All Group Buy Participants - NCM Price Change

Williams 728
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.
xjncoguyx said:
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.
Click to expand...

No one is entitled to any price. This isn't communism. The seller can set whatever price they want. We can choose to pay that price or find an alternative.

If they find a mechanism for price discrimination (and thus extract more surplus from the demand curve), good for them.
 
I'm not sure what's so unjustified about feeling slighted by overt market collusion. A sense of entitlement has nothing to do with it. I'm confident, in the end, that the free markets will speak for themselves. I would like to see the AHA officially chime in on the subject of LHBS dictating the business practices of wholesalers which may be precluding them from selling to legal, non-brewery or brew supply related, business entities (which could be considered an anti-competitive practice).

Consider the fact that there are so many home brewers and that the number of us is increasing dramatically every year. This industry is going to quickly outgrow the LHBS supply model. Consider the hypothetical of CostCo and Sams Club notices this market growth and decides they can afford two or three bays in their stores for bulk grains and cheap brew kettles. So they plan to start selling sacks of base malts at a price near or even lower than the cost of a sack the LHBS would pay (after all, this is what these companies do. They buy in bulk and thereby leverage a lower price form the wholesaler). Is the buzz we're hearing saying that the wholesalers have agreed to not to sell to any non-brewery or non brew supply store going to (initially, at least...until the attorneys get involved) preclude them from selling to WallyMart? Refusing equal treatment to a co-op or any other business interest who is interested in purchasing a pallet today is the same story (just without the evening news headlines and high dollar attorney involvement).

edit: I suppose I should highlight, in case the reader doesn't automatically recognize that I understand the wholesalers practice and ability to dictate different pricing to the public vs. commercial entities. What would be more difficult to justify is different pricing based solely upon what type of business you are.
 
xjncoguyx said:
We're buying in wholesale quantity, so why shouldn't we be entitled to that pricing structure?
Click to expand...

The amount you are buying doesn't really have anything to do with it.

Wholesale is the sale of goods to businesses who will then re-sell it.

Wholesale prices are not intended for end consumers.
 
Dschuetz said:
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.
Click to expand...
Me and my partner are in the process of trying to do this right now. We're looking to acquire a building then we'll be rolling from there.
 
When you open your brewery are you going to support the local home brewers? I would think they would be a great customer base for pints and growler fills in your tap room.
 
crazyirishman34 said:
When you open your brewery are you going to support the local home brewers? I would think they would be a great customer base for pints and growler fills in your tap room.
Click to expand...
Absolutely, i mean hey 99% of the breweries out there started as homebrewers

:mug:
 
My LHBS is willing to sell bulk grain to its customers at a very reasonable markup ($40 for Briess 2-row 50lb sacks). He even allows us to pre-order other bulk grains (pallet order once a week). By doing this a HBS can afford to sell bulk grain at lower prices since he doesn't have to hold the grain for more than a few days at his store and it brings more customers to his store that otherwise would order yeast and specialty malts online. I think for the foreseeable future this is the best solution to the higher prices for many of us.
 
And I heard something like a voice in the center of the four living creatures saying, "A quart of wheat for a denarius, and three quarts of barley for a denarius ; and do not damage the oil and the wine." - Revelation 6:6 (NAS)
 
xjncoguyx said:
Me and my partner are in the process of trying to do this right now. We're looking to acquire a building then we'll be rolling from there.
Click to expand...

Funny thing about acquiring a building is you end up paying property taxes, insurances and a power bill to name a few. These things add up to the point that just to break even you will need to charge more money and most likely much more money than a group buy of a few people will be willing to pay.

My wife and I are going to open a LHBS and have been pricing things out. We are lucky that we will be able to pay for the inventory up front meaning we will not be sitting on money or paying a bank to use their money. I would think though looking at the initial cost of opening a store most people could not do that.

I like the idea of group buys and I will encourage it in my store. But to think that a select minority of people who participate in group buys now is hurting the bottom line of any major wholesaler is kind of silly. I am guessing that well under one percent of a wholesalers business comes from group buys. Perhaps 10 percent to LHBS and the rest to micro brews and such.

I am guessing on those figures and I would like to know if they are accurate. I am basing them on other business deals I have done so they should be close.
 
All this does is make people find creative ways to circumvent the "rules". It's only a matter of time before people find ways around it. I'm all for supporting my lhbs, but I'm not going to do so when it affects my bottom line drastically. Most have prices themselves out of the bulk grain and hops market, which is why people have taken to group buys. If most lhb's start doing their own group buys at a reasonable discount they would actually see a profit increase.
 
Walker i could not disagree with you more. Cmc made a business decision, a decision marketers of products have to make every day.

The decision they are confronted with is which sales and marketing channels to use to promote and deliver the product to the end user. There is nothing that says they cannot go direct or they have to go retail. At the same time there is nothing that says an lhbs has a right to exist. If the lhbs provides a product or service that a market demands, they will exist.

At the time CMC made the decision to allow group buys, it was a business decision as is their present decision to protect their chosen market channels for this segment of their market (lhbs). They would not have made this decision if they did not think it would be good for their business.

At the same time, end users have every right to group together and make an offer. This is America and that is how capitalism works. CMC has every right to accept or refuse this offer. At this time CMC has made the decision to refuse or drastically alter the "group buy community offer". In turn, they are going to expect the lhbs to make up the difference plus.

In my case, I am not going to stop brewing but i am not spending any additional money either. That probably means less bags for Cmc from me.

CMC made their decision and as an end user you are free to make your decision. Its just business. It has nothing to do with being entitled.
 
Varmintman said:
Funny thing about acquiring a building is you end up paying property taxes, insurances and a power bill to name a few. These things add up to the point that just to break even you will need to charge more money and most likely much more money than a group buy of a few people will be willing to pay.

My wife and I are going to open a LHBS and have been pricing things out. We are lucky that we will be able to pay for the inventory up front meaning we will not be sitting on money or paying a bank to use their money. I would think though looking at the initial cost of opening a store most people could not do that.

I like the idea of group buys and I will encourage it in my store. But to think that a select minority of people who participate in group buys now is hurting the bottom line of any major wholesaler is kind of silly. I am guessing that well under one percent of a wholesalers business comes from group buys. Perhaps 10 percent to LHBS and the rest to micro brews and such.

I am guessing on those figures and I would like to know if they are accurate. I am basing them on other business deals I have done so they should be close.
Click to expand...
Well we're going to be running a brewery so it's not really any added cost on top of what we're paying to run that.
 
I'm a homebrewer, club member (club officer in fact), and homebrewing related retailer so I see all sides of the argument. If you're just the end consumer in this deal, I can see why you're upset. Base grain represents the highest percentage of batch cost which you previously had an amazing discount on. You had NOT had direct access to hop union or bulk sale from Wyeast or Whitelabs and you couldn't buy direct from the factory in China where Boilermakers are built. Let's be clear, NCM was helping the end user game a system that you already recognize as standard procedure everywhere else.

I'm not in the grain business, but I'll show you how direct manufacturer retail can hurt the industry. The makers of Concord pots approached me about retailing their kettles through BrewHardware and since I was toying with the idea of bringing in stock to have pre-modified with my typical accessories, we started talking about multiple pallet pricing. I was just about to pull the trigger on 4 pallets when I realized they were selling direct on Ebay for about 5% over my cost after freight. No business should be stupid enough to run a 5% margin on anything, nevermind something of that bulk. I know, big deal, one example doesn't matter but if everyone has access to the manufacturers at near wholesale pricing, you lose any value add that a retailer brings to the table.

Now that NCM's rock bottom pricing is inaccessible, clubs and motivated individuals should be able to work out deals with LHBS for much better than retail by-the-pound pricing. Free market says that the shops that discount sacks aggressively will reap the benefits of volume sales. This isn't rocket science, it's just business.
 
Jayhem said:
My LHBS is willing to sell bulk grain to its customers at a very reasonable markup ($40 for Briess 2-row 50lb sacks). He even allows us to pre-order other bulk grains (pallet order once a week). By doing this a HBS can afford to sell bulk grain at lower prices since he doesn't have to hold the grain for more than a few days at his store and it brings more customers to his store that otherwise would order yeast and specialty malts online. I think for the foreseeable future this is the best solution to the higher prices for many of us.
Click to expand...

His prices on the site are pretty damn good for a shop and about the same as the group buy when you add in the 7-10 bucks a bag for shipping. Hes an hour away but I can combine it with a trip to my buddy in the area. Ill definitely be ordering from him in the future and wouldnt have known about it if not for this thread. I dont see MYLHBS playing ball with some sort of a bulk deal and with the crazy weekend traffic and indirect route its almost a 40 minute drive there anyway.
 
so are hops next?

are the LHBS going to complain to the hop growers that selling by the pound deprives them of by-the-ounce walk-in customers, and therefore HopsDirect and the like should stop selling to us?
 
Bobby_M said:
Now that NCM's rock bottom pricing is inaccessible, clubs and motivated individuals should be able to work out deals with LHBS for much better than retail by-the-pound pricing. Free market says that the shops that discount sacks aggressively will reap the benefits of volume sales.
Click to expand...

Precisely, and the LHBS can benefit if the thousands of pounds of grain bought via group buys puts them into a lower pricing tier, lowering their cost on all grain sales, not just the group buys. It should give them an incentive to do so.
 
LHBS's aside what about craft BREWERIES? I think they have influenced wholesalers to stop selling to end users as much or more-so than LHBS's have. Craft breweries undoubtedly account for the majority of malt sold. A small local micro-brew near me brews over 100,000 gallons a year and only sells locally.

When end users realize how cheaply they can brew for they are less likely to spend $20 on a 12-pack of local craft brew or have their growlers filled at the brewery!

For me if I had to pay $50 for ingredients to brew 5 gallons of my IPA I would probably brew less and visit my micro-brewery more.
 
Bobby_M said:
I'm a homebrewer, club member (club officer in fact), and homebrewing related retailer so I see all sides of the argument. If you're just the end consumer in this deal, I can see why you're upset. Base grain represents the highest percentage of batch cost which you previously had an amazing discount on. You had NOT had direct access to hop union or bulk sale from Wyeast or Whitelabs and you couldn't buy direct from the factory in China where Boilermakers are built. Let's be clear, NCM was helping the end user game a system that you already recognize as standard procedure everywhere else.

I'm not in the grain business, but I'll show you how direct manufacturer retail can hurt the industry. The makers of Concord pots approached me about retailing their kettles through BrewHardware and since I was toying with the idea of bringing in stock to have pre-modified with my typical accessories, we started talking about multiple pallet pricing. I was just about to pull the trigger on 4 pallets when I realized they were selling direct on Ebay for about 5% over my cost after freight. No business should be stupid enough to run a 5% margin on anything, nevermind something of that bulk. I know, big deal, one example doesn't matter but if everyone has access to the manufacturers at near wholesale pricing, you lose any value add that a retailer brings to the table.

Now that NCM's rock bottom pricing is inaccessible, clubs and motivated individuals should be able to work out deals with LHBS for much better than retail by-the-pound pricing. Free market says that the shops that discount sacks aggressively will reap the benefits of volume sales. This isn't rocket science, it's just business.
Click to expand...

This right here will help. And if a LHBS will not help the end user then another LHBS will pop up and take up the slack.

Elsewhere in the thread I have read about folks going full on buying on the internet. I suspect I am in the minority here but I enjoy going to a business and knowing the people I work with. I believe that there will be a business model for those of us who do not shop online for a very long time to come.
 
crazyirishman34 said:
I don't think that is an issue.
Click to expand...

I was wondering about it and looking for feedback. I personally drink almost no store bought beer since I've started homebrewing but I know that the demand for Micro-brew has gone up almost exponentially in recent years. Heck my small town is even hosting its first annual "beer fest" on main street this year welcoming local craft breweries and homebrewers alike.
 
sweetcell said:
so are hops next?

are the LHBS going to complain to the hop growers that selling by the pound deprives them of by-the-ounce walk-in customers, and therefore HopsDirect and the like should stop selling to us?
Click to expand...
It's funny you say this, i have been meaning to pick up a few more pounds of hops and just haven't gotten around to it yet. Ran out of columbus and needed 4 ounces yesterday. So i mosey on over to the homebrew store and buy 4 ounces. Cost me 10$, i died a little inside. :cross:

10.99$ for a pound on farmhouse and 11.xx on hopsdirect

ahh well. convenience charge.
 
Varmintman, I would respectfully disagree on this point. When you sell a pot to an end user that is not a repeatable sale. I think you were smart to decline the business in this case. But a smart HBS should recognize that allgrainers need to resupply often on base grains. A smart HBS should compete with the group buyers on grain pricing to keep traffic high in the store. Then while they have you in there they should take the opportunity to learn about their customers needs and sell them other stuff at higher margin. Its called a loss leader in retail. And it really only works if you have welltrained sales people who care. JUST like the guys and gals at MY HBS. They are awesome. They are friendly. They are helpful. But, unfortunately, they have not had cause to see me much lately because their grain prices are just way too high.
 
Dschuetz said:
Varmintman, I would respectfully disagree on this point. When you sell a pot to an end user that is not a repeatable sale. I think you were smart to decline the business in this case. But a smart HBS should recognize that allgrainers need to resupply often on base grains. A smart HBS should compete with the group buyers on grain pricing to keep traffic high in the store. Then while they have you in there they should take the opportunity to learn about their customers needs and sell them other stuff at higher margin. Its called a loss leader in retail. And it really only works if you have welltrained sales people who care. JUST like the guys and gals at MY HBS. They are awesome. They are friendly. They are helpful. But, unfortunately, they have not had cause to see me much lately because their grain prices are just way too high.
Click to expand...

Yup I guess I phrased it wrong because we do agree. I think the shops that do not price compete are going to lose enough business that another shop can come in and get all of their business.

My big worry is that a store like costco or something will come in and undercut the LHBS. I worry about that because I am opening a LHBS and I know I cannot compete with something like that.
 
I brew a ton of beer threw out the year. I pretty much bump up against my allowed limit every year. But I still buy beer it is good to taste new beers to expand your palate. Also I like the social aspect of going out.
 
I think you are slightly off there too. If your prices are competitive and you genuinly take care of your customers, your customers will love you and will go out of their way to shop your store. Costco will never be a home brew shop. Even if they did sell brewing malt. I hope to visit your shop some day.
 
Varmintman said:
Yup I guess I phrased it wrong because we do agree. I think the shops that do not price compete are going to lose enough business that another shop can come in and get all of their business.

My big worry is that a store like costco or something will come in and undercut the LHBS. I worry about that because I am opening a LHBS and I know I cannot compete with something like that.
Click to expand...
I still don't understand how all homebrew stores aren't selling things online. It seems crazy to me as big as keystone is, that they don't do online sales. Austin homebrew, northern brewer, farmhouse, etc. all probably do a good portion of business through people who would likely never set foot inside their store because they're across the country. It's like evolution, pretty much if you're not online you're losing business.
 
xjncoguyx said:
I still don't understand how all homebrew stores aren't selling things online. It seems crazy to me as big as keystone is, that they don't do online sales. Austin homebrew, northern brewer, farmhouse, etc. all probably do a good portion of business through people who would likely never set foot inside their store because they're across the country. It's like evolution, pretty much if you're not online you're losing business.
Click to expand...

must be too busy opening their second megastore.
 
crazyirishman34 said:
I brew a ton of beer threw out the year. I pretty much bump up against my allowed limit every year. But I still buy beer it is good to taste new beers to expand your palate. Also I like the social aspect of going out.
Click to expand...

Craft breweries are a great source of inspiration for me. Like Round Guys in Lansdale and Prisim in North Wales and Free Will in Perkasie.
 
xjncoguyx said:
I still don't understand how all homebrew stores aren't selling things online. It seems crazy to me as big as keystone is, that they don't do online sales. Austin homebrew, northern brewer, farmhouse, etc. all probably do a good portion of business through people who would likely never set foot inside their store because they're across the country. It's like evolution, pretty much if you're not online you're losing business.
Click to expand...

As far as I know Keystone does online sells. At least their homepage would lead you to think so.
 
xjncoguyx said:
I still don't understand how all homebrew stores aren't selling things online. It seems crazy to me as big as keystone is, that they don't do online sales. Austin homebrew, northern brewer, farmhouse, etc. all probably do a good portion of business through people who would likely never set foot inside their store because they're across the country. It's like evolution, pretty much if you're not online you're losing business.
Click to expand...

I highly agree with this.

We are in the smart phone age. Today 12 year olds are more computer/online literate than most baby-boomers. Most new homebrewers are younger generation and are used to purchasing almost everything online. If you don't have an online sales portion with competitive shipping and a GOOD website to attract customers you are going to fall behind along with other stone aged businesses.

I don't usually go to small restaurants or shops in my local area if they don't have a good website because that is how I found out about them and GPS to their location!
 
lordura said:
Just got off the phone with the GM from North Country Malt. I'll post full details tonight on what their plans are.

It's going to be easier for everyone to get grain at group buy pricing!
Click to expand...

Excellent work. Very interested in the details.

Since I am a free market believer I will continue to see what other options are out there. But I am happy that this has reached the ears up the totem pole.
 
Jayhem said:
I highly agree with this.

We are in the smart phone age. Today 12 year olds are more computer/online literate than most baby-boomers. Most new homebrewers are younger generation and are used to purchasing almost everything online. If you don't have an online sales portion with competitive shipping and a GOOD website to attract customers you are going to fall behind along with other stone aged businesses.

I don't usually go to small restaurants or shops in my local area if they don't have a good website because that is how I found out about them and GPS to their location!
Click to expand...

I am not disputing you Jayhem but using your post since it happens to be the general consensus.

My wife and I have talked it over at great length and have pretty much decided not to ship orders at least for now. We will have a online presence to have people place orders with us to be ready for pickup but I am thinking I do not want the hassle of shipping stuff.

I am not doing this for the money. I am doing it to get out of the house and meet new people. As a baby boomer I know many of my age group will shop online but I also know that a larger portion will go to a brew shop just to get out of the house and have a beer. That is my target market not online sales.

Will I lose market share...Heck yes but I do not care. I would rather spend time talking and drinking with a few solid customers than working filling orders any day.

Just my 2 pennies
 

Similar threads

mclardass
DC Area Group Grain Buy #26
Replies
8
Views
3K
BrewSavage
BrewSavage
mclardass
DC Area Group Grain Buy #25
2 3
Replies
118
Views
12K
MikeLastort
MikeLastort
mclardass
DC Area Group Grain Buy #24
2 3
Replies
108
Views
9K
zombiepiratemonkey
zombiepiratemonkey
stonebrewer
DC Area Group Grain Buy #23
2 3 4
Replies
120
Views
12K
mclardass
mclardass
stonebrewer
DC Area Group Buy #22
2 3
Replies
95
Views
9K
stonebrewer
stonebrewer

Latest posts

Back
Top