Breweries selling 4% beer at regular craft prices

[azazel1024]

This conversation pops up here every few months. You really have to understand that breweries have virtually no say in pricing, the infographic early in this post really sums it up. 60% or more of the price is determined by distributors and retailers. I've seen the same 4-pack of beer range from $9.99 to $16 in the same town. I saw Bourbon County this year at one retailer for $26 a 4-pack. I got it for $18 in another town.

Bars are often upping the price 5 times or more. Some breweries go to great lengths to work with distributors, retailers and bars to get a price they all agree on, whether its higher or lower, but at the end of the day, they really don't have a big say in the price.

If you really think about it, we determine the price. If no one buys 6-packs that go for $10 or more, the stores will drop the price. Some people don't mind dropping $10-15 on a bomber of beer, even more in some cases. If there is enough of those people out there, there is no reason for a distributor or retail to not charge that price and make a profit.

Very much. That said, within a breweries line-up, at the SAME store, rarely do I see something like a 5% blonde ale go for more than a 9% DIPA. Granted, the price may not reflect the difference in base costs to produce, the Blonde might be $8.99 for a 6-pack and the DPIA might only be $10.99.

These days, I really only buy beer for 4 reasons.

1) I am on vacation
2) I need to find a specific beer for a tasting and my family/friends have told me I am not allowed to bring HB (family and friends probably have 4-5 tastings a year)
3) I am out at a restaraunt and feel like having a brew
4) I am looking for something very specific and generally "off kilter", which to me tends to mean something "big", or sour or maybe I want to get a few sixers of a variety I haven't had in awhile because I want inspiration for a new brew. Like I might get 2-3 sixers of Dortmunder Export before I whip up a batch of my own.

I just brewed a Mild, 5 gallons worth and it cost me about $15. That was only because I was trying to compare S04 and Notty, so the yeast was a big part of the cost. If I was reusing, it wouldn't have cost me $10 for 5 gallons of good beer. Sure, a RIS would have been 3x the price, but that still would be a lot cheaper than anything I can get at the store. And often (though not always) better.

 

[andrewmaixner]

Because most of the cost of beer has nothing to do with the ingredients. Handy graphic from HuffPost below:

The vast, vast majority of the costs of getting beer into a bottle or can and onto a shelf have nothing to do with what's in the bottle. The decrease in malt, hops and yeast isn't going to be significant towards the per bottle/can cost, at best $0.05. The difference in costs for a beer almost exclusively come down to two things: the retailer's margin and the distributor's margin, that's more more than half of the cost of your six pack. That's why I can go to two different grocers and look at the same beer, and in grocer #1 six pack #1 is $9 and six pack #2 is $7, but if I go to grocer #2 six pack #1 is $8 and six pack #2 is also $8; each store has a different distributor and/or different retail charge for their beer selections. There's a reason why most breweries start with a tasting room instead of a bottling line, and it's because distributors and retailers take most of the money from the sales.

Must have missed that post back on page 2

 

[andrewmaixner]

2) I need to find a specific beer for a tasting and my family/friends have told me I am not allowed to bring HB (family and friends probably have 4-5 tastings a year)

Them sounds like fightin' words!

 

[azazel1024]

Them sounds like fightin' words!

They got tired of their picks always losing in the blind tastings.

Or at least that is what I tell myself (I did often win).

 

[agrazela]

Exactly. like this:

Article: http://www.huffingtonpost.com/2014/09/12/craft-beer-expensive-cost_n_5670015.html

So if this is true, then all those poor schlubs schlepping around bags and barrels at the brewery could be given double pay, and it would only add like 12 cents to a six-pack of craft beer?

 

[Talgrath]

So if this is true, then all those poor schlubs schlepping around bags and barrels at the brewery could be given double pay, and it would only add like 12 cents to a six-pack of craft beer?

The only wiggle room is "brewer's margin", at least contractually. Brewer's margin is all of the money the brewery gets for the beer after the listed costs are taken out, about $0.64 on an $8 six pack, that's not necessarily profit that's just what the brewery gets. The brewery still needs to pay rent, electricity, gas (if necessary), equipment, etc. etc. Also keep in mind that bottling likely isn't their only source of revenue, most of their revenue probably comes from keg sales and pints served at the tasting room. So...long story short, not really.

 

[azazel1024]

The only wiggle room is "brewer's margin", at least contractually. Brewer's margin is all of the money the brewery gets for the beer after the listed costs are taken out, about $0.64 on an $8 six pack, that's not necessarily profit that's just what the brewery gets. The brewery still needs to pay rent, electricity, gas (if necessary), equipment, etc. etc. Also keep in mind that bottling likely isn't their only source of revenue, most of their revenue probably comes from keg sales and pints served at the tasting room. So...long story short, not really.

And everyone else generally wants to keep their margins. So either the brewery takes a big hit on profitability, or else because their costs jump up, all of the down stream prices jump up too to keep the margins intact.

Granted, it isn't lock-step, but most places aren't going to turn around from making something like a 30% margin, to only making a 20% margin.

 

[Talgrath]

And everyone else generally wants to keep their margins. So either the brewery takes a big hit on profitability, or else because their costs jump up, all of the down stream prices jump up too to keep the margins intact.

Granted, it isn't lock-step, but most places aren't going to turn around from making something like a 30% margin, to only making a 20% margin.

Yep. Especially since most distributors are owned, in part or in full, by big beer companies like AB Inbev or SAB Miller, they have an incentive to squeeze every red cent out of craft brewers if they can.

 

[brewcat]

$10 a six pack is why I homebrew more. That is my price point.