Let’s get this out of the way first, an allocated bourbon is not a symbol of quality.
An allocated bourbon is simply any bourbon where a retailer, bar, or restaurant has only been given a limited quantity to sell. Some classic allocated bourbons are ones such as Pappy Van Winkle or W.L. Weller. But given the rise of the taters, bourbons that once might have been easy to find, such as Blanton’s or Colonel E.H. Taylor, have become allocated in recent years as well.
If there is significant demand for a particular bourbon, often the producer chooses to allocate the liquid instead of producing more to meet that demand. Sometimes this is done because the producer simply can’t meet the demand — in the case of Pappy or a single-barrel bottling like Blanton’s — and other times it’s done to drive up the price and the buzz.
So basically, an allocated bourbon is any bourbon for which the supply is being constrained to the point that selected amounts are being allocated to sellers. It doesn’t necessarily mean the bourbon is any better than one that isn’t allocated.