entail the sales person at the distillery shop scanning the unique digital bottle code imprinted on the glass straight after the buyer has entered their payment details at the checkout counter. However, this method presents two problematic issues. The distillery would have to be in full compliance with the UK’s Data Protection Act 2018 whereby they would have to seek legal justification for holding such data. The second problem is that the sales-person would have to receive the consent of every customer to save his or her details at point-of-sale. This introduces the strong possibility of customer friction at the checkout counter which is the last thing the distillery wants.

However, the entire problem is avoided by the good old-fashioned manual technique. The customer cannot claim that the distillery violated their privacy because they were the ones holding the pen and eagerly entering their own data. Consequently, the Win-Win human signature method is and will no doubt continue to be widely utilised within the industry.

 

Membership Bottlings, Balloting and Digital "Blacklists"

Instead of letting a crowd of people queue up outside the distillery shop (which flippers prefer), many distilleries invite customers to sign up to a Distillery Membership. This obviously entails the new member to enter their personal details. Then, special Membership bottlings are offered exclusively to registered members.

In addition, distilleries such as Macallan, Ardbeg, Laphroaig and Springbank send out email lotteries or ballots. To enter, you must use your verified Membership account. Then, if the company comes across one of these bottles on online auction sites or specialist retailers then the original purchaser could be permanently blacklisted from future ballots.

 

The Cage

The last anti-flipping practice I’d like to mention is Springbank’s famous “Cage”. This topic however, I will bli neder, cover in my third and last article as it will be part of my description of my last Springbank distillery tour.

 

What Halacha (Jewish Law) Has to say about Flipping

Not only have I been asked this question following my article about Springbank and Flipping but about a year ago, I was contributing to a discussion on a whisky enthusiasts’ forum and was asked by the non-Jewish group what I, as a religious Jew, thought about the ethics of this practice. So, the following is an elaboration of what I wrote back then.

Disclaimer: I am totally unqualified to give a psak halacha (halachic ruling), so what I am about to bring you are just some ideas or lines of discussion to present before a Posek, expert in Choshen Mishpat (the section of Jewish law governing commerce and civil matters).

Vayikra 25:14:

וְכִי תִמְכְּרוּ מִמְכָּר לַעֲמִיתֶךָ אוֹ קָנֹה מִיַּד עֲמִיתֶךָ אַל תּוֹנוּ אִישׁ אֶת אָחִיו

"When you sell anything to your fellow or buy from your fellow's hand - do not wrong one another."

Selling a bottle of whisky at a massive profit, twice, three times or even four times what you bought it for, could possibly transgress one or more prohibitions in halacha. I’ll first speak about the whisky enthusiast who might be tempted to occasionally flip bottles given the opportunity. (I’ll deal with the habitual “professional” flipper afterwards).

I think it is realistic to say that not all people who purchase whisky intend drinking it in the near future. It seems perfectly legitimate to me for a person to buy two bottles of say, Springbank X, intending to drink one and the second to sell at a later date for profit by putting the bottle away as an investment for the future.

There does not seem to be any halachic or moral issue doing this because the above situation would seem to rule out the main prohibitions of commerce, these being of אוֹנָאָה - Ona'ah (Price Fraud) and הַפְקָעַת שְׁעָרִים - Hafka'at She'arim (Market Price Inflation).

Instead of this, what if the person immediately sold the second bottle to a third party for a profit?

According to the Rambam in Hilchot Mechirah (The Laws of Selling) 14:1, being a luxury, premium item, like art, precious metals or gems, it is generally accepted that there is no controlled upper price limit for Single Malt Whisky. You aren’t defrauding anyone as it’s up to the buyer whether he is willing to purchase even well above the original distillery price. The price for this luxury good is entirely determined by the market. Yes, I know that we call it “Aqua vitae” – “the water of life”, but nevertheless no one (except a Scot), would honestly describe Single Malt Whisky as a basic food or drink commodity like water or oil.

It would seem to me that technically speaking, according to the halacha, you might not be breaking any Torah or Rabbinical prohibition by occasionally flipping that second bottle for profit in order to finance your whisky enthusiasts’ trip or to buy other bottles. However, that doesn’t mean that one ought to do it. There might however be some ethical problems with this behaviour, which is no less important.

 

Two Factors That I Think Go to the Core of the Issue

There are two factors that I would think you have to take into consideration when considering this moral issue:

1. The distillery itself makes it crystal clear in word and action that they are against flipping. The question is, are they against all flipping or just on the professional systemic level?

Having said that, a regular reader who lives in the North of England (who may or may not have made the occasional trip to Springbank and sold the bottles on to a local specialist whisky shop), sent me a rather indignant WhatsApp, pushing back on my statement regarding distilleries being against flipping. He asked, if that was really the case, then why don’t they print on the label “Not for Resale within 12 months” or some such statement? Perhaps there are legal reasons for not doing this but he might have a point. In response I commented that instead of using what could well be legally unenforceable labelling, that distilleries focus on practical deterrents to combat systematic flipping instead.

2. Even though there is clearly a market for this, I think it’s correct to say that the majority of whisky enthusiasts speak out against flipping, and for obvious reasons. They are precluded from buying and enjoying drinking these whiskies because either they are out of stock everywhere or even if they are in stock, are being sold at inflated prices that they are not prepared to pay. Some are really angered and express their utter outrage on whisky forums. (Others, albeit a minority, admittedly defend the practice).

So, let’s focus in on two specific questions:

1. As an Orthodox Jew, should you do something that would cause a large percentage of non-Jews to view him with moral contempt?

2. As an Orthodox Jew, if asked by a general forum mainly consisting of non-Jews what your moral stance on the issue is, should you defend or condemn it?

 

Three Ethical Issues

·         לִפְנִים מִשּׁוּרַת הַדִּין - Lifnim Mishurat HaDin (Going Beyond the Letter of the Law)

·         מִדַּת סְדוֹם - Middat Sedom (Making a profit on something without it being of any benefit to anyone).

·         חִלּוּל הַשֵּׁם / קִדּוּשׁ הַשֵּׁם - Chillul Hashem / Kiddush Hashem

These are connected with two Torah pesukim:

Devarim 6:18 states: וְעָשִׂיתָ הַיָּשָׁר וְהַטּוֹב  -"You shall do what is right and good."

Vayikra 19:2, the command קְדֹשִׁים תִּהְיוּ   "you shall be holy".

In the Ramban’s perush on Devarim 6:18, he points out that just because you don’t see that specific action explicitly mentioned in the Torah, it doesn’t automatically mean that it’s permitted. Now, adding the Ramban’s perush to Vayikra 19:2 into the mix, there he attempts to define what this seemingly vague commandment is. That is, there are somethings that even though they don’t seem to conflict with any specific halachic prohibition, nevertheless, if it gives you a bad feeling or “has a bad smell about it” as they say, then you really shouldn’t be doing it.

The Rambam in Hilchot Yesodei HaTorah 5:11, mirrors this understanding. He writes that if a Jew delays payment, causing sellers to have to chase him up, or engages in excessive levity or uses questionable language, in other words, his conduct carries a ריח רע  (a bad smell), then the Rambam treats this as violation of the above commandments. The Rambam writes that one has an absolute obligation to be a “mensch”. To behave in a way that brings honour and praise from not just fellow Jews, but from non-Jews as well.

A Chilul Hashem - bringing Hashem and Torah Judaism into disrepute, occurs when others object to or are revolted when they see a person behaving in a dishonest, exploitative, deceptive or cruel manner, as long as the Torah itself would share that same moral assessment. (I added the last clause because Chilul Hashem does not include objections by a degenerate generation with a corrupted sense of morality, such as trying to ban Brit Mila or Shechita).

So, applying this directly to the practice of flipping, the fact that the official policy of the distillery is to publicly condemn it and actively implement actions to try and prevent it, plus the general negative attitude towards the practice, might make flipping fall under the category of Midat Sedom and Chilul Hashem.

As is always the case, one should consult with his or her local Orthodox Rabbi or Posek for a practical ruling and one should not reach any conclusions based upon my ramblings.

 

The Systemic “Professional” Flipper

Now we get to the question of flipping as a career choice. Here, unlike the occasional flipping by a whisky enthusiast, there is a palpable exploitation having a major influence on driving market scarcity and inflated prices.

For instance, a person or organisation that systematically exploits the distillery’s allocation system by registering under multiple names, sending proxies into distillery queues to buy the maximum allowed quantity limit and will actively work to bypass every anti-flipping technique, is in a completely different league.

These professional flippers contribute nothing positive to the market. In fact, just the opposite as they deliberately use retail allocation systems for a purpose they were not designed for, create the very scarcity for these bottles they then profit from, cause genuine hurt to the whisky enthusiasts’ community and are making money through market manipulation rather than fair and honest dealing.

גְּנֵיבַת דַּעַת - Geneivat Da'at

Many of the techniques professional flippers may well employ involve dishonestly, deceit and exploitation which could well amount to the very real prohibition of Geneivat Da'at. This literally means “Stealing the Minds of others”, amounts to deception by lying or withholding the truth, as well as purchasing under false pretences.

The Ritva (Chullin 94a) and many other Poskim derive Geneivat Da'at from לֹא תִּגְנֹבוּ (Vayikra 19:11) - "you shall not steal", arguing that since the Torah does not specify the exact type of theft here, it refers to “stealing the mind”. We learn this from Sefer Shmuel where Avshalom וַיְגַנֵּב אַבְשָׁלוֹם אֶת לֵב אַנְשֵׁי יִשְׂרָאֵל - "stole the hearts of the men of Israel" presenting himself as the people’s champion whilst pursuing his own agenda entirely. The same could be said of Korach.

Jew and Non-Jew

Up until now, I have given the impression that our discussion on the halachic and ethical question of flipping only applies to Jews but when it comes to Business Ethics and Geneivat Da'at, the Imrei Binah - Rabbi Meir Auerbach (1815–1878), makes it very clear that it applies equally to Jews and non-Jews alike.

Citing Rambam, the Imrei Binah (Part 4, Chikrei Vayikra 12:2) writes:

הרמב"ם בהלכות מכירה פרק י"ח הלכה א' - אסור לרמות את בני אדם במקח וממכר או לגנוב את דעתם, אחד גויים ואחד ישראל שוים בדבר זה

"It is forbidden to deceive people in buying and selling, or to steal their minds — Jews and non-Jews are equal in this matter."

Again, I am not making any psak halacha here and my only objective is to bring up what I hope are some relevant ideas for the reader, (whether he be Jewish or not), to discuss further, whether it be with your Rav or other religious or ethical councillor, or simply within the various Whisky forums.