All Group Buy Participants - NCM Price Change

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jeffb418

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Reading in South Jersey/Philly Grain buy thread, they seem to think it was a certain hbs in the Keystone state that caused NCM to cutoff homebrewers. They are starting to talk of a boycott over there.
 

Walker

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Honestly it looks to me that NCM is trying to set up an online retail presence.
I don't think so. The reason I say this is because they won't even give you an account if you are a homebrew. If they really wanted an online retail presense, they would have to let people actually order.

The only homebrewers that currently have accounts with them are ones that had accounts prior to their policy change in 2010 or whenever that was. Those accounts got grandfathered in.
 

jeffb418

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I don't think so. The reason I say this is because they won't even give you an account if you are a homebrew. If they really wanted an online retail presense, they would have to let people actually order.

The only homebrewers that currently have accounts with them are ones that had accounts prior to their policy change in 2010 or whenever that was. Those accounts got grandfathered in.
But even those grandfathered accounts are getting pushed out now if they dont order within a year. Which sucks too.
 

TravisT

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Have you ever noticed that a brewery doesn't really sell there bombers/6packs for that much cheaper then the liquor down the street? Its a bad business plan to undersell a liquor store...why you ask. That liquor store might stop carrying your product/go out of business. As a supplier you don't want to undersell your retailer.

Why can't you go to Detroit, walk up to the ford dealer and say" I would like to buy ten f150 trucks for $20,000 a piece???". Because the ford dealer knows that the cheapest a ford dealership can sell a f150 for is $25,000. the ford/manufacturing plant doesn't want to under sell its dealer. It's a bad long term business plan.
It's bad for the group/guy that has the cash to buy 10 trucks but good for the guy that only want one truck and has a local dealer to buy from.

The pro for keeping my lhbs in business as a consumer is I can drive down the street and get yeast,grain,hops at a moments notice. It's bad for the bulk buyer because he has to pay more because of the middle man.
Ps if anyone finds a supplier that will do cheaper group buys than my lhbs post it here :)
 

HBCBrewmaster

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I'm not sure I agree with completely with travisT. When we buy in bulk we are not just "going down the street", we can't just go when ever we want, and we can't cary our merchandise out in a grocery bag. We have to drive longdistances, in thelate hours of the day, split and weigh, haul, sometimes people would grab the wrong grain etc. Not to mention the free labor donated by the organizer. And my group buy up here in philly was doing 3 pallet orders on a regular basis. I bet someone could get a deal on 20 f150s. If they had the cash for such a large deal, if they had the ability to take delivery, if they had a use for them etc. I think what this ammounts to is greed. Whether or not there is a conspiracy with NCM and the HBSs the bottom line is the powers that be have made the calculation that screwing us out of the bulk pricing is in their own best interest. Its up to us to find a way forward.
 

bkl63

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In some areas of the country, smaller Brew Pubs buy Grain from their Food Service provider like Sysco. I would bet that getting an account through Sysco would be far easier than our Malting Group. I know many small local Brew Pubs who would like to be able to buy from Sysco instead of NMG as they can buy bags and not skids at a time. Generally Sysco is pretty responsive to "new markets" like this.

I posted some of this already in the MD/DC/VA thread:

Country Malt Group bought BrewCraft in 2010, essentially acquiring an existing distribution channel for homebrewers. I think this coupled with some pushback by some of their larger homebrew shop customers likely led to the policy change.

Another distributor option in addition to GW KENT "might" be CARGILL http://www.cargillfoods.com/na/en/products/malt/malt-specialty-products-group/index.jsp I called Cargill re: setting up a food coop to see if they would sell bulk grain and was referred to a regional sales rep. Haven't heard back from her yet.

Personally, I see 3 primary options:

  1. Adapt. Circumvent NCM's policy by becoming a licensed entity like a brewing COOP. Downside, they can duck and weave and change the policy again.
  2. Boycott. Push back on NCM's customers, the homebrew shops themselves. Tell them we don't want to do business with NCM and encourage them to find a new grain supplier.
  3. Strategic support of a direct competitor. Band together in greater numbers and leverage our buying power with another bulk distributor. Take that business away from NCM and the lhbs directly. I have to think that if NCM is this big that there is a smaller company that wants that chunk of business. *I'm sure someone will chime in that we don't want to hurt the lhbs, but bulk grain is (or should be) a small profit, heavy item.

my $0.02
 

JerseyBrewer

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I've been thinking about this. The real problem here is information. NCM has exposed their wholesale pricing to the retail customers. In most industries, this would be highly unlikely. Imagine if you had the wholesale prices for the groceries you buy down at Acme...

Frankly we have been spoiled. The ability to buy products at wholesale price usually involves establishing a commercial business, paying taxes, finding ways to make a profit and agreeing to the terms of wholesale suppliers rules. We have been lucky enough not to have to do that at all. I for one am thankful that I was able to take advantage of this situation for as long as I have been able to. Special thanks to the group buy organizers out there.

So, now there is an obvious and concrete demand that someone can fill. There is years of data available to confirm that the demand is real and the risk worth taking. I predict that either LHBS will figure out how to offer this service (case in point, Brett over at BYOB (LHBS in South Jersey is actively working with the former organizer of the South Jersey group buy to find a way to continue but with BYOB) or new companies will pop up offering cut-rate pricing for bulk goods - think Best Buys for homebrewing. Co-ops has some potential and seems like, in my opinion, the best way to keep this community function alive (it's essentially the basis for most classic co-ops out there), but it'll take a few years for the suppliers to not look at a new co-op as just a sidestep of their rules and even there they won't be given the full wholesale pricing.

However, no matter how you slice it, we will have to start paying more - at the very least sales tax and a profit margin (no matter how altruistic the business owner is they still need to make a profit or go out of business). It's sad, but there isn't much we can do about it. If we can look for a silver lining in all this, at least we won't have to meet in a dark parking lot in the freezing cold to get our bags of malt anymore. With a LHBS involved, we'll be able to walk into a warm shop and possibly enjoy a homebrew during the pickup...
 

neophilus

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Homebrew group buys are an atypical commercial situation, it's not the same as an average purchase at your local retail store. It involves organizing online, volunteer work and coordinating a delivery/pickup location. It's far beyond what your average consumer would do to get a better price on toothpaste or orange juice, and I don't think we should subject ourselves to the same standards as an average consumer when facing this hostile business decision.

Retail stores command business based on convenience and availability. You can stop by anytime during business hours and purchase a single serving from a variety of products. You don't have to store large quantities at home or arrange delivery and pickup ahead of time.

If a group of like-minded craftsmen want to pool their resources, leverage their purchasing power and put in extra effort to facilitate the delivery of bulk raw materials they should absolutely not be punished for their hard work. It is anti-competitive to cut a segment of the consumer base out of the market based on arbitrary bureaucratic standards.
 

swackattack

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I participate in group buys but as an owner of several retail businesses I really understand why the policy is changing. I'd be super pissed if this happened in my industry and would do whatever I could to put pressure on my suppliers.
 

xjncoguyx

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Have you ever noticed that a brewery doesn't really sell there bombers/6packs for that much cheaper then the liquor down the street? Its a bad business plan to undersell a liquor store...why you ask. That liquor store might stop carrying your product/go out of business. As a supplier you don't want to undersell your retailer.

Why can't you go to Detroit, walk up to the ford dealer and say" I would like to buy ten f150 trucks for $20,000 a piece???". Because the ford dealer knows that the cheapest a ford dealership can sell a f150 for is $25,000. the ford/manufacturing plant doesn't want to under sell its dealer. It's a bad long term business plan.
It's bad for the group/guy that has the cash to buy 10 trucks but good for the guy that only want one truck and has a local dealer to buy from.

The pro for keeping my lhbs in business as a consumer is I can drive down the street and get yeast,grain,hops at a moments notice. It's bad for the bulk buyer because he has to pay more because of the middle man.
Ps if anyone finds a supplier that will do cheaper group buys than my lhbs post it here :)
This is a terrible analogy. I can buy beer cheaper at the brewery, every brewery just isn't in one spot. It comes down to a matter of convenience at that point. And yes, places do call the ford plant and get special pricing when they buy vehicles in bulk, so i don't know what you're talking about. When say the police force needs vehicles, they go directly to the source and get better pricing on them.
 

forstmeister

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xjncoguyx said:
This is a terrible analogy. I can buy beer cheaper at the brewery, every brewery just isn't in one spot. It comes down to a matter of convenience at that point. And yes, places do call the ford plant and get special pricing when they buy vehicles in bulk, so i don't know what you're talking about. When say the police force needs vehicles, they go directly to the source and get better pricing on them.
Actually your example doesn't work when it comes to municipal equipment. Private industry would work with a dealership on bulk pricing. States work out contracts with producers for equipment that cities purchase through typically. I work for a small town in Illinois. We buy all of our vehicles and large equipment on "state contracts."
 

Beerbrew112358

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There are a lot of good points being made here. But the reality is that the industry is changing. There is an explosion of new homebrewers chugging along with, causing, the craft beer revolution. The AHA estimates there are over 1 million homebrewers in the US and 1,000 clubs. So it seems a bit presumptuous claiming that this forum represents the whole homebrewing community. I’d say the 700 plus LHBS and their customers represent the homebrewing community as much as, or more than, those on this forum. This will have no effect on the vast majority of the homebrewing community. It may even improve most brewers access to products. Many LHBS do not deal with NCM because they sold to clubs. When NCM bought Brewcraft they announced they would discontinue doing business with clubs. They are now merely conforming to what they promised then and what everyone else in the industry does. As a business NCM has to adapt to a changing environment to maintain competitive. Do the math guys. Clubs: 1,000 with 50 members is 50,000. One million homebrewers are going through a LHBS now. Next year there will probably be another double digit increase, 2 or 3 times the total in clubs just there. Many new LHBS are opening too.

I’m with Homebrew Emporium. Our stores did not deal with NCM until they purchased Brewcraft and announced a change in their policy. No one store is responsible for this change by NCM, but lots of us have been urging NCM to do so for quite a while. So singling any one store out is ridiculous. With NCM as a vendor we’ve increased the variety of products we offer. I’m sure other stores will also now be more likely to work with NCM. They have some nice products not available elsewhere that our customers can now find here.
All in all clubs circumventing the LHBS have been hurting the industry. That’s why LHBS want NCM to conform to industry standards, which are similar in most industries. For most LHBS, what clubs do is take just enough so that the business struggles. Not until it’s gone do you miss it and wonder why it failed. NCM’s action will help your LHBS.

Some of the schemes proposed here are, let’s say, a bit unrealistic. From all the comments it seems no one out there owns a business or they’d understand. You want to be treated like as business, but not be one. You all want the benefits of being in business without the responsibilities; skim the cream without doing the work. You guys think it’s easy to run a store? You should try it. We have to deal with the IRS, Ag & Markets, the Health Department, insurance, CPAs, sales tax, workers compensation, the fire marshall, store rent, banks, utilities, IRA’s, lawyers, and on and on for our customers and employees. The average store owner probably works at least 80 hours a week, has their life savings tied up in the store and hasn’t had a vacation in a year or two. They possibly taught a lot of club members how to brew. Then they watch as you go and buy from NCM. Think they’re happy to see you, telling all about how much you saved on the grain you bought in bulk through the club. Then hear remarks about the lack of variety and new products. Two hop bags and a hydrometer later and you want a 10% club discount too. That’s why many owners refuse to give discounts to clubs. We’re all about the beer, but don’t you think our employees and LHBS owners deserve to make a decent living?

I imagine that most clubs with a decent LHBS will likely find the LHBS happy to work with you. We have an annual grain buy for our customers with significant discounts. But if as a club you want a pallet another time during the year? Come and talk to us, we'll work something out. Plus we’ll be more likely to offer a club discount on other items. So you’ll get more back from us. We know who our good customers are and we reward them. And we give back in other ways: Big Brew Day we give the ingredients free to brewers at our stores, enough for 750 gallons last year, as well as raise money for local food pantries.

For those without a good LHBS, well here’s an opportunity perhaps. The homebrew market is growing double digits. Maybe one of you guys complaining about your LHBS should show them how it should be done and open a store. Or if they are too far away maybe now's the time the area gets a LHBS. That would let you to run it the way you think it should be run.
 

bmason1623

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There are a lot of good points being made here. But the reality is that the industry is changing. There is an explosion of new homebrewers chugging along with, causing, the craft beer revolution. The AHA estimates there are over 1 million homebrewers in the US and 1,000 clubs. So it seems a bit presumptuous claiming that this forum represents the whole homebrewing community. I’d say the 700 plus LHBS and their customers represent the homebrewing community as much as, or more than, those on this forum. This will have no effect on the vast majority of the homebrewing community. It may even improve most brewers access to products. Many LHBS do not deal with NCM because they sold to clubs. When NCM bought Brewcraft they announced they would discontinue doing business with clubs. They are now merely conforming to what they promised then and what everyone else in the industry does. As a business NCM has to adapt to a changing environment to maintain competitive. Do the math guys. Clubs: 1,000 with 50 members is 50,000. One million homebrewers are going through a LHBS now. Next year there will probably be another double digit increase, 2 or 3 times the total in clubs just there. Many new LHBS are opening too.

I’m with Homebrew Emporium. Our stores did not deal with NCM until they purchased Brewcraft and announced a change in their policy. No one store is responsible for this change by NCM, but lots of us have been urging NCM to do so for quite a while. So singling any one store out is ridiculous. With NCM as a vendor we’ve increased the variety of products we offer. I’m sure other stores will also now be more likely to work with NCM. They have some nice products not available elsewhere that our customers can now find here.
All in all clubs circumventing the LHBS have been hurting the industry. That’s why LHBS want NCM to conform to industry standards, which are similar in most industries. For most LHBS, what clubs do is take just enough so that the business struggles. Not until it’s gone do you miss it and wonder why it failed. NCM’s action will help your LHBS.

Some of the schemes proposed here are, let’s say, a bit unrealistic. From all the comments it seems no one out there owns a business or they’d understand. You want to be treated like as business, but not be one. You all want the benefits of being in business without the responsibilities; skim the cream without doing the work. You guys think it’s easy to run a store? You should try it. We have to deal with the IRS, Ag & Markets, the Health Department, insurance, CPAs, sales tax, workers compensation, the fire marshall, store rent, banks, utilities, IRA’s, lawyers, and on and on for our customers and employees. The average store owner probably works at least 80 hours a week, has their life savings tied up in the store and hasn’t had a vacation in a year or two. They possibly taught a lot of club members how to brew. Then they watch as you go and buy from NCM. Think they’re happy to see you, telling all about how much you saved on the grain you bought in bulk through the club. Then hear remarks about the lack of variety and new products. Two hop bags and a hydrometer later and you want a 10% club discount too. That’s why many owners refuse to give discounts to clubs. We’re all about the beer, but don’t you think our employees and LHBS owners deserve to make a decent living?

I imagine that most clubs with a decent LHBS will likely find the LHBS happy to work with you. We have an annual grain buy for our customers with significant discounts. But if as a club you want a pallet another time during the year? Come and talk to us, we'll work something out. Plus we’ll be more likely to offer a club discount on other items. So you’ll get more back from us. We know who our good customers are and we reward them. And we give back in other ways: Big Brew Day we give the ingredients free to brewers at our stores, enough for 750 gallons last year, as well as raise money for local food pantries.

For those without a good LHBS, well here’s an opportunity perhaps. The homebrew market is growing double digits. Maybe one of you guys complaining about your LHBS should show them how it should be done and open a store. Or if they are too far away maybe now's the time the area gets a LHBS. That would let you to run it the way you think it should be run.
I think that you bring up a lot of valid points. However, I also think that a lot of this volume generated through group buys will go away instead of being funneled to LHBS. Most of us will be brewing less. As a result, I believe that in the future the distributors may have to make an exception to extremely large volume group buys or else they nor the LHBS will never see those sales dollars due to significantly higher prices. $0.02

EDIT: Not to mention that now the two biggest players, NCM and Brewers Supply Group, will be diviying up the business of LHBS since many LHBS will now start buying from NCM due to their new policy. If nothing else, you have to admire the free markets at work here. Good stuff!
 

orion7144

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In case it has not been brought up.. Several LHBS will pre-order your grain for you at a reduced price. If you order a week or two in advance they will put it in with their order. I know I save 30% by pre-ordering it from here. They still make a profit but don't have to have it sitting in a warehouse.

EDIT: I see it has been brought up after reading the whole thread. Glad to see other LHBS also offering the pre-order discount.
 

dcHokie

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Some of the schemes proposed here are, let’s say, a bit unrealistic. From all the comments it seems no one out there owns a business or they’d understand. You want to be treated like as business, but not be one. You all want the benefits of being in business without the responsibilities; skim the cream without doing the work. You guys think it’s easy to run a store? You should try it. We have to deal with the IRS, Ag & Markets, the Health Department, insurance, CPAs, sales tax, workers compensation, the fire marshall, store rent, banks, utilities, IRA’s, lawyers, and on and on for our customers and employees.
No, I don't think we want to be treated like a business, certainly not one that is operating to turn a profit. I think a decent sized contingent of us, as a like-minded group of consumers, want to leverage our collective buying power to purchase one unique item in bulk. Much like a farmers' co-op, we have a shared interest in organizing a break-even entity that exists for the sole benefit of fulfilling a need for our local members. And we are willing to donate our time and effort to that end.
 

bmason1623

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Hey for some reason the south jersey thread just went down. Any idea why?
too much unsubstantiated bashing perhaps? some of those people were out of control and probably hurt our (group buyers) cause. $0.02
 
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I know that being able to make a mistake with a batch and not have it cost me an arm and a leg made me a better brewer. If I was still paying 30 to 40 dollars a batch I would have just stuck to established recipes.
 

masonsjax

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Maybe it's just me, but a brick and mortar hbs holds zero value to me. All of my needs are met through purchasing online, and through group buys. LHBS operators might be great people, but that's not enough of an incentive for me pay extreme markups to cover their overhead. The retail industry (and many others) are facing this shift en masse. I suspect that the ones that resist change rather than trying to adapt will eventually be left behind.
 

Snisup

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Maybe it's just me, but a brick and mortar hbs holds zero value to me. All of my needs are met through purchasing online, and through group buys. LHBS operators might be great people, but that's not enough of an incentive for me pay extreme markups to cover their overhead. The retail industry (and many others) are facing this shift en masse. I suspect that the ones that resist change rather than trying to adapt will eventually be left behind.
Is it just me, or do both sides of this argument make sense? I'm really torn because my LHBS has good prices and awesome people. On the other hand I'm a cheap bastard and would love some group buy savings. Either way I'm still going to brew!
 

Coff

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Dschuetz said:
Hey for some reason the south jersey thread just went down. Any idea why?
Yea what happened? I made a post at 2pm then I checked back an hr later and it was gone.

What I posted was, if Keystone really was the driving force in this price change then they could be breaking some laws. It looks to me like corporate price fixing, and both companies could get in a lot of trouble.

http://www.justice.gov/atr/public/guidelines/211578.htm
 

HBCBrewmaster

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Yea what happened? I made a post at 2pm then I checked back an hr later and it was gone.

What I posted was, if Keystone really was the driving force in this price change then they could be breaking some laws. It looks to me like corporate price fixing, and both companies could get in a lot of trouble.

http://www.justice.gov/atr/public/guidelines/211578.htm
All we want is a fair shake. That's it.
 
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I don't think they are price fixing since they are just coming in line with other suppliers. But honestly I think just talking to your local nano or brew pub will get you what you want. It helps the small brewery to get better pricing.
 

HBCBrewmaster

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I don't think they are price fixing since they are just coming in line with other suppliers. But honestly I think just talking to your local nano or brew pub will get you what you want. It helps the small brewery to get better pricing.
PLUS while you're there you can have a pint or fill a growler!
 

neophilus

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LHBS have to be crazy if they think people will buy the same amount of grain at a greatly increased price from them. I don't have the money to spend $50 a batch. I buy my hops in bulk it's the only way to afford brewing a dry hopped iPa, I'm not buying $14 of hops for one batch.
 

lordura

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No sense in beating a dead horse. NCM is just holding up to their policy. Commercial pricing is for commercial customers. Homebrew pricing is for homebrewers.
 

Weezy

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Well, the industry is free to exert its collective pressure to control prices to the consumer. The homebrewer is free to collectively exert its own pressure, either with its pocket book or with its own lobbyists. I would like to think the AHA should be interested in promoting and protecting the rights of home brewers. Its in their mission statement. I certainly hope that the AHA isn't empowering the brew supply industry, to the intentional detriment of the majority of its membership.
 

Walker

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Well, yes and no. People seem to have a pretty strong (and unjustified) sense of entitlement here, IMO.

Everyone who has been involved in these grain buys over the past several years was really getting a deal that they should have never been able to get. We were buying at wholesale prices, but we are not the retailers, or businesses. We should be paying retail prices.

Now that we have to pay retail prices, people feel they are getting ripped off. That's simply not the case.

Believe me, I don't like the price increase either, but I don't feel like I am being screwed. I feel like we have just come to the end of a sweet run that we were lucky to have had.
 

xjncoguyx

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Well, yes and no. People seem to have a pretty strong (and unjustified) sense of entitlement here, IMO.

Everyone who has been involved in these grain buys over the past several years was really getting a deal that they should have never been able to get. We were buying at wholesale prices, but we are not the retailers, or businesses. We should be paying retail prices.

Now that we have to pay retail prices, people feel they are getting ripped off. That's simply not the case.

Believe me, I don't like the price increase either, but I don't feel like I am being screwed. I feel like we have just come to the end of a sweet run that we were lucky to have had.
We're buying in wholesale quantity, so why shouldn't we be entitled to that pricing structure? It isn't that they've decided not to sell to homebrewers anymore at all. Which in that case it would make sense. It's that basically the same services and products that we were able to get a week ago, have all of the sudden jumped in price by 35% for no reason other than to bang homebrewers for some extra cash. Im pretty sure there's no way some of the smaller homebrew shops go through 126 bags of grain in a month. Just a thought.
 

HBCBrewmaster

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Agreed. I just dont see how this can be a boon for NCM. though I don't think they would have done it if they didnt think it was in their best interest. The real benefactors are the HBS that will pick up the volume at full retail. And to walker I would ask how many people visiting HBT do you think aspire to open a brewery? I say, we are more than just "homebrewers." We are Craftspeople. We are the future of the micro brewing industry. We deserve to get the best prices possible when we are an organized group willing to deal with larger volumes as an organized group. And I would add that I would not expect any wholesaler to ship me a dozen bags of malt to my home front door.
 
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