Wholesale beer prices

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BrewSpook

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Does anyone know if there is a price difference between the price charged for me to buy a keg of beer and the price a place would charge a bar or restaurant to buy a keg of the same beer?

I was just curious because it seems like a brewery wouldn't make very much at all selling kegs after you take out materials and overhead. I know it used to be that bars were charged more for liquor they would buy for resale... when I worked at a club in Milwaukee the bar would be charged $50 for a bottle of vodka that I could buy for $20 at the liquor store.
 
From what I've seen (and this isn't a statistical universe), bars and restaurants pay 10-20% less than retail if they have much volume.
 
IME, a brewery will charge the distributor a wholesale price, and the distributor charges accounts a retail price. This goes even for the largest volume retail account in Nashville.
 
Does anyone know if there is a price difference between the price charged for me to buy a keg of beer and the price a place would charge a bar or restaurant to buy a keg of the same beer?

I was just curious because it seems like a brewery wouldn't make very much at all selling kegs after you take out materials and overhead. I know it used to be that bars were charged more for liquor they would buy for resale... when I worked at a club in Milwaukee the bar would be charged $50 for a bottle of vodka that I could buy for $20 at the liquor store.

Pretty sure its like this in SC. I'm not 100% sure, but I think I remember hearing the owner of a local bar that served a ton of craft beer bitching about it. They partner with a beers store to bring new beers into the area. The beer store can get the beer for wholesale prices, but the bar has to buy it for considerably more. Thats why a beer at a restaurant or good beer bar is so expensive per glass, opposed to going out and buying a 6 pack at the store. At least thats my impression.
 
The rules vary by state. It is tightly controlled madness.

The actual material cost of brewing a pint of beer on a large scale is pretty small.
Consider unmalted Barley is less than 10 cents per pound and hops are going to be dirt cheap under contract. We can buy Willamette pellets for under $4 a pound... imagine what the big breweries are paying.
 
Bars have to pay a good amount more than you do for liquor. They have to buy from distributors but can buy a certain very limited amount from the grocery store if necessary. It is cheaper for them to buy from the grocery or liquor store than the distributor.
 
First off, the laws very GREATLY state to state. In Maryland, all wholesale must be sold at the same price to every bar, restaurant, grocery store, all retail outlets. They can have quantity discounts, but again, must be available to all. Any preferential treatment is illegal. Rebates are also illegal.

Second, you are in the Commonwealth of Virginia, aren't all alcohol sales by the state itself? You are literally buying from the state, so who knows what the setup is.

Any bar who pays a higher price wholesale then retail must be not be selling very much of those liquors. I have never heard of a system where the wholesale price is more then the retail price. I guess anything is possible, or some bar owner is straight lying to make it look like his margin is less (very possible, if you ask me)
 
i live in VA. distilled liquor can only be bought at state run ABC stores. the price of a bottle of liquor is the EXACT same price in every store (controlled by computers).

beer and wine you can buy at the gas station, grocery store, etc. i know that in CO any thing over 3.2%ABV must be bought from a liquor store.
 
Yes in VA all hard liquor must be bought through state run ABC stores, which sucks.

The reason I am asking is for a school business plan project I will have to do next semester, in order to get my profit estimates correct. If I can go to my local bottle shop and pick up a keg of Sam Adams Boston Lager for $145.

Going off statistics from the micro matic draft beer profitability site, this would yield ~ 135 16 oz beers with 3/4inch head @ about $1.07 each in cost. Sam Adams goes for around $5.00 a glass here in Richmond. That being said, the establishment would net a profit of $530 off of one keg of sam adams while the brewery itself keeps a small margin of this.

Now if the restaurant was charged say $300 for the same keg, at wholesale intended for resale, the brewery would make more of a profit as they know what the bar will end up selling it for, distributor makes more $, and the bar still rakes in $375 profit. The beer would cst ~ $2.22 per glass.

That was my thought behind posting this and I was hoping someone can confirm since I know that is how liquor is done in some places. The price has to be less for direct consumers (people who buy kegs for themselves/parties) or producers would have to jack up their prices.
 
I find it hard to believe that retail sale price would be less than distributor sale price in almost any context, unless a large retail buyer was undercutting the prices the distributors offer to small retail sellers (e.g., arbitrage; CostCo buys booze in bulk and undercuts the distributor's offered price to Joe's Bar and Grill).

Direct consumers buy from retailers, not distributors. You don't buy from Jesse Jackson's childrens' liquor distributor in Illinois for your backyard kegger.

I don't mean to be disagreeable, maybe I am missing something?
 
I'm pretty sure that the grocery store pays the same price for beer that the restaurant does. It generally goes something like this brewery -> whole sale to distributor -> 25-30% mark up -> retailer ->25-30% mark up -> consumer.

I can't see how the gubment would allow a price disparity like that between types of retailers.
 
I find it hard to believe that retail sale price would be less than distributor sale price in almost any context, unless a large retail buyer was undercutting the prices the distributors offer to small retail sellers (e.g., arbitrage; CostCo buys booze in bulk and undercuts the distributor's offered price to Joe's Bar and Grill).

Direct consumers buy from retailers, not distributors. You don't buy from Jesse Jackson's childrens' liquor distributor in Illinois for your backyard kegger.

I don't mean to be disagreeable, maybe I am missing something?

Usually retail is less than distributor price for resale of product. This is because of higher markups on the backend to the consumer. Think of it like this. you can buy a bottle of vodka for $20 at a liquor store to drink at home, but a bar will charge you $7 for a vodka tonic containing 1-1.5oz of that same vodka. Distributors, government, wholesalers, and producers all want their piece of that $7 drink so they charge the bar $40 for that same bottle of vodka.

I was just wondering if beer sales work the same way, which I am sure it does - I just can't find it in writing anywhere.
 
a bar is required to buy from a distributer. Which is another entity tacking on a price increase to the product. If you were to go down to the circle K to buy beer on sale to sell on your bar you would loose your liquor license. Bars and restaurants pay more up front but still make a great profit.

Its rules of the game. Now, with that said.....producing your own product makes you your own distributer
 
Texas is the same way. Alcohol purchased for resale is insanely expensive compared to retail prices. I'm told some of that has to do with the state regulatory system.

I suspect some of it also has to do with wholesale distributors marking up prices because they know bars can support the higher prices.
 
There are alot of state and fed taxes tacked onto every wholesale purchase. For example a bottle of Jack is going to cost a bar about 25 bucks where as you could pick it up for 14.99 at your local grocery store.

Taxes and distributor markup, everyone has their hand out
 
Back to the reason for your original question. It is industry standard that a pint of beer contain 13.5 to 14oz (a standard pint glass only holds a pint when filled with the meniscus reaching over the rim of the glass), plus 1 inch of head. If you are also calculating profit from a keg, it is important to remember that the lines get flushed every two weeks, as well as loss from foam itself. Generally speaking, it is a ssumed that 10% of the keg will go down the drain.

Also, European kegs are only 13.2 gallons, so keep that in mind if you are using them.

A wholesale, frontend price of Sam Adams is $123 a keg. If you buy 5, $4 off each, 10, $6 off.

To the gentlman who said the bars make great profit, what you mean is margin. The profit is not made until all the other bills are paid. That margin hsa to pay a whole lot of things before any of it becomes profit. If you are a well run, profitable bar, you can expect 3-4% of the sales price to go to profit. So that $5 beer just made the owner $ .20 if he is lucky. Around here everyone expectrs a bottle of domestic to cost $2. The bottle costs the bar $0.67. Very hard to make money like that.
 
Thanks for clearing that up.

For kicks (it's slow today at the job) I took a look at the Wisconsin liquor control laws, and I think W.S.A. 125.33, subd. 9 (malt beverages) and W.S.A. 125.69, subd. 6 (liquor) are the Wisconsin statutes that ban "class B" retailers (on-site consumption, which I think covers bars and restaurants) from buying from "class A" retailers (off-site consumption, I guess that's liquor stores).

Sort of interesting that the fine for a Class B buying from a Class A is limited to $100 ("[n]otwithstanding par. (b), a “Class B” licensee who purchases intoxicating liquor from a “Class A” licensee for resale or who possesses intoxicating liquor purchased from a “Class A” licensee for resale may be fined not more than $100"). They do have a fair number of small bars in Wisconsin, so maybe that's the reason for leniency (and perhaps there's the possibility of losing your license as well for buying from Class A licensees).

(referring to WI liquor laws because the original poster mentioned practices in Milwaukee)
 
The entire system is a huge Cluster and a slap in the face of capitalism. But that's the way it is and the people making money off it it do everything they can to keep it that way.
 
Thanks for clearing that up.

For kicks (it's slow today at the job) I took a look at the Wisconsin liquor control laws, and I think W.S.A. 125.33, subd. 9 (malt beverages) and W.S.A. 125.69, subd. 6 (liquor) are the Wisconsin statutes that ban "class B" retailers (on-site consumption, which I think covers bars and restaurants) from buying from "class A" retailers (off-site consumption, I guess that's liquor stores).

Sort of interesting that the fine for a Class B buying from a Class A is limited to $100 ("[n]otwithstanding par. (b), a “Class B” licensee who purchases intoxicating liquor from a “Class A” licensee for resale or who possesses intoxicating liquor purchased from a “Class A” licensee for resale may be fined not more than $100"). They do have a fair number of small bars in Wisconsin, so maybe that's the reason for leniency (and perhaps there's the possibility of losing your license as well for buying from Class A licensees).

(referring to WI liquor laws because the original poster mentioned practices in Milwaukee)

Yep, thats very true. And that was what started my whole thought process, because I remember stocking cases and cases of booze, bought from our wholesaler, and seeing the prices the bar paid for the booze... it was ridiculously expensive compared to what I paid at the 7-11 for the same stuff. I talked to the owner about it one night after work and she explained how the whole thing worked and why it was so much more expensive.... Glad to see that it applies to beer as well as liquor in most places.
 
I used to own a liquor store in Massachusetts (Mass) for 6 years and/or been involved in the ownership of a liquor store in Mass for a total of 13 years and typically the mark up on a keg of beer in a store was just $5 to maybe $10.

In Mass as a retailer if you had buying power in a calender month you could save an extra $10-$20 on a keg compared to a bar or restaurant who typically buys barrels here and there.

In Mass, bars or restaurant's buy bottles at a time and pay full price plus a bottle charge for single bottle purchases. Whereas, if they could buy cases in 10, 15, or 25 or more they could receive significant discounts on those cases. Single bottle purchases therefore increase the bottle cost, and single bottle surcharges also raise the price of a single bottle dramatically.

I have seen example of bars and restaurants buying liter bottles (required for bars in Mass) from retail stores as their prices can be actually cheaper, but in Mass this is also illegal.
 
Haven't found much on beer pricing yet, but in Michigan liqiuor is controled by the state and pricing is published online.

http://www.michigan.gov/documents/dleg/Price_Book_FINAL_10-31_thru_1-29-11_334323_7.pdf

hope this helps

Thats awesome... thanks for the post. I guess in michigan it is different than what I have experienced elsewhere. They charge more (not alot, but a little more) to liquor stores than they do to restaurants. interesting.

Do you know if they do the same for beer as well?
 
Thats awesome... thanks for the post. I guess in michigan it is different than what I have experienced elsewhere. They charge more (not alot, but a little more) to liquor stores than they do to restaurants. interesting.

Do you know if they do the same for beer as well?

looking for that info now. not sure if it will be online or not. If not I will head down to the local tavern and ask owner what he knows. He is a good guy and will fill me in if he knows. He did show me a "special" sheet from his dist. when we talked about me buying 1/2 bbl from him instead of retail store. Pricing seemed kinda high(close to retail) but he might get discount off that price .
 
Bars also get "incentives" from breweries to get tap space. Sure the bar owner might pay at or maybe above retail for that keg but the breweries salesmen will need to offer anything from basketball tickets to old fashioned cash kickbacks to the bar owner to get that coveted tap space especially in busy hot spot urban bars. Most of that will be under the table. Ive been out with the salesmen on their route calls and Ive seen some pretty shady deals in some pretty shady dives.
 
Talked with the guys at a local retailer here. They say that bars and retailers pay the same for beer. But will have to double check with the local pub(good enough reason to head in there again as the owner has been out for the holidays)

Edit:
according to pub it seems that they pay the same retailer for beer. not counting any discounts/incentives that might be offered.
 
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