The "Economy" of Homebrewing

[McKBrew]

Yippee, another homebrewing ecomomics thread. I haven't read it all, but I'll lay it down like this.... With all of the money spent on equipment in the last couple of years, plus the money I'm planning on spending I'm not in it to save money on beer. That and the fact that before I started brewing, I went through a six pack in two months, and MGD was a good beer, compared to the money I spend on commercial beer now, still not saving money.

Why then, do I brew... because it's a kick axx hobby, and as far as hobbies go, it's a relatively inexpensive one compared to some things I could be blowing money on..... and I like the taste of good beer that I made myself.

 

[RadicalEd]

Here's the way I figure it. For all the fact of the matter that the process of brewing might take 6 hours, how much of that time is actually spent brewing? I personally am on the internet for a vast majority of the time, and have been know to hop out on an errand during the conversion. I figure I have:

5 minutes filling various pots
15 minutes total mixing time over sparges
10 minutes whirlpooling during cooldown
45 minutes cleanup

5 minutes to sanitize and setup a siphon for kegging

So that's what, an hour and a half, rounded up? Really, the time spend brewing is generally highly exaggerated. You could easily get a stay-at-home job and earn money, even while brewing. Had I kids, it would be easy to see how for long stretches of time I could go and play with them, with a few short breaks here and there.

And then, consider that there'd be a 'cost' to doing whatever you'd be doing if you weren't homebrewing, either. A round of golf? Easily $25 with a cart. Go watch a movie? Last I checked, a ticket was $9.50 at the local cinema. That's just the physical cost, never mind the hypothetical 'labor' cost.

Now I'll admit that I've no economics studies under my belt (just regular old electrical engineering for me ), so I'd appreciate it if someone out there with it could tell me how all of my points stick.

But in the meantime, I'll not be counting the time, or at least most of it, I spend brewing as a "cost". Which means that at $20 or so per batch, I'm rather enjoying my saved money. Goodness knows that this poor college student is able to drink quite a bit more that I would be able to otherwise. And this is good stuff too!

And then there's the side hobbies like liquor making (no, not distilling. Go do some reading ). For something like kahlua or a fruit liquor I make, which would go for $20 or easily more, the production costs are well under $10, with almost no time involved. At the local HBC meeting, I've had more than one member subtly hint that I should look into commercial opportunities in that front, but I think that continuing my education is more important at this point.

Ok, I'll hop off the high horse here. I look forward to the eruditious discourse to follow.

 

[Bosh]

I had some Franziskaner at the bar in Itaewon. After you enter Itaewon (from Yungson) I think it's at the second light, make a right (there are fruit vendors usually parked right at that corner) and you can see the upstairs bar on the right. It's across from the Burger King (but I was told it's not there anymore). I was just there in Nov and Dec.

I don't remember the name of the place, but lots of Americans go there.

Anyway, it's better than Cass, Hite, and OB...I prefer the mango juice and Soju...

Right, that's Gecko's was there last night with the wife
Franziskaner isn't a bad beer, but its not worth 7,000 won (about $7.50). Too bland Hoegaarten's decent enough though, but then I tend to prefer Belgian beer to German across the board...

 

[mr x]

Pretty obvious who has some Economics schooling in here, and who needs some.

It's basic accounting. If you can't back it up with numbers ...

Of all the posts I've seen, all the many times this has been discussed, all the times people have claimed costs for time, not once, not once have I seen anybody give the dollar figure of what it cost them for their time for a 5 gallon brew day. The basic core value of the argument, and no dollar figure to back it up. When you can do that, then come back and talk to me. No theories or conjectures. Just a number.

 

[IlliniSox4Life]

For all those going on and on about the opportunity cost of your time, I understand that part completely (I'm graduating in less than a month with a degree in Economics).

What you are also failing to factor into the equation is the joy/utility that people get out of actually doing the work. In other words, you are comparing the cost of a bottle of good beer to the cost of a bottle of homebrew. Even if the physical beer themselves is identical, the pleasure that somebody gets out of drinking that homebrew is inherently more than the pleasure from a bottle of any other beer. There is the feeling of accomplishment as well as the pleasure of making it and so many more things that you get out of it than just the beer. So you can't really directly compare the costs of the two - the homebrew gives the homebrewer more pleasure than a regular beer.

The equation totally changes if somebody doesn't enjoy brewing their own beer.

Think about it like this. If you were to try to apply an economic thought process to comparing the cost of sex with a hooker versus sex with your significant other. Let's just make up a figure (I have no experience with this): $100 + 1 hour of time (I'm just going with an even number here, and I didn't want to say 1 minute). Lets say your time is worth $20/hr. So it is costing you $120. Now take your significant other. It will take the same hour, but won't have a pricetag attached to it. However, it also takes all the effort you need to put into a relationship. There could be costs too. Going out to dinner? Lets say you spend an average of 10 hours of time with your significant other for every time you have sex (again, this can vary widely based on relationships, I just picked a number that didn't seem ridiculous). So that is $20/hr*10hr=$200. You're looking at a total of $220 (including the hour the act takes).So having sex with your significant other "costs" more than a hooker. The problem is, it is not the same, so you can't compare the two without remembering that the act which is occurring is inherently more rewarding with your significant other than with a hooker.

There's so many more costs/benefits you can take into account when trying to determine the "economics" of comparing any two things. My point is that in this instance you are not comparing equal products:

Buying beer = Lust
Homebrewing = Love

Buying beer = Physical
Homebrewing = Emotional

 

[Aust1227]

It's basic accounting. If you can't back it up with numbers ...

Of all the posts I've seen, all the many times this has been discussed, all the times people have claimed costs for time, not once, not once have I seen anybody give the dollar figure of what it cost them for their time for a 5 gallon brew day. The basic core value of the argument, and no dollar figure to back it up. When you can do that, then come back and talk to me. No theories or conjectures. Just a number.

I have made a good amount of money playing online poker. I play 4 tables at a time and have averaged $16.37 an hour for my last 500 hours. Online poker is available 24 hours a day and seven days a week. When I am playing I am making money (over the long run, obviously there are short term swings), when I am not playing, I am not making money. Brewing a batch of beer takes me 4 hours.

I forfeit $65.48 by brewing a batch of beer.

You like apples?

 

[EvilTOJ]

I like apples.

 

[Bobby_M]

It's basic accounting. If you can't back it up with numbers ...

Of all the posts I've seen, all the many times this has been discussed, all the times people have claimed costs for time, not once, not once have I seen anybody give the dollar figure of what it cost them for their time for a 5 gallon brew day. The basic core value of the argument, and no dollar figure to back it up. When you can do that, then come back and talk to me. No theories or conjectures. Just a number.

I gave you a perfect example using your 40 hour work week potentially going up to 46. Instead of using my point for a basis of arguement, you ask for something else.

If you earn $20 an hour for 40 hours and your boss offers you 6 more hours that would eat into your brew time, the cost of brewing instead of working is YOUR hourly wage. That would be $120 in opportunity cost. Are you asking me for MY hourly rate? $42.50 an hour but I have taken short term part time work for $25.

If you're not buying it at your day job rate, please at LEAST use your area's legally defined minimum wage. Let's say $7 an hour. That's STILL at least $42 in labor for a batch of all grain beer.

Just tell me how much it would take to be convinced to go work at a local brewery. The head brewer approaches you because he heard you're a damned good brewer and says, how much would I have to pay you to come here once a week and brew a batch. It will take you 6 hours. Do you do it for free? How much then? That's amount is how much it costs you to brew beer even if you're the one going to consume it.

 

[Bobby_M]

For all those going on and on about the opportunity cost of your time, I understand that part completely (I'm graduating in less than a month with a degree in Economics).

What you are also failing to factor into the equation is the joy/utility that people get out of actually doing the work.

If you read through the entire thread, you'll notice that I deliberatly do this because the build vs buy question it completely unrelated to the fun involved in the work. Again, using the emotional aspect of the question is perfectly fine if the question is "is it worth homebrewing?". Yes, the answer if yes (YES). Why? Because it's FUN.

The one thing I failed to realize in the beginning of this interesting debate is that even if someone comes in here and posts the seamingly innocent question of "is it cheaper to brew your own beer?" everyone here IMMEDIATELY assumes the person asking the question is already agreeing that homebrewing is an awesome intrinsically rewarding hobby. Does everyone understand this nuance? What if someone overheard you talking about brewing in public and had no idea that homebrewing was possible. They pose the question "what is cheaper, brewing or buying beer?". Will you still answer it with the false pretence that EVERYONE will enjoy brewing as a leisure activity despite the ACTUAL question they asked you? Would you not at least mention that it will probably cost more but you'll have a lot of fun in the process?

Someone please tell me that the following two questions have the same exact answer all the time:

1. Given that homebrewing is a rewarding hobby, is it worth paying for all the ingredients and putting all that time in?
2. I'm a beer drinker that has no interest in the hobby of homebrewing for its leisure value, but I'm wondering if it might be a way to get good beer cheaper than buying it. Is it really cheaper?

Frankly, if you as a homebrewer think the answer is the same, I'm done debating. If you realize the difference, I guess we all have to agree from now on that anyone that comes to a homebrewing forum and asks something like either of the questions they are REALLY asking question #1. To that question the answer is yes.

 

[Jonnio]

I have made a good amount of money playing online poker. I play 4 tables at a time and have averaged $16.37 an hour for my last 500 hours. Online poker is available 24 hours a day and seven days a week. When I am playing I am making money (over the long run, obviously there are short term swings), when I am not playing, I am not making money. Brewing a batch of beer takes me 4 hours.

I forfeit $65.48 by brewing a batch of beer.

You like apples?

Are you actively engaged for that entire four hours? If not then that doesn't count because you could start your mash, go play for 45 minutes (stirring on hands that you fold) etc...

I would say you probably forfeit $20-$30 by brewing and the rest by choosing to spend the time between active steps relaxing.

I think something a lot of people are missing when figuring opportunity costs from a pure hypothetical standpoint is why we associate opportunity costs in the first place.

Time spent has an opportunity cost because there are things that you would rather be doing or need to do instead of said activity. If you would rather be at home then at work, then there is an associated cost to being at work (hopefully at least your wage) If you would rather be at work then brewing beer you ABSOLUTELY have to figure in the cost of missing work.

That is why things like mowing the lawn or changing the oil are often used as they lend themselves to these purely hypothetical arguments. They work because for many there are things we would rather do. How many of you would rather be at work than mowing the lawn...I am one of them, so for me, if I could find someone to mow my lawn for less than the cost of 2 hours of work (and my boss would start paying me overtime to work 2 more hours a week) I would do it. I can't though, so I better get out there and start the mower.

 

[FlyingHorse]

It's basic accounting.

Actually, your side is arguing accounting (my time is only worth the amount of currency that some 3rd party is willing to pay me for it); the other side is arguing economic theory (my time is a resource that I can use in many different ways to increase my utility, not necessarily in monetary ways).

I like oranges.

 

[the_bird]

Here's a different way of looking at this "problem."

Start with an estimate of how much good beer costs. I've been paying $10 a sixer for decent stuff, ballpark's probably $8 - $10. Let's say $9 per sixer, for two cases, is $72, as being the equivalent value of your output for a five-gallon batch.

Now, what are your ingredient costs to make that beer? $25, maybe? Stuff's more expensive, but we usually buy in bulk. Many people re-use yeast, so you can spread that cost out over a couple batches. Let's factor in other direct expenses, like propane and maybe you use a bag of ice to pump ice water through your IC. Let's ballpark direct expenses at $30 for that batch.

That leaves a quasi-gross "profit," before paying yourself, of $42. Now, you ought to depreciate some of your overhead - your gear is getting wear and tear on it, you'll have to replace your mash tun eventually (even if ten years down the road). This is a huge gray area, but you should SOMEHOW factor in your capital expenditures and spread that out over time. Let's say you figure $5 per batch of "overhead," leaving a preliminary profit of $37.

How long did it take you to brew? Six hours with cleanup, another two hours of researching and designing the recipe... another couple of hours to rack and bottle the beer... let's say ten hours total.

$37 divided by ten hours = $3.70 per hour. In effect, that's your "brewing wage." If you're brewing JUST to save money, you'd be better off working a part-time job for those ten hours if you could get an after-tax wage above $3.70.

 

[Bobby_M]

Thanks for that perspective because I think it illustrates my point much better than I had been able to do. You also touched on the fact that it's getting more expensive for us while it hasn't affected the big boys quite as much (at least not yet). I mean that special bitter used 7oz of hops and you have to consider the current costs of your stock, not what you actually paid (I'm sure Mr X would argue on this one too). Why? I can sell an ounce of hops for $2.75 right now even if I paid 10 cents for it). My hop bill was like $20. I also thought buying grain in bulk was so cheap, but not so much. It's about a dollar a pound for MO.

 

[the_bird]

Bobby, I think that means I've got an unrealized capital gain of $50 on the hops I have in the freezer! The IRS ain't gonna make me mark-to-market, are they?

 

[Jonnio]

If you're brewing JUST to save money, you'd be better off working a part-time job for those ten hours if you could get an after-tax wage above $3.70.

That's what I was trying to get across too - if you hate brewing and would just assume working a part time job at McDonalds, then brewing will never monetarily make sense.

 

[mr x]

I have made a good amount of money playing online poker. I play 4 tables at a time and have averaged $16.37 an hour for my last 500 hours. Online poker is available 24 hours a day and seven days a week. When I am playing I am making money (over the long run, obviously there are short term swings), when I am not playing, I am not making money. Brewing a batch of beer takes me 4 hours.

I forfeit $65.48 by brewing a batch of beer.

You like apples?

Well, a number.

Now, look at a week of your earnings in which you brewed a batch of beer. Did you take home $65.48 less money by brewing that batch of beer in that week? Real money, not hypothetical money.

 

[FlyingHorse]

$37 divided by eight hours = $3.70 per hour. In effect, that's your "brewing wage." If you're brewing JUST to save money, you'd be better off working a part-time job for those ten hours if you could get an after-tax wage above $3.70.

Right! now presumably, one of the other outputs of the brewing session is "happiness"...you like to brew, you like to tell people you made the beer they're drinking, you like your beer etter than commercial, etc. So to you:

$30 + 6 hrs = 2 cases of beer + 1 brew session worth of "happiness" (BSH)

Let's say it takes you an hour to buy commercial beer, and toss in $3 for the cost of getting to/from the beer store. So, you'd have

$75 + 1 hr = 2 cases of beer

Substituting:

$30 + 6 hrs = $75 + 1 hr + 1 BSH
5 hrs = $45 + 1 BSH

If you are indifferent to brewing (in other words, your BSH = 0), then you are saying your time is worth $9/hr...you're willing to invest 5 hours of time to save $45, with no additional "happiness"

If you really LOVE brewing, you're saying your time is worth MORE than $9 hr...imagine that your neighbor comes along and says "instead of brewing this afternoon, let's go to the ballgame". You, for purposes of this example, are indifferent to the baseball game -- it provides you with 0 happiness. If you're rational, you will need something worth MORE than $45 to make you give up the 1 BSH of happiness that brewing will give you. Say the neighbor offers you free box seats and buys all the beer, and that comes to $100. That's just enough to put you on the fence; you're now indifferent between brewing and going to the game.

Now for your 5 hour investment you can have either $45 + 1 BSH, or $100 and 0 BSH. All o fthese things are equal to you.

5 hours = $45 + 1 BSH = $100

Your time is worth $20 an hour ($100/5 hrs)

The more you say you like brewing, the higher economic value you're assigning to the time you spend doing it.

 

[_Edge]

I should never have posted in this thread.

We all homebrew. That means we all value it more than doing something else. Homebrewing wins!

 

[mr x]

That means we all value it more than doing something else. Homebrewing wins!

No question about that.

 

[Sherpa FE]

Just think how much money has been wasted typing and debating this instead of homerewing

 

[RoaringBrewer]

Just think how much money has been wasted typing and debating this instead of homerewing

Ah-hah! Noone has figured in the cost of spending 4 hours per day on HBT, "researching" techniques or your recipe for your next brew!!! A la, "R&D Expense"...

EDIT: Wellll... I guess this could be b/c a lot of us browse at work and "get paid" to browse HBT. Haha.

 

[BigKahuna]

Ah-hah! Noone has
EDIT: Wellll... I guess this could be b/c a lot of us browse at work and "get paid" to browse HBT. Haha.

I can't believe you would do that at work. That is what gives beer drinkers a bad name.

If I wasn't at work right now...I'd really give you a piece of my mind.

Edit: Wait. Hold on. Sorry. I was almost on a rant. Just realized, I'm at work too. Damn.

 

[Sigafoos]

I see your forum browsing and raise you IRC

 

[zacster]

And while my batch was boiling away last night, after I last posted, I went off and played the piano. Do I get ANY economic benefit from playing the piano in my own house? Nope. Do I do it anyway? Yep. (I'm a rank beginner at the piano too, so I'm not practicing to play for money, and at 53, I don't think I'll ever get to that point.)

There it is in a nutshell, we brew because we like to. Whether we save or make any money in the process is almost irrelevant.

And to someone else's point, I wasn't spending the entire 2 hours of brew time watching the pot.

 

[IlliniSox4Life]

If you read through the entire thread, you'll notice that I deliberatly do this because the build vs buy question it completely unrelated to the fun involved in the work. Again, using the emotional aspect of the question is perfectly fine if the question is "is it worth homebrewing?". Yes, the answer if yes (YES). Why? Because it's FUN.

The one thing I failed to realize in the beginning of this interesting debate is that even if someone comes in here and posts the seamingly innocent question of "is it cheaper to brew your own beer?" everyone here IMMEDIATELY assumes the person asking the question is already agreeing that homebrewing is an awesome intrinsically rewarding hobby. Does everyone understand this nuance? What if someone overheard you talking about brewing in public and had no idea that homebrewing was possible. They pose the question "what is cheaper, brewing or buying beer?". Will you still answer it with the false pretence that EVERYONE will enjoy brewing as a leisure activity despite the ACTUAL question they asked you? Would you not at least mention that it will probably cost more but you'll have a lot of fun in the process?

Someone please tell me that the following two questions have the same exact answer all the time:

1. Given that homebrewing is a rewarding hobby, is it worth paying for all the ingredients and putting all that time in?
2. I'm a beer drinker that has no interest in the hobby of homebrewing for its leisure value, but I'm wondering if it might be a way to get good beer cheaper than buying it. Is it really cheaper?

Frankly, if you as a homebrewer think the answer is the same, I'm done debating. If you realize the difference, I guess we all have to agree from now on that anyone that comes to a homebrewing forum and asks something like either of the questions they are REALLY asking question #1. To that question the answer is yes.

For one, the OP NEVER asked "is it cheaper to brew your own beer?". The OP stated "I was trying to determine just how economical homebrewing really is." If you think those are the same question, you are wrong.

You should also note that in my post, I didn't ignore the fact that certain people don't like to homebrew. In fact, I specifically stated "The equation totally changes if somebody doesn't enjoy brewing their own beer. "

If you are looking for the answer to your two questions you proposed they are:
1) Yes
2) It is possible even if you factor all the opportunity costs in if you compare it to really good beer, but not likely. I would never recommend it to anyone if they don't have interest in the hobby itself.

If you are trying to answer the OPs question about "trying to figure out how economical homebrewing is", than you HAVE to factor in both the utility and the quality of the product. That is the question I am trying to answer.

 

[farmbrewernw]

I wish I could figure out how to make beer while at work, I have the HBT thing down pretty good but not so much on the beer making thing. Someone has got to come out with some sort of automation process by which we can do this sort of thing over the internets.