bulk buy whoas

So, I bought a barley crusher from NB and it will be here this coming Tuesday. I decided to buy grain in bulk to help me offset the cost of rising grain and hop prices. I am not a member of my local homebrew club yet but I doubt I will join for a while, here is why. I really think it would be a great idea for the local club to buy grain in a group bulk buy and with over 35 members, many brewing all grain, there are enough people to chip in a bulk buy. But, and big but, is one member of the club is a local homebrew shop owner and any talk of a bulk buy is obviously going to hurt his business. I personally don't want to hurt the lhbs business. However, I spent $1,300 last year in homebrew related ingredients and equipment - most of all of that from my local shop. With recent price increases, my local shop went up on grain by the pound from $1.40 to $2.50 over a very short amount of time. Hops went up from $1.95 per oz to $3.95 per oz. for cascades and centennial (my favorite) and every other variety up by $1 per oz. After some quick calculating, those new prices would increase my batch cost by almost double and I can't afford that. So, I got the barley crusher and plan to buy in bulk. Here is the kicker, mail order from many different shops would cost almost the same to deliver to me due to shipping. Here are some prices: 1 sack of grain from nb is about $32 and shipping is about $27 (total is $59). Several other shops are similar, higher prices per sack and less shipping topping out at about $60. My local shop quoted me a price of $59 for sack of base grain! To me, that is insane. If Nb, and ebrew and austin homebrew supply can sell a sack of grain less than $59 then I should be able to get it from my supply shop for less. I think the shop owner has done research and knows what the alternative is for me. So, to get better prices that $59 a sack I need to coordinate a bulk buy and risk mutiny with the local shop or possibly get in with a local brewer to piggyback a purchase. How would you guys address this if it were you. I realize that increasing prices are just how it is for us homebrewers but I do want the most bang for the buck and right now I don't see the local shop's pricing being competitive enough for me not to look elsewhere.

 

I'm in the same bind - our local club is, while perhaps not "sponsored", at least very good friends with the LHBS, and a few (not all, but a few) of them are of the opinion that we have a moral obligation to buy anything and everything there. A few of us have piped in with the argument that "Well, if I have no money because I spent it all on overpriced merch at the LHBS, then it's awful hard to brew".... but that didn't go over well.

I bought a 50# sack from the LHBS because my cheapest price with shipping was $48.50 and I got it in town for $50 even. Close enough for me. Hops, however, I ordered 3 lbs from Hops Direct so that I can be self-reliant for the winter.

I want to arrange a pallet order too though. T__T

 

You should shop where you can get the best balance of price versus customer service. Shop around and write the prices down. Then go to the shop and compare. Give the LHBS a chance to earn your business. You could easily shop online and save a lot of money without telling him but to be fair and to show him his prices are out of line, give him the opportunity to match the price or come close.

We have a large homebrew club here in Austin. Recently they made a large bulk purchase and they went elsewhere to buy it. The sad thing is that they didn't give me the opportunity to match or beat the price.

 

Good point, Forrest, I had never thought of it that way! Thanks for showing me the other side of the argument - we can all be a little biased sometimes, especially when our hobby money is at stake

 

call the local brew pubs and see if there's any way you can buy one bag of grain from them. they obviously buy palletts, and freight it in cheaper than UPS can.

 

Just because you buy bulk grain does not mean your LHBS would go out of business or they should be really PO'd at you.

I stole an idea from the Beer Nut in SLC of an Bulk Grain Club. You buy a whole bag of grain at a substantial discount and the LHBS keeps it for you. You get the freshest grain and the LHBS gets your money up front. All the LHBS has to do is keep a running tally of how much grain you have used.

Think about it. Nothing really changes in the business, but every time you want to brew, you HAVE to go the LHBS to get your grain, plus everything else you need. It's a win win for everyone.

I offered up the idea, it was met with a eh?, so I facilitated a 42 bag buy of grain with about 10 people.

Do I still frequent my LHBS? You bet. I've spent upwards of $2,000 in the last 12 months there buying specialty grains, hops, yeasts, & equipment.

I still like the Bulk Grain Club idea, but it has to be offered, otherwise it really pays off to be part of bulk buy on a pallet of grain. For my efforts, I have saved on average 70% on the cost of grain by buying bulk ($0.42/lb compared to $1.40/lb).

 

Ed, 42 cents a pound is below my cost. I have no problem with you buying the grain elsewhere if you can get that kind of deal. Tell me where it is 42 cents a pound so I can buy some too. Is it 42 cents a pound not including the shipping charges?

Like I said before, you can't campare prices with the place where homebrew stores buy their grain.
Forrest

 

My nearby LHBS just went up to $1.70 per pound for crushed grain and $2.25 for an ounce of hops. Eleven pounds of grains, two ounces of hops, a bag of bottle caps, a baggy of priming sugar and a pack of yeast totaled $29.00 including sales tax. That's cheap enough for me. I will back there again next Saturday.

 

You should compare prices and buy at the best deal you can find.

But comparing the prices of the place where homebrew stores buy their grain with homebrew store prices is an unfair comparison. I am not saying you shouldn't buy there, but expecting a homebrew store to come close in price to the place they buy from, is unrealistic.

So, when comparing prices compare homebrew stores. You can buy where ever you want but if you find a great deal it is probably wholesale and don't expect a homebrew store to come close to the price.

 

I don't get why they'd do that. They get your money up-front, but then they have to keep track of "This is Ed's sack - don't sell it to anyone else!" They get your money upfront, which is nice, but they have to store it, which has an implicit cost. I'd go "eh" on that off, too.

 

He means having a punch card and when the card is full he buys another bag in advance.

I am still thinking it over but I don't see the up side for me. Paying for it in advance doesn't help me. It makes it harder to keep track of inventory.

 

Ah, I see. Not *literally* storing a bag for Ed off in the corner. Still seems like more work than anything else. Seems like the HBS shop's taking a risk, too; getting paid upfront but possibly filling Ed's order with grain that's gone up in price. The inflation risk goes to the HBS.

Theoretically, you've got some more money in the bank until Ed uses up his card, so you're making more money on the float.

 

Just a plug here ... the proprietor of my LHBS (The Thirsty Brewer), Tom Davidson, is active in our brew club (Wootown Brewers) and offers a 13% discount on his still otherwise competitive prices for Wootown members. The annual membership is $25.

Anyone in the Baltimore (on north) area looking for a great brewshop to patronize, try Tom's.

 

You don't make money by simply having it in the bank. Isn't it a false economy? It appears like you have more money when you don't really. The inflation part is an important part I didn't really think of. Some grains just went up 50% in cost.

 

Interest.

Warren Buffett made all of his money at Berkshire Hathaway using the float (the difference in time between when the company received premium payments and when they paid out on claims). He did it by investing in companies, but the principal is the same if it's sitting in a 5.0%-yielding money market account. The interest it earns, in this circumstance, is yours, not Ed's.

 

That would be pennies. We are talking about $40 that wouldn't be in the bank very long.

 

How many customers might you do that for?

How many customers would pre-pay, but never collect their entire sack?

It's the theory; whether it makes sense in practice or not is another matter.

 

I can't see a lot of people buying in advance of their needs. Would you?

Should I open another online store that sells homebrew items real cheap but charges full shipping charges? Basically the same margin I am making but it would be a different set of customers that value a much lower price and don't pay attention to shipping charges. I have thought about it.

 

I wouldn't; just answering the question. I might if I didn't have a lot of storage room, but then I probably wouldn't be doing all-grain anyway.

You know my feelings; charge actual shipping on big items, then bring your "base" prices for things like bulk malt down closer to where your competition is.

 

The problem with this statement is that, while it is interpreted correctly by most brewers, I am part of a very different generation, which is highly web-oriented. We don't often develop the same feelings of loyalty towards brick-and-mortar stores as most other generations do. Therefore, in my opinion, if they're really gonna close, let 'em close. We'll just buy online after they do.

I'm not saying it's bad to have a LHBS. They're great. But, if it's a choice between my bottom line or their bottom line, I know who I care about more. I want the lowest price, period.

 

Though it may be unfair to compare HBS prices with wholesale prices, why shouldn't I? If a wholesaler is willing to sell his/her products to me at a large cost savings, isn't it in my best interest to take them up on the offer?

It certainly won't damage your business, Forrest. Most wholesalers won't sell small enough volumes to satisfy the average homebrewer. But...some of us on this site are far from the average homebrewer in terms of volume.

 

If everyone had this view, we would be buying everything from Amazon and Walmart.

Grain and hop prices are up. The LHBS stores are doing the same as they always have; they buy in bulk, add their markup and resell it to us. If their prices go up, our prices go up. The online sellers prices are up as well. I don't see why there is all the fuss. The LHBS stores usually add a lot of value and service over their online counterparts. If you value that service, keep buying from them. It's unfortunate, but the LHBS market is not a large one, and I would imagine it would not take much to affect the LHBS shop's bottom line if a lot of people start looking for alternate sources for supplies.

Is it really the current price of supplies that is the problem? If prices keep going up (and they most likely will). Then the online prices will be at the same level as the LHBS stores are at today. What will you do then...stop brewing?

 

I like Ed's thought. I would take it one step further:
If you purchase a lot from your LHBS store, then negotiate with the store; "Hey, I am spending $$$ with you and at this volume, I could do better buying direct. How about I keep buying from you, and you cut me a %% discount?"

There are some easy ways this could be managed; the LHBS store could keep an annual total of your purchases and could give a rebate at the end of the year based on volume. There are lots of ways to do this, be creative and find something that works for you and the LHBS. If you are offering your LHBS shop your loyalty and volume business, they should reward that business or risk losing it.

 

It is unfair to compare the prices but I never said you shouldn't buy there. When people go on this forum and bad mouth their LHBS because they can't match the wholesaler price is not fair to the LHBS.

Most people reading the forums don't know that you are comparing a homebrew store with the place the homebrew store buys the grain. So they think that the LHBS is gouging. It costs the LHBS 25 cents a minute to stand there and talk to the person about grain and mill it for them. Not to mention other costs. I know you understand what I am saying.

The homebrew store is charging what they need to make it. Buy where you want but don't compare the two prices on the forum because it is not fair comparison. It only makes the homebrew store look bad. You can compare Homebrew stores and their prices and seperately compare wholesalers and their prices.

For example, a Black and Decker drill that you want. Home Depot and Lowe's have their price but to compare their price with buying the drill directly from Black and Decker at the cost Home Depot and Lowe's buys it for would be an unfair comparison.

 

On bulk grain I should charge $10 less and then add an additional $10 shipping charge? Would it look better? It is the same thing.

 

The price was actually $0.37 per pound, but with shipping it came to $0.42, but that was earlier this year. I'm sure the prices have increased quite a bit. Maris Otter was 59 cents/lb, Best Malz Vienna was 52 cents/lb, and most European specialty malts were 55 to 63 cents/lb.

The flat freight for a pallet was $229 to Austin so split between 42 bags added freight cost of $5.46 per 55 lb. bag of grain at the 2,000 lb. wholesale price point.

Again, I'm sure the prices have increased both for freight & grain.

 

Those are great prices. I need to get in on this. Where can I buy grain at these prices? Hook a brotha up!

 

I am a pretty savvy buyer and consider your (Austin Home Brew) flat rate shipping one of the better deals out there - plus, since you are out of state - no tax. The closest LHBS to where I live is in Tallahassee (80+ miles away), so I look online for most all my supplies. My methods are pretty simple, I go to several online shops, add what I need to my cart, click checkout, tally shipping costs, and see which offers me the best overall price. So far, Austin Home Brew has been the best deal most times. If I could ask - why don't you sell full sacks? I would much prefer that over 40#s in a box...

 

I tried selling bags on line and no one bought them. We have a heavy duty box that we ship wine kits in and it happens to hold 40# of grain. Now that 40 lb boxes are online people buy alot of them. I don't question it it just works.

 

North Country Malt. Interesting though, they took their wholesale program off the web. Imagine that.

Still, I personally like the Bulk Grain club. Sure, it's a little work for the store, but it creates a captive customer who has to come back in the store for his base grains. While he's there, he picks up is speciality grains, hops & yeast, plus any other impulse buys.

I know I for one cannot walk into your store without dropping a couple 20s on various stuff.

 

Tell me about it! I drove over the to HBS yesterday basically because it was a nice day and I wanted to go for a drive (and Cassie and I needed to get out of the house). Ended up dropping almost $100. "Ooh, he's got in stainless steel racking canes!" "Oh yeah, I need a CO2 charger!" "Well, I should get some Saflager for the fridge"...

I *needed* maybe $20 of stuff...

 

http://www.countrymaltgroup.com/contact/mid_country_order.asp

Is this what you're looking for?

 

I can almost promise that if you offered 55 lb sacks with the same $6.99 shipping that I would take you up on it.

Reference the conversation above, I now understand the "unfair comparison" argument. I don't think anyone's trying to insinuate that you're price gouging, but fair's fair.

 

You can mark me down for this as well...

 

That's my biggest problem, shipping cost. I would by grain from a LBHS if the shipping did not double the cost. The only way I buy grain is to go get it but I do not have a local LBHS source and so I have to drive quite a distance and that is what I would like to avoid if I could. Now with the unreal increases of every cost involved I feel like I am forced to create an online business just to try to reduce costs of brewing. No one want's LBHS stores to disappear. Sometimes you are needing a certain item and need it right away.

 

What are their grain prices per pound? Do you spend more than $6.99 in gas to go there and back? Just asking.

 

I'm also wondering about that. My LHBS's owner is like the god of brewing in the city. He's one of the "supporting members" of a semi-new microbrew in town, he's advertising nationally and a member of both local homebrew clubs, FOAM and BURP.

That said, I'm not quite sure how he'd react to a bulk buy. I don't think he's got lots of storage space (at least, I never see it) so I think he may not be getting the best prices on his own grains. It's very possible in that situation that he's willing to join in the bulk buys himself to snag sacks at prices lower than his suppliers.

 

I am willing to bet that your LHBS owner would entertain the thought of a group buy. It seems to me that you could get a good price for your grain and he would still be able to make a little on it. He could even have you pick it up at the shop. Like they said in the posts above, not many people can go to the brew shop and not drop a few bucks on something.