All Group Buy Participants - NCM Price Change

[lordura]

Just to confirm... I took the South Jersey thread down. I did it to make room for the new one

 

[lordura]

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.

 

[HBCBrewmaster]

Just to confirm... I took the South Jersey thread down. I did it to make room for the new one

Glad to know it wasn’t censorship!!

Will you be posting or e-mailing a link?

 

[lordura]

Just added a new thread to post the updates. Hoping to get the list rolling soon.

 

[Weezy]

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.

 

[HBCBrewmaster]

That is a really good point weezy.

 

[Walker]

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]

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]

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.

 

[crazyirishman34]

What about opening a group brewery? They have something like it down in Texas.

http://breweryincubator.com

 

[TyTanium]

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.

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.

 

[Weezy]

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.

 

[crazyirishman34]

I think that the AHA is in line with the LHBS. I am sure if you are a member of the AHA and send an email to Charlie he will get back to you.

 

[Walker]

We're buying in wholesale quantity, so why shouldn't we be entitled to that pricing structure?

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.

 

[xjncoguyx]

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.

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.

 

[crazyirishman34]

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.

 

[xjncoguyx]

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.

Absolutely, i mean hey 99% of the breweries out there started as homebrewers

 

[Jayhem]

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.

 

[masonsjax]

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)

 

[lordura]

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!

 

[xjncoguyx]

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!

you sir are a gentleman and a scholar

 

[Jayhem]

Well don't leave us hanging too long! :cross:

 

[Varmintman]

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.

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.

 

[Spinrathen]

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.

 

[Jackjama]

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.

 

[xjncoguyx]

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.

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.

 

[Bobby_M]

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.

 

[Olive Drab]

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.

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.

 

[sweetcell]

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?

 

[geckholm]

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.

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.