When did craft beer prices “jump the shark”

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Broken Crow

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Of course, consumers can be influenced by advertising and other factors which in turn changes perception of overall value or lack of value of a product.
Beta was vastly superior to VHS. 'CD-Quality' is an oxy-moron. Compressed music sounds like sh*t. McDonald's...
yet $$$.
 

deeve007

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Production costs are not relevant to the value of "worth" to a consumer. The person who actually takes the money from their pocket and buys something determines what it is worth, not anyone else. Put something valuable on Ebay, you might be surprised what people are willing to pay. Of course, consumers can be influenced by advertising and other factors which in turn changes perception of overall value or lack of value of a product.
No debate. My comment was more that a $9+ can of beer retail price is ONLY due to marketing, when those that do have insights into production & distribution costs know this is not the case.

The marketing aspect comes into play for whether a brewery can charge $7-9 for that can, or $15. The Bruery, for example, make some incredible higher end beers of all types (along with a cheaper core range, like most), their beers are exported around the world and usually sold out very quickly where available. With the name they have in the market nowadays (they've been around since 2008) no debate their profit margins are probably a bit higher than the new brewery just starting out.
 
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lumpher

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Production costs are not relevant to the value of "worth" to a consumer. The person who actually takes the money from their pocket and buys something determines what it is worth, not anyone else. Put something valuable on Ebay, you might be surprised what people are willing to pay. Of course, consumers can be influenced by advertising and other factors which in turn changes perception of overall value or lack of value of a product.
HEAR, HEAR!!! I can verify this is true, as think I saw this 30 years in a freshman Marketing textbook. Maybe not the reference to eBay. Maybe it was an internet trading site...
 

Miraculix

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As I wrote, why not go chat with a few actually running breweries and get some insights about the FACTS involved in production costs and challenges, rather than repeating your OPINION that this beer style isn't worth the money to you? All I can convey is what I have learned from a number of them in a few different countries, and from our own early estimates of production costs. Our more limited release "creative" beers won't be for making a larger profit, but simply because the market is demanding them. It would be amiss of us from a business perspective to ignore that as a small brewery looking to gain a foothold in the market.
My girlfriend's father actually owns a brewery. Not a micro one. He does all the fancy shmancy hipster pleasing neipa milkshake whatnots, and he also does long term barrel aged sours, imperials. Apart from these, obviously the core beers as well, APAs, IPAs and lagers.

Except from the high abv beers, the barrel aged and ice beers, there are no beers that are even close to 9 dollars a can. And he wins prizes with his beers so they are not cheap rubbish.

Man, if you have production costs that need a two week beer to cost 9 dollars a can to be profitable, there is something seriously wrong with your production costs!
 

deeve007

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I do love how so many seem to know so much about everyone else's business and what must be wrong with it! :D

"Except from the high abv beers" - You do know that the same reason these cost more to make (more ingredients, grain in this case) is the same reason beers with lots of adjuncts, and certain premium priced adjuncts, cost more to make?
 

McMullan

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The stripped-down mentality behind the flawed business plan without its marketing speil. Let's package beer in gold cans and charge mugs a ransom for the beer. It has very little to do with beer.
 

Miraculix

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I do love how so many seem to know so much about everyone else's business and what must be wrong with it! :D

"Except from the high abv beers" - You do know that the same reason these cost more to make (more ingredients, grain in this case) is the same reason beers with lots of adjuncts, and certain premium priced adjuncts, cost more to make?
I'm sorry that I didn't make it clear enough. These high abv beers that are higher priced require special processes or extended aging time and do have higher taxes on them. For example long term barrel aging or ice beer and than barrel or whatever you can think of weired combinations, he probably did it :D

That brings up the price and that is understandable.
 

deeve007

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Higher ABV comes from more grains, double the amount sometimes.
---

This might interest some, and probably the most comprehensive breakdown of costs I've seen from a brewery (though I want to do similar once we're operational). This is one of the best known independent breweries in Australia, excellent beer & multiple awards including Aussie small brewery of the year (in case anyone wants to dismiss them as not knowing how to run their business).

Original costs breakdown from 2016 when they brewed 2,000 litre batches: Craft beer prices: how much does beer cost to make? - Black Hops Brewing
Updated costs from 2020 when they're brewing 15,000 litre batches: Craft beer prices: how much does beer cost to make? 2.0 - Black Hops Brewing

This is for one of their cheaper beers (core pale ale), not a lot of hops, zero adjuncts.
2,000 litre batches is still fairly sizable, we'll be starting off with 500L tanks as many small breweries do.
The costs drop significantly with volume increases if you compare their 2016 and 2020 breakdowns.
Inversely, a brewery brewing 500L batches would have higher costs than doing 2000L batches.

2016, retail price if they were going to make any money at all for the retailer was $120 a carton (24 beers I think, though many breweries here do 16 per carton).
That's AU$5 retail for a 375ml can (~US$3.40).
That works out to around US$4.30 for a 16oz can, for a fairly stock standard (but excellent!) pale ale.

That's if buying a full case of course, what's the usual markup buying a 4-pack versus a 16 case? It's roughly 20% in Oz, which would take it up to US$5.30/can. Again, no adjuncts, not a huge amount of hops.

And in their 2020 update that estimate they probably underestimated the real costs, so probably a little more than what they've outlined.
 
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McMullan

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Again, there's no money in beer. Beer's cheap. Dirt cheap. A lot cheaper than slick marketing pretends. Commercial breweries need to be able to make beer for less than a home brewer, for goodness sake. It's all about sales volume and scale. If a brewery isn't big enough to support its operations by selling beer at reasonable prices they failed to accept the maths of reality in their business plan.

Only a brew pub can justify charging much more than the beer's worth, because the venue and service cost more than the beer.
 

AlexKay

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Hey, I agree that most people paying $9 a beer in a liquor store are being taken for a ride. But, just as a mental exercise ...

Everything I've seen everywhere says that a nano-brewery is not going to make money. You've got to produce beer (cheap) at scale to cover the costs of labor, rent, overhead, and amortization of equipment (all not cheap). Given the amount of beer you produce there just isn't enough money coming in: you have to charge a ridiculous amount of money for every beer.

So, that said, let me propose a nano-brewery business plan: make the best damn IPA you possibly can, and do whatever you need to do (refrigerated trucks, super-local distribution, aggressive sell-by dates) to get it into a customer's hand super-fresh. Why IPA? Because freshness = quality cuts much more in your favor, in terms of competing with all of the (quite good) beers already on the market, for hop bombs than for most other styles. Do all that, and -- maybe -- that customer has an experience they're willing to pay for, at the exorbitant price you're going to need to set to stay in business.

No one is going to argue that there aren't any beers worth paying $9 for a can or bottle. No one's going to argue that the list of such beers isn't vanishingly small. Your chances of getting onto that list is also vanishingly small, but it's a more plausible goal if you can leverage your tiny business and local-only distribution into getting a much fresher (and for hop bombs, that can mean much better) product out there.

Edit: for freshness reasons, I buy all my beer from breweries within roughly a hundred miles (and this includes some very good breweries indeed.) Also for freshness reasons, I buy IPAs only from breweries more or less in my town.
 

Beermeister32

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A good time to review cost curves and micro economics:


Another thing manufacturers are currently dealing with is the unpredictability of future materials costs. Nobody has a crystal ball, everything is being costed out high using worse-case numbers currently. Especially affected are small batch, limited run items like this.
 

Brewdog80

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While I'll not be buying any beers that I think are overpriced, and this example is about double anything I've seen locally, I would say if this particular brewery ONLY sells through stores, they may have to charge extravagant prices to exist. Most all of the micro and nano breweries around here have a taproom and charge as much or more than retail prices for their draft offerings. THIS is where the profit is made. I'd bet most that package and sell through stores break even at best on that volume. Most around here sell packs at or slightly less than retail price at the taprooms also. Good profit here as no cost to distribute and they get all profits the retailer gets. Restaurant prices? They have ALWAYS been double or triple what a can or bottle retails for. Heck the towns around here have an EXTRA 10% TAX on Restaurant beers and drinks. 20% tax on that beer.....
 

Pablo 54

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Wow. I read the post and then stumbled across this: Beeronomics: Factors Affecting Your Pint

Unless I missed it, I didn't see any mention of growlers.
The bottle shop I used to go to would fill up just about anything with what they had on tap. Then, about 5 or 6 years ago, they stopped doing that and you had to buy one of their embossed growlers. About that time I figured out the math involved and determined there was at least a 20-25% markup when getting beer in a growler.
 

deeve007

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No one is going to argue that there aren't any beers worth paying $9 for a can or bottle.
Some in this thread are arguing just that.

No debate the $9+ segment isn't going to be the major segment, anymore than $30+ bottles of wines or $50+ bottles of whiskey will be, most buyers go in large part on price. I can't recall the last time I purchased a $30+ bottle of wine (accept maybe in a restaurant), but I have a few friends who do quite often. Every alcohol segment is the same in that regard, all of them. Anyone believing otherwise has no actual idea, sorry.

But the very clear facts as indicated by sales (at least in Oz, we've done far more research there for obvious reasons), is that the premium segment of the craft beer market - aged, high ABV, super hoppy, heavily adjuncted (pastry stouts, smoothie sours et al) - is growing as a percentage of the overall craft beer market. Over the past 5 years that segment of craft beer has increased sales, breweries that brew them sell out of them very quickly and hence are brewing more and more, and any market research I have come across shows that drinkers are demanding these types of beers more and more, "quality over quantity" as it were.

Those are simply the facts within the craft beer segment at present, in Australia at least, whatever anyone's subjective personal opinion is on the quality of any those styles. And I'd be very surprised if it's not similar in many if not most other markets, including the US. Indeed a quick search does suggest this is the case:

Beeronomics: Factors Affecting Your Pint (posted by @Pablo 54 above)
"Although it's logical to assume that the demand for cheap beers increases during recessions, this isn't always the case. Sales of high-end craft and flavored beers have been on the rise even during recessions."

Report from tavour.com showing that their best selling beers are from the premium segment.
Their best selling beers for the month reported on included a $50 bottled imperial stout, and a trio of $10 fruited sours.

Another thing manufacturers are currently dealing with is the unpredictability of future materials costs. Nobody has a crystal ball, everything is being costed out high using worse-case numbers currently. Especially affected are small batch, limited run items like this.
Very true, and the situation in Europe is already having an impact on prices for some beer ingredients, and may continue to do so for a while.
 

balrog

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Wow. I read the post and then stumbled across this: Beeronomics: Factors Affecting Your Pint

Unless I missed it, I didn't see any mention of growlers.
The bottle shop I used to go to would fill up just about anything with what they had on tap. Then, about 5 or 6 years ago, they stopped doing that and you had to buy one of their embossed growlers. About that time I figured out the math involved and determined there was at least a 20-25% markup when getting beer in a growler.
THe alc licensing folks in Massachusetts do not allow pubs to fill random containers; growlers must be embossed with *THAT* brewery's name/brand/etc.
 

mud1070

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Still, since a sixtel is about 50 beers, it works out to about $1.35 per beer at the cheapest for Landshark to $1.99 per beer at the most for Dogfish Head 60 min. I’m just pretty sure we can do better.
It depends on how you value your time.
If you were to pay yourself a salary for the brew day, it would be close. If you had a loan or lease or other overhead, you'd be very close. IF you hired help, you'd be struggling.
I still prefer to brew my own and I know I can brew "cheaper" with similar results if I only factor the ingredients costs.
 

Erik the Anglophile

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Hipsters buy sub-par products that are niche and marketed as rare and new in order to feel special, then when enough hipsters have started buying it it is no longer cool and they move on to the next trend, nothing new.
I think a lot of the people who drink ONLY puree-milkshake-sour neipa whatever are people who don't really drink beer, and will likely go back to sweet cider once the fad dies.
Kinda makes me wonder how many breweries will close down when the trend with graphic cans fade out, and all the mediocre beers can't rely on extravagant artwork to sell...
 

SanPancho

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I don't see any of the taxes in those numbers, nor the cost of running a business -rent, salaries, utilities ect
taxes are negligible. Pennies on the dollar. Overhead is covered by your profit margin.
Work in the industry. This is correct.
I’m assuming small breweries, relatively new (no long term contracts), and obviously no canning line.
although this could also apply to special one-off beers, even from larger breweries as well.

In any case, I’m the first to admit I’m a cheap bastard, but I just can’t just see how folks are ok paying even half this price for 4packs. It’s insane to me.…
 

deeve007

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just can’t just see how folks are ok paying even half this price for 4packs.
I feel exactly the same about those paying.$50 for a bottle of wine, and yet many do.

Overhead is covered by your profit margin.
That's not how you run your budgets if you hope to survive, all your costs of production including salaries and any business costs are factored in, not just assumed as part of your profit. If you missed it check my previous link to costs breakdown from an Aussie brewery for an example of how it's done.
 
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Milk shake? Hotcakes? Here’s my “Hot Fudge Sundae” Fat Tire is the vanilla ice cream, North Coast stout is the hot fudge. Use as much as you like. In the NW I buy FT for less than $20 for TWELVE. The Stout is $11 for four. That’s $2-3 for an Imperial Pint. Does any nano-nano-mini-micro brewery really know how to make better beer than this? It’s beer.
 

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deeve007

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yet the$50 bottle of wine, when stored on its side in a cool dark place, gets better with age.....
Apparently aged whiskey does too, but it's lost on me. Completely subjective, just like beer styles and flavours.

Just like the beers we all prefer to home brew. You think every home brewer is paying the same for all the ingredients they need to brew the 20L of beer they prefer to drink? Not even close.

And seriously, if craft beer was only what a few in this thread believe it "should" be, I certainly wouldn't be excited about starting work in it. Thankfully it's not, not even close.
 
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SanPancho

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Apparently aged whiskey does too, but it's lost on me. Completely subjective, just like beer styles and flavours.

Just like the beers we all prefer to home brew. You think every home brewer is paying the same for all the ingredients they need to brew the 20L of beer they prefer to drink? Not even close.

And seriously, if craft beer was only what a few in this thread believe it "should" be, I certainly wouldn't be excited about starting work in it. Thankfully it's not.
you seem to have really strong opinions on this. which is interesting, since your thesis is basically "everyone has their own opinion and that's fine" and yet you wont stop trying convince everyone that its fully reasonable, which is just your opinion, which is what you think everyone should have a right to hold, even if it differs from others.....

i dont give a damn if someone wants to pay 9 a pint in a can. i just think its stupid. and i dont care what the cost basis of the can is, nor the profit margin, nor the marketing push and advertising hype, nor the brewery's prospects for success. i just think its stupid.

now if you tell me the beer was aged for 5 years in 1000 year old barrels with unicorn piss and wild yeast derived from cleopatra's mummy i might see how that could be "reasonable" in an objective sense.

but i wouldnt be buying a 4 pak. and it doesnt matter how much my homebrew costs, or that having commercial supplier accounts i can guarantee you that my homebrew ingredients are as cheap as they can get, i still think its stupid to pay 9 a can.

i also think that if a brewery held an auction for their beers, and the bidding went to $9/can due to demand, well that's just about as perfect of an objective, free market-derived "value" as you can get.

but i'd still think its stupid.
 

IslandLizard

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This is a homebrewing message board. This thread is in the “General Homebrewing Discussion” subforum. Why isn’t it in the “Craft Beer” subforum where the 3 or 4 people a week who visit that forum can deal with it? :cool:
You're absolutely right!
Thread was moved to our Craft Beer Forum.

When a member sees irregularities, please [Report] the post. That way us mods will be alerted.
The [Report] function is on the bottom of each post, first button on the left.
 

Pablo 54

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THe alc licensing folks in Massachusetts do not allow pubs to fill random containers; growlers must be embossed with *THAT* brewery's name/brand/etc.
Had a feeling. Just kind of stinks that I have to pay a premium plus to try a beer in the growler.
 

bwible

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Again, there's no money in beer. Beer's cheap. Dirt cheap. A lot cheaper than slick marketing pretends. Commercial breweries need to be able to make beer for less than a home brewer, for goodness sake. It's all about sales volume and scale. If a brewery isn't big enough to support its operations by selling beer at reasonable prices they failed to accept the maths of reality in their business plan.

Only a brew pub can justify charging much more than the beer's worth, because the venue and service cost more than the beer.
There’s no money in beer for some of the brewpubs and micros too. How many have we all seen come and go? Little ones and big ones. In its day, Schaefer was so big they sponsored the Yankees and the Mets. In the 50s, Schlitz was the best selling beer in the US, more than Budweiser at the time. And those were big boys. We’ve had so many brewpubs and micros here in SE PA startup, last a few years and go under. I remember talking to one guy who was the head brewer at 3 different micros here that all made good beer and all ended up going under. He said its a very capital intensive business and the competition is fierce. As I sit here in my basement, I have framed coasters hanging up from 5 that are no longer around and a shelf with pint glasses, 6 of which are not around anymore. I own 3 glass growlers, the logos on 2 of them are not around anymore.
 

Pablo 54

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Wine!? Son of a....

Best documentary to watch about wine and people who gush over it is:
"Wine for the Confused" (2004) with John Cleese.
I could not stop laughing.

I think you like what you like and that is that. I brew the beer styles I like, buy wine in the box, and still like a little Jack or Jim. Not into drinks, particularly beers that taste like food.

The places I used to frequent in my youth can be best summed up by Nick the Bartender from "It's A Wonderful Life":

Nick: Hey, look mister, we serve hard drinks in here for men who want to get drunk fast. And we don't need any characters around to give the joint atmosphere. Is that clear? Or do I have to slip you my left for a convincer?
 

kaffeenjunkie

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I know how much it costs to make beer 👈 🤷
you may know how much it costs to make beer but, you are apparently lost on leasing facilities, paying employees, graphic design, marketing, packaging, transporting, electricity and natural gas costs, taxes and other costs that must be paid out of that can of beer.
 

Bramling Cross

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I'm cheap.

As a kid in the punk scene, I quickly gave up on buying beer once I learned that you could make it. My interest in distilled beverages peaked around that time. ;) Eventually, I got it together and, outside of business dinners and baseball games, for the last twenty years or so, I buy beer once or twice a year at most.

My brewery is a lot more interesting to me than what is available on store shelves.
 

deeve007

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you seem to have really strong opinions on this. which is interesting, since your thesis is basically "everyone has their own opinion and that's fine" and yet you wont stop trying convince everyone that its fully reasonable, which is just your opinion, which is what you think everyone should have a right to hold, even if it differs from others.....

i dont give a damn if someone wants to pay 9 a pint in a can. i just think its stupid. and i dont care what the cost basis of the can is, nor the profit margin, nor the marketing push and advertising hype, nor the brewery's prospects for success. i just think its stupid.

now if you tell me the beer was aged for 5 years in 1000 year old barrels with unicorn piss and wild yeast derived from cleopatra's mummy i might see how that could be "reasonable" in an objective sense.

but i wouldnt be buying a 4 pak. and it doesnt matter how much my homebrew costs, or that having commercial supplier accounts i can guarantee you that my homebrew ingredients are as cheap as they can get, i still think its stupid to pay 9 a can.

i also think that if a brewery held an auction for their beers, and the bidding went to $9/can due to demand, well that's just about as perfect of an objective, free market-derived "value" as you can get.

but i'd still think its stupid.
I'm trying to convey some facts and data about costs of production, and the current state of the craft beer market. Most others are posting opinions, many of them misinformed. Big difference.

And I care because you're talking about thousands of people's jobs and careers, and hundred of small businesses who are working their ass off to brew good beer - even if that beer they brew isn't a style you like - and succeed in business.

So yeah I care. Apologies for that.

But you're right about one thing you allude to (possibly accidently)... I shouldn't have bothered, what happens in this thread doesn't matter, to any of us. My bad, all the best.
 
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SanPancho

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I'm trying to convey some facts and data about costs of production, and the current state of the craft beer market. Most others are posting opinions, many of them misinformed. Big difference.

And I care because you're talking about thousands of people's jobs and careers, and hundred of small businesses who are working their ass off to brew good beer - even if that beer they brew isn't a style you like - and succeed in business.

So yeah I care. Apologies for that.

But you're right about one thing you allude to (possibly accidently)... I shouldn't have bothered, what happens in this thread doesn't matter, to any of us. My bad, all the best.
im happy to debate production costs, forward contract purchasing, overhead, capital sourcing/purchasing and installation or pretty much anything else. Are you?

I’ve built and operated three brewpubs. Employed hundreds of folks at one time or another over past decade.

when you’ve come close to that level of experience and knowledge then circle back and we’ll continue the conversation.

in the meantime don’t act like you’re some sort of expert. nor are you a lobbyist or marketing director of the mbaa.

you can do whatever you want with your 9 bucks. so can I.

but I’m pretty confident that the majority of people posting on this thread (who are BEER DRINKERS, i.e. consumers) feel that -barring something very unique or rare- $9 a can is stupid.

YMMV.
 

McMullan

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Beer's dirt cheap
you may know how much it costs to make beer but, you are apparently lost on leasing facilities, paying employees, graphic design, marketing, packaging, transporting, electricity and natural gas costs, taxes and other costs that must be paid out of that can of beer.
This is why you'd need to be brewing (and selling) high volumes of beer, to be a viable business. Again, your customers aren't responsible for paying your bills or covering your setup costs. That's not how viable businesses work. If you find you're pricing yourself out of the market to cover your costs your business is failing. For every little craft brewery that starts up more go out of business, because they failed to accept the harsh reality of running a business. There are actually business models for pricing. Inflating prices to cover costs isn't a viable model; propped up by slick marketing, it actually becomes more of a confidence game. A form of con artistry, not a good business model.
 

bwible

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but I’m pretty confident that the majority of people posting on this thread (who are BEER DRINKERS, i.e. consumers) feel that -barring something very unique or rare- $9 a can is stupid.

YMMV.
Unless its a big, barrel aged beer. I’ve bought a few of those. But even Backwoods Bastard is only about $13 here for a 4 pack.

Me, I’m largely done with all the over the top stuff anyway. I’m not looking for the latest hazy hop bomb or the chocolate chicken chipotle pot pie porter.

Thats the other question to ask - when did beer get so WEIRD? How did we start with Sierra Nevada and end up with pastry stouts?
 
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khannon

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THe alc licensing folks in Massachusetts do not allow pubs to fill random containers; growlers must be embossed with *THAT* brewery's name/brand/etc.
That was the case in the past, but changed in ~2017 or so..

Also after a day at homebrew con, then a bar, we stopped at a bottle shop, and I guess I picked up one of these ~36 dollar 4 packs, having not paid attention to the price(other beers purchased as well).. The one I tried was not really a beer, but an ~5.3% fruit smoothie, chunks of fruit and all.. could not drink more than a few sips and down the drain it went..
 

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