Price surge comming to US?

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mullenite

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Around the middle of next month to the beginning of October expect to see a small price increase across the board. As was mentioned in the article ABI and MillerCoors will be raising prices slightly (typically when they do this it's about $1/case) and distributors are asking craft brands to follow suit.

Even if the brands say no distributors and retailers may raise the price by the same percentage.
 

DrawTap88

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...(typically when they do this it's about $1/case) and distributors are asking craft brands to follow suit.

Even if the brands say no distributors and retailers may raise the price by the same percentage.
Craft brewers might as well raise their prices then. Why give the extra $1 to the distributor or retailer when it could help strengthen the brewery(s) bottom line?
 

mullenite

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Craft brewers might as well raise their prices then. Why give the extra $1 to the distributor or retailer when it could help strengthen the brewery(s) bottom line?
I agree, but there is one problem.

If craft brewers didn't raise the price of the product, and neither did the distributors or retailers, it would narrow the pricing gap between the premium and craft tiers which is better for craft beer all around.
 

JJL

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I agree, but there is one problem.

If craft brewers didn't raise the price of the product, and neither did the distributors or retailers, it would narrow the pricing gap between the premium and craft tiers which is better for craft beer all around.
I have to agree. From what I've read, this isn't a commodities-based increase. The cost of ingredients isn't going up. Also, there is little to no inflation right now in the U.S. I also read somewhere earlier this year that one of the BMC's CEO's was saying something like "The market conditions are right for a price increase." (paraphrasing) So, if the increase isn't being driven by production or raw materials costs, then there would be no reason why craft brewers would need to raise prices. That's not to say distributors or retailers wouldn't raise prices on everything to increase their profit margins. Everybody's trying to make a buck.
 

jonbomb

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This has been bothering me all week. I went to the beer distributor last week for the first time in a really long time. I was going through the isles and it hit me. Micro brewed beer is expensice as hell. One case of lefthand sawtooth esb 36 - 38 bucks. Dogfish head 60 minute was 42 dollars. I would up buying a local beer that was made by lion brewing company (lionhead) if anyones ever had it. It's ok. The ber I bought was called pennsylvania lager. Eh it was alright but that was only twenty two bucks. I don't remember Micro brews being that expensive two - three years ago.

I coulda swore I was buying cases of left hand at like 28 dollars.
 

motobrewer

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highly unlikely distributors and retailers won't raise prices on craft beers. my opinion.

during one of the last price raises (which was commodity based) a local micro decided to keep his prices flat. The retailer upped his price regardless. he found out about 2 months later when someone asked why he raised his prices.
 

JJL

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highly unlikely distributors and retailers won't raise prices on craft beers. my opinion.

during one of the last price raises (which was commodity based) a local micro decided to keep his prices flat. The retailer upped his price regardless. he found out about 2 months later when someone asked why he raised his prices.
You're probably right. I've worked in manufacturing and retail for almost my whole career. The fact is, the retailer will make a buck anytime he can. Even if the manufacturer lowers their prices, the retailer won't take prices down unless there are market pressures that make it necessary to stay competitive. The fact is, increased competition is about the only thing that will lower prices.
 
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What pisses me off is that many products that had significant price raises during the oil price boom in 2008 have come back down in price (thinking specifically about groceries).

But beer's prices haven't come down at all - and now are going to go up even more.
 
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robertbartsch

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We have a micro brewer in NY called Adirondics that brews quality beers.

The beer with deposit is $32 a case and it is a few bucks cheaper than major brands like Becks, for example. Other micos here are about equal in price to the majors - sometimes a tad more $.

I assume the profit margins on micro brewers is high. Unfortuneatly, they often have issues staying in business because volumes are typically very low.

This is how the majors became majors - buy out the little guys or let them go bust...
 

Montanaandy

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I have run into price increases recently when I went to fill a growler at a microbrewery near where I camp during the summer. It was $7 to fill a growler (which was up from $6.50) until I went in this past weekend and the price had increased to $7.50. I believe that there were also some beers that were $8. It was not all that long ago that it was $5 to get one filled. That translates into roughly the $30 mark for a case of beer that is being discussed. Thought growlers were a more economical way to purchase your beer. Guess not anymore.

On the other hand wine prices seem to be coming down with the glut of juice on the market. I was at Costco and they keep floating deals where if you purchase a case of wine for around $60 or so you get a $25+ dollar rebate or almost 50% off. Premium wines from Cali and Wash. state are aggressively priced because of the competition from great wines from France, Chile, Argentina, etc.
 

Montanaandy

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I have to agree. From what I've read, this isn't a commodities-based increase. The cost of ingredients isn't going up. Also, there is little to no inflation right now in the U.S. I also read somewhere earlier this year that one of the BMC's CEO's was saying something like "The market conditions are right for a price increase." (paraphrasing)

Saw that sales of alcohol have increased substantially across the board recently. Lousy job market. Lousy stock market. Lousy housing market. What else can you do but drink to dull the pain. People are always going to drink but will perhaps trade down to the BMC yellow water from craft beer because of the economic conditions. Montanaandy
 

Scooby_Brew

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As was mentioned in the article ABI and MillerCoors will be raising prices slightly (typically when they do this it's about $1/case) and distributors are asking craft brands to follow suit.

Even if the brands say no distributors and retailers may raise the price by the same percentage.
One question I'd like to ask is what happened with the "free market" and "competition"? It looks like a few companies own the market and do whatever they want. And why the article states that one of the reasons for the price hike is "consolidation"?
I thought that more consolidation = better prices for the consumer...
It looks like more cosolidation = less competition = bend over Mr. Consumer and grab your ankles :D
 

NorCalAngler

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One question I'd like to ask is what happened with the "free market" and "competition"? It looks like a few companies own the market and do whatever they want. And why the article states that one of the reasons for the price hike is "consolidation"? I thought that more consolidation = better prices for the consumer...
It looks like more cosolidation = less competition = bend over Mr. Consumer and grab your ankles.
Quite the opposite. Some of these craft brewers are often operating on very slim profit margins in order to get their product into more refrigerators. As the big guys buy them out they are able to sacrifice the "grow, grow, grow" business model and raise prices to earn a better (arguably more reasonable) profit.

Knowing what goes into a well made beer I'm still surprised to see how much pricing variation exists in the craft brewing market. IMHO I think Dogfish Head's prices are ridiculous. $10 for four bottles of beer is outrageous given their economies of scale. We can clone their brew without any scale for half of that, if not better. Then you have breweries like Sierra Nevada kicking out amazing brews like Torpedo at $7/six pack or $12/12 pack.
 

jay4e

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fortunately here in the boston area there is a lot of competition for craft and micro brews, and it tends to keep prices of good beer down. But in all honesty i wouldnt mind paying a small increase at the register if the money goes to the breweries. however i suspect most of the mark up comes from the distributors and stores, not the breweries.

dont even get me started on the mark up at most bars and events...
 

mullenite

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One question I'd like to ask is what happened with the "free market" and "competition"? It looks like a few companies own the market and do whatever they want. And why the article states that one of the reasons for the price hike is "consolidation"?
I thought that more consolidation = better prices for the consumer...
It looks like more cosolidation = less competition = bend over Mr. Consumer and grab your ankles :D
BMC raises their prices this time of the year every year. It's basically "throw it at the wall and see if it sticks." They did this last year, at the same price point ($1/case avg) and have been generally alternating sale prices between their products since.

fortunately here in the boston area there is a lot of competition for craft and micro brews, and it tends to keep prices of good beer down. But in all honesty i wouldnt mind paying a small increase at the register if the money goes to the breweries. however i suspect most of the mark up comes from the distributors and stores, not the breweries.

dont even get me started on the mark up at most bars and events...
We make 31% on beer on average, some of them go as low as 28% and some go as high as 35%. This basically means we make about $3 per $10 sold regardless if it is a 6 pack or a 12 pack or whatever. This is about average with all of the other stuff we sell.
 

motobrewer

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Quite the opposite. Some of these craft brewers are often operating on very slim profit margins in order to get their product into more refrigerators. As the big guys buy them out they are able to sacrifice the "grow, grow, grow" business model and raise prices to earn a better (arguably more reasonable) profit.

Knowing what goes into a well made beer I'm still surprised to see how much pricing variation exists in the craft brewing market. IMHO I think Dogfish Head's prices are ridiculous. $10 for four bottles of beer is outrageous given their economies of scale. We can clone their brew without any scale for half of that, if not better. Then you have breweries like Sierra Nevada kicking out amazing brews like Torpedo at $7/six pack or $12/12 pack.
what get's me is Rouge beers, at least here in WI. $10.99 / 6-er.

I've always wanted to try dead guy, but could never bring myself to drop that on a 6 pack, especially when there are so many other great and reasonably priced beers on the shelf.
 
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