The "Economy" of Homebrewing

Homebrew Talk - Beer, Wine, Mead, & Cider Brewing Discussion Forum

Help Support Homebrew Talk - Beer, Wine, Mead, & Cider Brewing Discussion Forum:

This site may earn a commission from merchant affiliate links, including eBay, Amazon, and others.

enohcs

Well-Known Member
Joined
Jan 31, 2008
Messages
446
Reaction score
43
Location
Washington, DC
So tonight I couldn't sleep because I was trying to determine just how economical homebrewing really is. I'm not good at doing math in my head so I came to my computer (after checking on my primary...wo hooo...fermentation is flying after about 6 hours), opened up excel and punched in a few numbers.

Pardon the general assumptions

Assume you only buy 12oz bottles from the liquor store, at a price of $1.00/bottle.
There are 128 fluid ounces in a gallon, thus 640 in 5 gallons, thus 5 gallons yields ~53 12oz bottles, thus the cost of 53 12oz bottles of beer from the liquor store is $53.
Assume the average cost of ingredients for a 5 gallon batch of homebrew is $25.
Your savings per 5gal batch: $28!!!! Meaning you only pay $0.48/12oz bottle of homebrew.

NOW

My all grain setup cost me ~$600.
($600 setup)/($28 savings per 5gal batch) = ~21.5 5gal batches.
Meaning I have to brew 107.5 gallons of beer in order to break even.
Not bad...I could clear that in a year.

However, one could say that the time of a person who makes $50K/year is worth ~$25/hour...once we figure this into the equation all economy goes right out the window.

In conclusion...It's a good thing we do this for fun :mug:
 
Even though I'm really new to this hobby and only have roughly $300 invested I was given a nice piece of advise from a homebrewer I know when I wanted to start out. 'Don't go into homebrewing expecting to save money on beer. ' I wasn't under that assumption but i think it's a pretty good statement. Just looking around there is ALWAYS some piece of equipment we want to buy or upgrade some of our old stuff. Like you said, good thing we do this for fun. :mug:
 
I HAVE brewed 26 batches of beer since December, and 4 of them were double batches, so let's say 30 batches. Including all of my kegerator gear, 5 plastic fermenters, 3 glass carboys, 300 bottles, 12 kegs and the ingredients to make 30 batches, I have spent roughly $1700 so far. Adequate beer here in AUS costs roughly $37 per case of 24 X 375ml bottles. I used to buy 2 cases a week, for my own consumption, and a few here and there over the fence with the neighbour, and a few friends dropping past, so roughly $300 per month. I have bought 2 cases of beer since late December, so I guess I have saved (not spent) roughly $1100 so far.

Now that most of my expenses have been outlayed (excpet for probably another $500 soon on AG equipment) I am in "cost saving" mode.. well and truly. My $75 per week beer bill has been reduced to around $20 per week. That's over $200 per month in savings on beer.
 
Also at lot homebrew beer tends to be significantly higher gravity than most beer that only cost $1/bottle at a store, which has to be factored in.

Personally I homebrew because decent beer in Korea is $2.50/bottle at the very cheapest (Beck's Dark, the cheapest beer in Korea that I'm willing to pay a premium for) and the selection sucks. Of course my supplies cost more as well, but I wend up with a MASSIVE savings in money brewing my own beer instead of buying imports.
 
It's hard for me to make a direct comparison because my beer intake would not necessarily be the same if I had to go out and buy beer, vs. having a kegerator with two beers on tap all the time. I definitely save money, but I can't put a number on it...

But I look at it primarily as just a hobby, which by definition is just about guaranteed to be a money pit. I'm sure I'm in the $1-2k range by now (especially with the kegerator), so I have no false notions of my equipment paying for itself anytime in the extremely near future (though I know it will, in time)... So the fact that I save some money on beer is just a nice perk. After all, all of my other hobbies cost me money but never save me a dime.
 
Just think, after you get into AG and start buying grain and hops in bulk, your cost per batch REALLY goes down. My last batch (a Kolsch) ran me ~$8 for 5.5gal.

Of course, that does not include propane...... So all in all, maybe ~$12 fo that batch:D
 
I have had this same discussion in re: gardening. Hobbies don't save money, but they provide relaxation, stimulate your brain, and give you a sense of well being. I have given trying to justify my hobbies with the "It'll save us money" argument.
 
This has been debated to death and most people will agree that cost is NOT the primary reason to homebrew. If you're in Canada where the liquor taxes are crazy, you can save money by brewing to support your consumption. I still contend if you honestly look at your time commitment (barring any reference to how much you enjoy the hobby), brewing doesn't save you much if any at all. If you're already into brewing and consider the time free, you'll eventually get to saving money once you stop buy equipment (fat chance) and ammortize what you already bought.
 
enohcs said:
...
However, one could say that the time of a person who makes $50K/year is worth ~$25/hour...once we figure this into the equation all economy goes right out the window.

In conclusion...It's a good thing we do this for fun :mug:

Finally someone that understands that in the PURE economic question, you have to consider time invested. Even if you rate the labor at MINIMUM wage, it starts to fall apart. You'd have to count your time shopping for recipes, ordering, setup, cleanup, etc. That's like 8 hours for a 10g batch. $8/hr x 8 hour is $64 and I'd never work that cheap.

I agree. It's a good thing I enjoy it so I don't mind the added cost.
 
Once you stop buying equipment you do save a little money. Most six-packs that I buy now are up around $9US, and going to a pub will cost lots more. By comparison I spend about $5 per six doing extract brewing, so I'm ahead. I wouldn't consider any cheaper beer comparable to what we brew ourselves, so unless your choice is between bud and homebrew, you will save some money, excluding time.

My other hobby is DIY Audio, and you save big money doing that. It is amazing how much markup goes into the store bought stuff. It comes out to something like 90% markup. I built a tube amp with all premium parts for about $750, the same type of amp, which is hard to find as it isn't one of the popular topologies, would cost 5g's. Speakers will save you just as much, but you need to do woodworking.
 
I don't count my time in the factor either...it's a hobby, not a job.

I drink mostly 1/2 liter beers (and keg)...and those are usually Hefe Weizens. So I use (at a minimum) $2 per bottle in my equations.

Since I buy bulk DME and wash my yeast I figure it costs me about $17 per batch. Getting 37-39 bottles out of a batch that $74. Double that at a bar if it's available...($9.00 per bottle if I'm in Seoul).

74 - 17 = $57 savings per batch.

It's almost like having a negative hobby...:rockin: :ban: :mug:
 
homebrewer_99 said:
I don't count my time in the factor either...it's a hobby, not a job.

I drink mostly 1/2 liter beers (and keg)...and those are usually Hefe Weizens. So I use (at a minimum) $2 per bottle in my equations.

Since I buy bulk DME and wash my yeast I figure it costs me about $17 per batch. Getting 37-39 bottles out of a batch that $74. Double that at a bar if it's available...($9.00 per bottle if I'm in Seoul).

74 - 17 = $57 savings per batch.

It's almost like having a negative hobby...:rockin: :ban: :mug:

And they don't even have any good Hefeweizens here in Seoul, only crappy bland ones. *cries*
 
You can save money when 'cloning' a commercial beer that cost ~$8 for 12 ounces and making 5-gallons of homebrew version. :drunk: And yours turns out being better than the original.;)
 
for me, i never thought to save money doing this, though SWMBO thought we would.

Its made my beer purchases outside the home very different. I try things of the style I'm going to brew, I buy only the good stuff, etc.

It's super nice to have a supply of beer at home, I never get home from work and think, crap, now I need to go to one of the beer stores cause it was a rough day. That's worth money right there, beyond the savings in per bottle prices.
 
Wow... I never realized how much you save by buying grains. So far I've done three kits (two extracts and a PM), and while I was planning on buying my own/mashing more in the future anyway a quick glance at my LHBS' website shows that damn, I've been overpaying. It's the HBT recipe database for me in the future!

Also, the smugness and self-satisfaction I get from being able to say 'I brewed this' is worth more than anything I pay for ingredients and equipment :D
 
Buying grain, especially sacks, does also drive the cost down. As does growing your own hops, which can be a huge cost factor these days. The DIY projects also reduce the overall cost as well. Once you have brewed enough to cancel out equipment costs and you are looking purely at material costs it can be really inexpensive.

I don't factor my time either. One becasue it's hobby. Two because I usually have other things going at the same time. And finally because through half of it I am sitting back, drinking, and waiting.

All that figured.....

I brew medium gravity for around 25 to 30 cents a serving. And High Gravity for around 50 to 60 cents a serving. Only once did I actually approach the 1.00 per serving mark on a really big brew.
 
Bosh said:
And they don't even have any good Hefeweizens here in Seoul, only crappy bland ones. *cries*
I had some Franziskaner at the bar in Itaewon. After you enter Itaewon (from Yungson) I think it's at the second light, make a right (there are fruit vendors usually parked right at that corner) and you can see the upstairs bar on the right. It's across from the Burger King (but I was told it's not there anymore). I was just there in Nov and Dec.

I don't remember the name of the place, but lots of Americans go there.

Anyway, it's better than Cass, Hite, and OB...I prefer the mango juice and Soju...
 
To really analyze the cost of buying in bulk, you need to factor in the opportunity cost of your inventory investment, plus the usual costs associated with holding inventory (facilities, shrinkage, spoilage, inventory management and so on). I mean, if you are doing the economics, you might as well consider all of it.

I want to know what PeteOz is doing with all that beer. I heard folks down under drink a lot of beer, but 26 batches since December is pretty heroic drinking. Possibly it goes to an Oz Rules football team?
 
If you are in this only to make cheap beer you can. There are people on youtube that do it. Some albino name Craig comes to mind or modern brewing.

If you are in this to make good beer cheaply you might be able to do it.

Then there are the rest of us.

I would need to not spend another dime on equipment and see a cost savings in about 2015.
 
I have the occasional party, but 26 batches is a lot. I need to brew some more for the round of porch parties we usually have in June, before people go away for the summer. But I'm only doing this to show it off, not to save money even if I may.
 
Bulk purchase and 10-gallon batches.

I recon a 10-gallon batch of pale costs me around $19.00.

I brew a lot.

I'm sure my equipment was paid for about 25 batches ago.

I enjoy brewing so much I'd pay someone to let me brew...so my time is not a factor :D
 
BierMuncher said:
Bulk purchase and 10-gallon batches.

I recon a 10-gallon batch of pale costs me around $19.00.

I brew a lot.

I'm sure my equipment was paid for about 25 batches ago.

I enjoy brewing so much I'd pay someone to let me brew...so my time is not a factor :D

Send checks payable to Sherpa FE @ HBT....I'll PM tha address.. :D
 
I think these economy of brewing threads say a lot about how passionate we are about homebrewing to the point where we're so used to using the "it'll save us money" arguements on SWMBO's that we're using them on each other now. No matter how many times I'll argue that labor costs must be factored in if you're asking a pure economics question, there are ten people that repeat that they should not be because it's so "fun" to brew.

Am I losing my mind or do people really not understand my point?

Please analyze the following points and if you don't agree, please explain point by point:

If the question is "Quality remaining equal and scale being 10 gallon batches, is it possible to homebrew beer for less than it costs to purchase it?"

You do realize this is an economy question that has NOTHING at all to do with any benefits or joy you get out of the process right? If you don't agree here, you might as well stop reading.

Still with me? OK good, now you have to factor everything in:

Ammortized cost of equipment (a reasonable life of this stuff is hard to estimate, but you can't ignore it. Let's just say it all lasts 100 batches)
Ingredients (SteveM touched on an even more difficult to figure piece of this and it's not JUST the purchase price)
Fuel (aslo difficult to estimate quickly unless you know exactly how many batches you get out of a propane tank).
Cleaning products.

and the biggest controversy...
A hypothetical value of your time (labor). Many will argue that it's time you'd otherwise waste. OK, come use that time to work for me then, and I'll pay you in beer. Remember, in this question, you must remain completely indifferent to the joy or pain of the brewing process itself. Your time is worth something and I'd judge its worth on how much you'd pay for that 10 gallons of beer IF you had no interest in brewing. If you don't like that method, it would be whatever hourly wage you'd take if a part time job was offered to you. A third way might be to weigh how much honey-do things you'll have to do for SWMBO to repay the guilt of avoiding the family for 6 hours.
 
I'd say that you can only factor in the time if you would have been earning money in that same time. Some people work at work, and play at home. Some people work 24/7. Either way, let us ignore the time=money analogy altogether, because if you do not enjoy homebrewing, then this question is moot anyway.

I have not spent anywhere near $600 in brewing equipment. Granted, I have not made it quite yet to all grain, but plan to soon. I could add up my cost and probably get closer to $300 if I had to buy it again. Plus, going AG really drops the price/batch.

Also, understand that kegerators should not really factor into the brewing cost, because it's really only a serving system.

Kegs, yes, because they are your container of choice, but, I could buy (for cost of deposit) lots of bottles for the price of one keg, and reuse them near to infinity if I didn't give them away.

I'd say it depends on the beer you would buy, and the type of equipment you'd use. Most of my stuff is scrounged if I can, built if I can, and bought if I can't.
 
I do cost benefit analysis for the federal government for a living. Setting aside the fact that it's for the federal government and they are ridiculous, I can add some insights into this discussion from a purely hypothetical standpoint. However, I, along with the rest agree that I will never recoup my costs because I keep buying gadgets. I just like great beer.

There is a hypothetical cost for leisure time. A lot of economists have been working on that problem for a long time -- some even argue that it has to be higher than work time, because if work time were worth more than leisure time, we would just work instead of go on vacation! That sort of makes sense, but it's not typically how it's measured. it's usually lower than work time, but definitely NOT zero.

Off topic, but we did an analysis a while back where people had to wait in an airport customs line for an average of 30 seconds longer than usual. For each person (based on the distribution curve) we had to place a value on 30 seconds in a line. In that case, we just used average hourly business wages because it was easier than doing % of leisure versus work travelers and all of that.

You also need to realize that there is a negative value based on convenience -- that is you probably drink MORE beer because it is convenient for you to access it. There is also a time-cost associated with going to the store and buying beer. I don't know how much more beer that is without doing research, but it exists -- so say you drink 1.1 beers for every 1 beer of commercial you drink -- there is a loss in value there because you drink MORE because you make it yourself and justify your hobby by increased consumption.

Now also factor in how much beer you GIVE AWAY!!! that's completely irrational economic behavior, by the way. Never give anything away, or donate to charities, it drives economists nuts because they can't explain why you did it. Anyway, I know I give a lot away. I practically force my younger brother to drink it when he comes around. How much commercial beer would you give away? wouldn't you expect people to BYOB at most summer BBQ's except at BBQ's where you have 5 kegs waiting?

All of the rest of those things (Ingredients, fuel, etc.) are just unit costs with set values. Those are really easy to figure out especially if you had data on like 100 homebrewers who were measuring those things every time they brewed. You'd have a mean propane used, and a standard deviation, and also an average cost for propane across the country. typically, things like that are really the easiest parts about benefit cost calculations... it's those pesky people.

anyway, I hope this was informative, if nothing else.
 
There is no sense in considering your time as money, unless you are skipping time at a paying job to brew. Or put another way:

Time isn't money unless you are making money with your time.

To use the example of making $50,000 a year, at $25/hour, that's 40 hours a week of paid time. That leaves 128 hours. Knock off 63 for sleep. That leaves 65 hours of time for you. You can't think that for everything you do with that 65 hours, you are on the clock for $25/hour? It's imaginary money.
 
In the business profit sencse of the economics yes, everything must be factored in time, materials, transport, consumables, utilities, everything.

But I am not making homebrew for commercialized profits and I am not filling taxes against my enterprise. So by that I would justify not including my time involved in brewing. Nor do I factor the electricity used to keep the light on over the kettle.

I do agree BM that time is a factor. I just don't feel it needs to be a consideration when qualifying cost to brew.
 
Yeah, it really doesn't work that way, though Mr. X. You could get a second job instead of homebrewing -- so hypothetically you COULD be earning money. That's the point. whenever you do calculations like this you have to include the opportunity time lost.

If the value of your leisure time really was worth nothing, that is it wasn't important to you or you didn't care about it, you would just get another job to make more money.

And even though you say it would be "wasted" everything else you could be doing with your time has a certain value to it as well -- that could be doing your laundry, or even surfing the internet, or getting extra sleep, etc. and yes, even staring at the wall has to to have certain value attached.
 
All right, just the point is that we can't really ever say that we are "saving" money on beer unless we calculate those things in anyway.

Of course, if making beer saves us so much money, why don't we just quit our jobs and make beer?

that would be the life...
 
Another point is that its clear that we all WANT the answer to this question to be YES... You save tons of money. How bad you want something does not change the truth. This is called self delusion.

Also, for those who continue to say there's no value on your time/labor, you've already skipped over into considering it NOT WORK. I don't know about you, but if I didn't LIKE the hobby of brewing you'd be damned sure I wouldn't go through this for the hell of it. It's work. Again, you're answering the question "is homebrewing worth it?" as soon as you start deciding which costs to skip over out of convenience.

Let's say hypothetically that it took 18 hours for a 5 gallon batch. Is your time still worth nothing?
 
Bobby_M said:
Another point is that its clear that we all WANT the answer to this question to be YES... You save tons of money. How bad you want something does not change the truth. This is called self delusion.

Also, for those who continue to say there's no value on your time/labor, you've already skipped over into considering it NOT WORK. I don't know about you, but if I didn't LIKE the hobby of brewing you'd be damned sure I wouldn't go through this for the hell of it. It's work. Again, you're answering the question "is homebrewing worth it?" as soon as you start deciding which costs to skip over out of convenience.

Cheers to that!
 
_Edge said:
hypothetically you COULD be earning money.
Hypothetical money doesn't pay the bills. I'm talking about real money. You need to skip the hypo's and do the math.

Say I make $30/hour at 46 hours per week. That's $1380.

If I homebrew for 6 hours, I don't take home less money. i.e., it hasn't cost me any real money.

If I don't homebrew for 6 hours, I don't take home more money. There is no real cost, unless you skip a real job that pays real money.
 
Bobby_M said:
Another point is that its clear that we all WANT the answer to this question to be YES... You save tons of money. How bad you want something does not change the truth. This is called self delusion.
It's not a matter of rationalization, it's a matter of math. The math says, unless you are skipping real work that pays real money, the cost per hour of your time is fictional.
 
Read:
http://en.wikipedia.org/wiki/Opportunity_cost

money:
The consideration of opportunity costs is one of the key differences between the concepts of economic cost and accounting cost. Assessing opportunity costs is fundamental to assessing the true cost of any course of action. In the case where there is no explicit accounting or monetary cost (price) attached to a course of action, ignoring opportunity costs may produce the illusion that its benefits cost nothing at all. The unseen opportunity costs then become the implicit hidden costs of that course of action.
 
nuff said...

Me_Brewing.jpg
 
mr x said:
It's not a matter of rationalization, it's a matter of math. The math says, unless you are skipping real work that pays real money, the cost per hour of your time is fictional.

I'm saying that you ARE skipping real work. If you suggest that there's absolutely no way for you to earn money during that time, I'm not buying it. If you don't like that logic, by brewing, you are NOT doing a million other things that you enjoy. Do you enjoy brewing? If you answer yes, you're already biased in answering the economic question. Answer the question as if you HATED brewing and see where you get. I don't mean this as a personal attack, but ignoring economic fundamentals in this discussion is the equivelent of holding your ears and going "la la la la...brewing saves money".

Notice that I'm still a homebrewer and a big advocate of showing other people how cool it is to brew so you have to know I'm not trying to give it any negative "press". I just won't ever suggest to a potential homebrewer that he/she will save any money in the process.

If you enjoy the process, homebrewing is DEFINITELY worth the trouble.
 
Too many words, not enough numbers. Calculate what you think it costs you for labour to brew. Did that number affect what you brought home in pay for the week? If yes, then you were skipping work, and your time has a real cost. If no, then...
 
There are a lot more costs than I think most of us figure in. Here of some of my 'extra' costs that I don't normally take into account for the "cost" of a batch. They seem pretty small but I bet if you actually added them all up they would be significant:


Yeast starters
--DME
--Gas for my stove to boil wort
--sanitizer

Brewing
--Propane for my burners
--sanitizer
--batteries for my thermometer & timer
--electricity for barley crusher, March pump, lights & radio in garage
--water both for my HLT and for my IC
--gas for my water heater to reheat the hot water I use from the sink

Fermenting
--more sanitizer for taking samples
--central heating/air energy to constantly keep my house at optimum fermenting temperatures year round


Yeast washing
--mason jars to store the yeast in
--gas for my stove while boiling the jars
--sanitizer

Bottling
--bottles (I don't buy empty bottles, but I still buy them)
--bottle caps
--dishwasher water/electricity to sanitize bottles
--sanitizer
--corn sugar
--stove energy to boil corn sugar in water
--label paper/ink

Overall
--shipping of ingredients and parts
--dishwasher and sink water/energy to clean up equipment
--replacement of broken equipment (hydrometers!)
--gas for driving to LHBS or hardware store
--energy for the 2 extra fridges I have to lager/store beer in
--energy for washing machine/dryer to clean up towels & washcloths


.....so yeah, it's strictly a hobby :mug:
 

Latest posts

Back
Top