Why is commercial beer getting more expensive?

[normonster]

The price of beer is mainly on the distributor/retail end. They set the price and make up about 60% of the cost. Breweries have very little say in the cost other than a suggested price point.



Prices are going up because people are still buying them. I call it the "Apple" effect. How can Apple charge $2,200 for a laptop when there are great ones out there for $700? Because people buy it.



I have two Craft Beer Cellar stores on my commute home from work. One near the city and one in my hometown. SAME beer, 25 miles apart is sometimes $5 more a 6-pack. I literally don't buy beer from the one in my town unless I have to. I've seen price swing of up to $10 on a bomber from store to store.



This has nothing to do with the brewery.

Breweries cannot dictate retail prices but there is WAY more they can do than what you imply. I'm a pricing manager for a huge wine company, so I'm very familiar with three tier pricing strategy.

Wholesalers and retailers generally work on known margins (negotiated and in some cases State mandated like OH) and freight and tax rates are known (freight is negotiated and tax is dictated by the State).

If you want a bomber to hit the shelf at 4.99 and you know the tax and freight agreement with the distributor you can price accordingly:

4.99x.7 (retail assumed at 30%) = retail purchase price ($3.493). $3.493x.75 (distributor at 25%) = distributor landed cost ($2.619). If tax and freight total to 00.38 then $2.619-.38=manufacturer FOB = 2.24.

There you go. If retail is at 30%, three tier is at 25% and freight and tax make 38 cents then you need to sell it at 2.24 to hit a $4.99 retail shelf price.

What's weird is how it changes as FOB goes up.

Say they raise the FOB by .50 cents...doesn't seem like much but the resulting shelf price with all else held equal is 5.95. If they raised it a whole dollar up to 3.24 FOB then the shelf price goes up to 6.89 each!!!!

Much more to pricing than simply letting the chips fall where they may.

 

[tagz]

Ah, so this is where all the armchair economists have been hanging out.

 

[drainbamage]

Yeah, we got run out of "Funny things you've overheard about beer" years ago.

 

[applescrap]

Forget expensive six packs my liquor store now has row after row of $10 12 ounce bottles. Paradox made in Denver here aged in oak barrel it's definitely worth the $11 a bomber in my opinion

 

[max384]

It's the bomber prices that get me. There's some decent $4 and $5 bombers, but the majority are $7-10 for any standard beer, then $15 for big imperial stuff. It's insane.

Yep. This has always bothered me as well. The prices really are insane, and to boot, I'd rather have two 12 ounce bottles than a bomber anyhow. My glasses are 12 ounces, so the only thing that buying a bomber accomplishes over two 12 ouncers is that the second half gets flat while I drink the first half.

Needless to say, I rarely buy bombers.

 

[iijakii]

Most of the grocery stores near me let you grab singles for $2. It's funny doing it for a $7 bomber and getting it for $4 instead. That said, most beers I want to try are bomber-only unfortunately.

 

[Calichusetts]

IMO, the best stores let you buy 6-packs or singles of that beer, often for the correct fraction or slightly more ($6.00 six pack or $1.25 single is often the equivalent.) If that is not offered in your neck of the woods, then that is a great business opportunity right there.

 

[bobeer]

I noticed an increase in prices for sure. I used to brew about 95% of all the beer i consumed. Now, i've gotten bad and its probably close to 50/50... buying beer is much more expensive than just brewing but I'll go back to making my own once celebration ale goes away
I can't do the expensive bombers anymore. I could brew a half batch for almost the same price as 1 or 2 bottles of commercial stuff. I allow myself 1 750 ml a year to put in my cellar but that's it!

 

[ThomasPaine]

I get drunk from pbr and enjoy my homebrew

 

[mtausch11]

Yeah. I've seen a lot of 6 packs at $10 now. All the more reason to brew your own and justify spending all that money at the brew store to the wife.

 

[Bosh]

$10 for a six-pack? ****, here we get happy shouts buzzing around Facebook when they get below $30 for a six-pack worth of good stuff. Best deal I EVER find is four tall boys of the more expensive mass market stuff (Pilsner Urquell, Japanese light lager, sometimes Bass or Boddingtons etc. etc.) for about $9 and that's so incredibly cheap that the local breweries that screaming and trying to goad the government into legal action against such unfairly low prices.

 

[mtausch11]

$10 for a six-pack? ****, here we get happy shouts buzzing around Facebook when they get below $30 for a six-pack worth of good stuff. Best deal I EVER find is four tall boys of the more expensive mass market stuff (Pilsner Urquell, Japanese light lager, sometimes Bass or Boddingtons etc. etc.) for about $9 and that's so incredibly cheap that the local breweries that screaming and trying to goad the government into legal action against such unfairly low prices.

Last year all the craft beer in Milwaukee seemed to be 7.99/6pk. I would never pay 30. You can make 2 cases of the same beer for 30 at home.

 

[QuadConPana]

When I heard how much BCBS is going to be this year, I decided I would sleep in this Black Friday. Can I afford a couple of bottles? Sure, I suppose. I just don't want to encourage that nonsense. Maybe I would buy a couple of bottles if it was easier to get. But there's no way I'm standing on line in the dark at that price.

I paid $36. for a 4 pack of Higher Math, but all I had to do was drop it into my cart. (And @ 17% it's really two servings per 12 oz bottle) But, I wouldn't have gotten up at 4 am at that price.

 

[schematix]

I stopped buying commercial beer 4 years ago when the price went above $6/6 pack for an average craft brew and started making my own.

I speak with my wallet and my wallet agrees most of these beers aren't worth $1 each, let alone now closer to $1.50 each.

 

[rawlus]

I don't know about BMC prices, but craft beers are using way way more raw j gradients than ever before. Even a basic session IPA can have insane amounts of whirlpool hops to add aroma/flavor without bitterness. This drives up the cost to make that beer exponentially.

Imperial beers cost more because their grain bill and typically hop bill in the case of dipas and similar are way higher.

Same with all the habanero and fruit infused flavored beers, it's more than just hops barley and malt.

As consumers demand more flavor and more variety I think that is driving raw costs and experimental costs to satisfy that demand.

 

[Bosh]

Last year all the craft beer in Milwaukee seemed to be 7.99/6pk. I would never pay 30. You can make 2 cases of the same beer for 30 at home.

Exactly. Hence homebrewing, a lot easier to justify it when you're saving that much money.

Of course the ingredients cost more too, for some reason malt is pretty reasonably-priced (about $2/pound for base malt if I buy it in a two kilo bag, more for specialty malt) but yeast and hops are pretty damn expensive. But if you get bulk hops from the states and harvest/stick to dry yeast it isn't that much more expensive, especially for a place where even the local piss beer is taxed heavily enough to be as expensive as a lot of craft beer back home (about $1.73 for a half liter can of weak-ass lager, a bit cheaper for the pitcher bottle or a six-pack, but then it's almost never sold in six packs).

 

[treacheroustexan]

I buy commercial and brew my own. For my light beer I drink I get Genesee Light for $3.99 a 6 pack of 16 oz cans. I can get commercial/local 6 packs for $7-12 which I don't mind. I occasionally splurge on a few bombers. I don't mind spending the money.

 

[schematix]

Ingredient cost in your typical bottle of beer is a small component of the overall cost. Reasonable size brewers only pay about 50 cents per lb for grain (your LHBS isn't paying much more) and a few bucks a pound for hops. Buying volume on contract makes all the difference here. Even for an Imperial Something this is only slightly more expensive than your average beer in terms of raw ingredient cost.

 

[smcinco]

I don't know about BMC prices, but craft beers are using way way more raw j gradients than ever before. Even a basic session IPA can have insane amounts of whirlpool hops to add aroma/flavor without bitterness. This drives up the cost to make that beer exponentially.

Imperial beers cost more because their grain bill and typically hop bill in the case of dipas and similar are way higher.

Same with all the habanero and fruit infused flavored beers, it's more than just hops barley and malt.

As consumers demand more flavor and more variety I think that is driving raw costs and experimental costs to satisfy that demand.

I reached past a Sculpin to get a cheaper Enjoy By today but what do I know.

 

[beekeeperman]

Craft beer here is running $8.50 - $10.50 a 6 pack .
Too much although i will buy some if the pipeline runs dry, the $8-9 dollar stuff.
Need to keep the pipeline flowing better .

 

[TheCADJockey]

Genesee Light

Aww yeeah

 

[Johow]

Glad I can still get a case of Sierra Nevada at Costco for $25, just over a buck a bottle and the 12oz shorties are my favorite bottle anyway.

 

[aangel]

We pay $40 for a case of generic light lager here in Ontario, and sixpacks of decent craft beers go for $13+

 

[hunter_le five]

We pay $40 for a case of generic light lager here in Ontario, and sixpacks of decent craft beers go for $13+

USD or CAD?

 

[normonster]

We pay $40 for a case of generic light lager here in Ontario, and sixpacks of decent craft beers go for $13+

Sounds like a whole thread of reasons to spend your drinkin days in the States and move to Canada when it's time to be constantly sick.

 

[ThomasPaine]

I buy commercial and brew my own. For my light beer I drink I get Genesee Light for $3.99 a 6 pack of 16 oz cans. I can get commercial/local 6 packs for $7-12 which I don't mind. I occasionally splurge on a few bombers. I don't mind spending the money.

I'm with you. I love me some good craft brew. That is why I brew my own. But a $5 6pack of pbr sure goes down easy for the price.

 

[BreezyBrew]

What's more confusing to me is when bombers are 2x expensive per ounce as the SAME beer in 12 oz form... Are we supposed to be idiots?

Last time I was at the beer store they had two of the same EXACT beers, one was a 16 oz and one was a bomber. The bomber was $12.99 and the 16 oz was $12.49. Uhhhh.

The more expensive bombers I buy (not all that often) the more I realize they just aren't worth it. One of my more recent purchases was a barrel aged barley wine for $18 that was pretty forgettable. What was the name again?

 

[PlexVector]

What we need is craft beer that is along the lines of a "Two Buck Chuck" wine. Not fantastic but very drinkable and the price can't be beat!!

Wouldn't that be an average homebrew...

EDIT: That would be a below average homebrew; now that i caught up with my post and reread the qoute.

EDIT2: I think one of my fingers must be dyslexic.

 

[aangel]

USD or CAD?

CAD...but the price only goes up. It was $40 for a case back when we were at parity on the dollar.

 

[goiked]

was playing through the noses in Michigan for years until more breweries and output and increased . Bells alone prices moved up then down when their out put increased. Hells bells , no pun intend lol ,Kroger's was undercutting the small guys by selling a 6 packed for $7.99 this summer where normally it goes for 10.49 most small places. It don't help up here with Michigan messed up limited distributors system where brewers have to go to the middle man to get their beer to market. Still your going to play more for quality beer anywhere. It sounds like THE MAN down south has seen $$$ in their eyes on the nation trend on drinking real beer and not that water down **** we were all subject to drink in the old days!