Breweries selling 4% beer at regular craft prices

[elkshadow]

How can Deschutes River Ale at 4% cost more than Pyramid Outburst IIPA at 8.5%? I can buy Outburst at WM for 7.47 a sixer and DRA is 8.99 at safeway. ?!?!?!?!?!

"So wait, we can use half the ingredients but call it 'session IPA' or 'Long Haul Pale Ale' or whatever and still charge 9 bucks a six pack?"

Thoughts?

 

[afro_lou]

Labor?

 

[serum]

It'll still take pretty much the same time to make although there's less malt. The question you should really ask is whether the taste justifies the cost.

 

[AK7007]

The price of beer is woefully uncoupled from the wholesale price of ingredients. Pyramid might get a better deal than Deschutes on malt, hops, or yeast. They also have the backing of a large international corporation, whereas Deschutes is still privately operated. Deschutes might decide that their product is superior and commands a high price. Don't get outraged if you don't like a price - just don't buy it. You brew at home anyways, it'll all work out.

 

[jekeane]

There are so many variables that go into deciding price. Including companies being able to charge what they want for their product. Deshutes doesn't yet have mass distribution to the entire southeast or the North East according to the distribution map on their site. Pyramid is all over the place here in Florida so the distribution will change prices dramatically.

Cigar City Jai Lai is $10 /6 here Avg price of any other Florida IPA with similar abv is $8/6 Jai Lai is is better and worth more.

 

[soccerdad]

I don't generally look at ABV when I taste beer. I may look at it later, but taste means more to me than ABV. If I like the taste I will probably drink it again - and if I don't, I won't - regardless of ABV. If I want strictly ABV, a friend can get me truly excellent clear moonshine for $100 a gallon.

 

[Hello]

I've never associated ABV with price before. I've bought 6-pack of session IPAs (they're hugely popular today) at the same price as a 6-pack of something else higher in alcohol. I never gave it a second thought. In fact, I would venture to guess that when I am buying beer I am looking at taste and not how quickly I'll get drunk. I don't shy away from low ABV beers, but I shy away from beer that I know isn't good.

Deschutes can charge what they charge because they're not mass distributed. I do believe Pyramid is in NC as well.

 

[azazel1024]

The only time I'd really have it enter my conciousness is if Deschutes 4% pale ale was $8.99 for a 6-pack, but their 6.8% IPA was $7.99. Then I'd have to wonder what the hell is up.

That doesn't mean I've never bought a certain beer because it was cheaper (but I know it was still good. I don't drop money on crappy beer, no matter what). I'll admit to occasionally wanting or needing to stock up for a party, or I need more bottles or need to bring some brewery beer to a family beer tasting and looking at something and going "Oh, Schlafly IPA is only $7.99 for a 6-pack and Stone is $9.99...since I am getting a case...hmmm, maybe Schlafly this time and I'll get just a 6-pack of stone for personal enjoyment another time".

 

[falkaveli]

All supply and demand. More people want the Deschutes, therefore the price is higher. Price point will be driven by what the market can handle.

 

[zgja2]

I don't generally look at ABV when I taste beer. I may look at it later, but taste means more to me than ABV. If I like the taste I will probably drink it again - and if I don't, I won't - regardless of ABV. If I want strictly ABV, a friend can get me truly excellent clear moonshine for $100 a gallon.

$100 a gallon? You might want to find a new guy... Its 1/4 that here

 

[d3track]

You're comparing prices at two different retailers...

 

[Psylocide]

I'm not going to lie and say that I don't take ABV into consideration when I'm buying alcohol. Actually, that's the first thing I consider if I'm going in to buy something I'm going to drink right away.

But, different brands have different price points... that's just how it is. Generally speaking though, it seems there is correlation between price and ABV within a single brand (some exceptions would be seasonals/special releases etc.).

 

[BeerGrylls]

I think from a business to consumer standpoint, there is something to be said about the markup over cost + labor. If the brewery is expecting to get a several-fold margin by charging some exorbitant amount, the bottom will eventually fall out. Classic economics tells us that once the niche is flooded with competition, it will drive down prices. The brewers that charge with variable and fixed costs in mind, while still making a competitive product (recipe) will win. Those who charge an insane price will not.

 

[BrotherBock]

I imagine the rate/quantity at which they're buying their malt makes the malt one of the cheapest aspects of the beer. Time, labor, taxes, distribution, etc is probably where the cost comes in.

 

[BeerGrylls]

I imagine the rate/quantity at which they're buying their malt makes the malt one of the cheapest aspects of the beer. Time, labor, taxes, distribution, etc is probably where the cost comes in.

There's no way around it, a 4.2% cream ale is going to cost less than an 8% DIPA. The grain and hops more than double.

 

[broadbill]

I think from a business to consumer standpoint, there is something to be said about the markup over cost + labor. If the brewery is expecting to get a several-fold margin by charging some exorbitant amount, the bottom will eventually fall out. Classic economics tells us that once the niche is flooded with competition, it will drive down prices. The brewers that charge with variable and fixed costs in mind, while still making a competitive product (recipe) will win. Those who charge an insane price will not.

This assumes that all products are equally represented in the marketplace. In the case of beer I'm not sure this is true; the 3-tier system and limited shelf space put the squeeze on smaller brewers. Their distribution is then pushed into smaller venues (bottle shops, liquor stores, etc) with other small brewers. The up-side to this for the brewers is that that downward market pressure on price disappears somewhat because the smaller brewers are now competing on quality and market appeal in this particular sub-market, and beer geeks like us will drop the coin for the best products.

 

[Misplaced_Canuck]

There's no way around it, a 4.2% cream ale is going to cost less than an 8% DIPA. The grain and hops more than double.

The ingredients only represent a portion of the cost of production.

Labor, equipment, bottles, distribution, etc all remain roughly the same whether it's a 4% beer or an 8% beer.

Making a 4% batch of beer does NOT take 1/2 the time of a 8% beer, I assure you.

When I make sausage, it takes me 4 hours of work, whether I make 5 pounds of 15 pounds. Set-up of the equipment takes the same time, cleanup takes the same time, etc.

Myself, I don't buy over-hyped/overpriced beers unless it's truly an excellent product worth the price.

MC

 

[BrotherBock]

I imagine the rate/quantity at which they're buying their malt makes the malt one of the cheapest aspects of the beer. Time, labor, taxes, distribution, etc is probably where the cost comes in.

There's no way around it, a 4.2% cream ale is going to cost less than an 8% DIPA. The grain and hops more than double.

Yeah...I'm saying the bulk of the cost comes from aspects other than grain. At the commercial brewery level, grain is bought at a quantity that makes the price per pound much lower than we get at the homebrew shop.

 

[andrewmaixner]

Yeah...I'm saying the bulk of the cost comes from aspects other than grain. At the commercial brewery level, grain is bought at a quantity that makes the price per pound much lower than we get at the homebrew shop.

Exactly. like this:

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

 

[BugHunter]

Exactly. like this:

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

This is excellent, but even it forgets the TIME restrictions and bottlenecks a production brewery encounters. Say the brewery has 8 fermenters. At an ideal time they have all the fermenters full to the max and they're cranking out beer as fast as possible. They're still restricted in how much they can produce, and the original gravity (and thus amount of grain) used makes absolutely no difference in how fast they can get a set volume of product out to market.

I work for a brewery where our standard 40bbl recipes have anywhere from 1400 to 2400 lbs of grain, and yet the only ones priced higher are our IPA and double IPA. They all take the roughly the same amount of labor hours to produce, occupy our equipment for similar durations, and the grain and hops costs are on the list but they're hardly at the top of the price formula.

 

[Beernip]

$100 a gallon? You might want to find a new guy... Its 1/4 that here

and costs $10 to make...

 

[kh54s10]

Exactly. like this:

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

Other things to consider. Market image for the beer.

Brand X's Chocolate Stout is considered one of the best. $$$$$$
Brand Y's Chocolate Stout is considered swill. $

Brand A's 4% Pale ale is considered one of the best. $$$$$$
Brand B's 9% IIPa is considered swill. $

 

[hunter_le five]

If you are trying to get the best ABV/$ ratio, just buy some cheap vodka.

The price I'm willing to pay for a six-pack of beer is dependent on how much I like the taste, not how drunk it will get me.

 

[1977Brewer]

Other things to consider. Market image for the beer.

Brand X's Chocolate Stout is considered one of the best. $$$$$$
Brand Y's Chocolate Stout is considered swill. $

Brand A's 4% Pale ale is considered one of the best. $$$$$$
Brand B's 9% IIPa is considered swill. $

This is where I was going to go with it. Deschutes makes a few beers that I consider top notch. Pyramid makes some of the worst. That IIPA the OP referenced is just awful. I will payy premium prices for Premium beer. Sculpin is $16 a 6 pack here. That's a dollar away from an 18 pack of Miller Lite. Which one will get me the drunkest vs. which will bring me joy are 2 completely seperate things.

 

[BrotherBock]

That graphic makes me wonder. If 50% of the cost is distributor and retail margins, how come growler fills and pints straight from the taproom cost as much as they do?

If I can get a 6 pack for $9, and most of that is distributer/retailer margin, how come I pay $5+ for a pint when I buy from the brewery itself and they get to skip those costs?

 

[hunter_le five]

That graphic makes me wonder. If 50% of the cost is distributor and retail margins, how come growler fills and pints straight from the taproom cost as much as they do?

If I can get a 6 pack for $9, and most of that is distributer/retailer margin, how come I pay $5+ for a pint when I buy from the brewery itself and they get to skip those costs?

They're obviously not going to give you the same margin they give the distributors/retailers. If anything, they are using the growler fills to make up for the piss-poor margins they make on wholesale.

There's nothing wrong with charging you a higher price at the tap than they charge the wholesaler. That's just good business sense/economics.

 

[Psylocide]

That graphic makes me wonder. If 50% of the cost is distributor and retail margins, how come growler fills and pints straight from the taproom cost as much as they do?

If I can get a 6 pack for $9, and most of that is distributer/retailer margin, how come I pay $5+ for a pint when I buy from the brewery itself and they get to skip those costs?

The tap room is where the money is made... you're paying tap room prices. And they give you a small discount (in some cases) for filling the growler.

 

[kh54s10]

That graphic makes me wonder. If 50% of the cost is distributor and retail margins, how come growler fills and pints straight from the taproom cost as much as they do?

If I can get a 6 pack for $9, and most of that is distributer/retailer margin, how come I pay $5+ for a pint when I buy from the brewery itself and they get to skip those costs?

This is the answer:

Other things to consider. Market image for the beer.

Brand X's Chocolate Stout is considered one of the best. $$$$$$
Brand Y's Chocolate Stout is considered swill. $

Brand A's 4% Pale ale is considered one of the best. $$$$$$
Brand B's 9% IIPa is considered swill. $

You are at the brewery for a reason. Most will pay the $$$ so that is what they are going to charge!!!

You are also paying for the rent, electricity, the staff to run the tasting etc.

 

[Misplaced_Canuck]

The tap room is where the money is made... you're paying tap room prices. And they give you a small discount (in some cases) for filling the growler.

Actually, at least in SC.... The LAW forces the brewery's tap room to charge "market price" for their growler fills. They can't undercut the retailer.

OY

 

[Psylocide]

Actually, at least in SC.... The LAW forces the brewery's tap room to charge "market price" for their growler fills. They can't undercut the retailer.

OY

I didn't say that... what I meant was, you'll pay tap room prices and they'll toss you a small discount for filling the growler.

For example: Beer is $5 dollars a pint in the tap room, they'll fill your growler for ~$3.5-4 bucks a pint or something. Still more than buying a sixer of bottles.

That's what I've run into around here at least.

 

[JonM]

This is one of the reasons why I love brewing. I really like session beers, but few breweries make them because customers balk at $8 for a sixer of 4% when they can get stronger beer for the same price. Fewer still brew session beers well.

I can make a wonderfully flavorful 4% beer because I don't have to give a rip about what customers think.

 

[madscientist451]

On a recent Brewing Network podcast, a brewery owner told about how he is expanding, buying new fermentors, brite tanks and such and paying for it all out of cash flow, and all after being in business for only 2 years. The selling price of beer has nothing to do with cost of production. Its about how much the market will bear. I don't begrudge beer businesses the profits if their customers want to pay the price. People are used to paying $10-12 or even $17 a six pack, and $5-6 for pints. I go out for a beer now and then and buy a 12 pack when I want to try something new. But the high prices help justify (in my mind at least) the effort I put into homebrewing.
I keep thinking that the forces of supply/demand will force prices down, but it doesn't seem to be happening.

 

[Baja_Brewer]

I've been irked by the same thing that OP posted about - and its part of the reason that I haven't tried many different breweries session IPA's. Around here, I will see:

Founder's All Day IPA - $8.50-$9/6-pack, $18-$20/15-pack can's
and I compare this with:
Southern Tier's session IPA - $10.50-$11/6-pack (vs their 2X IPA at $12/6-pack)
Lagunita's session IPA - $8-10/6-pack (vs $10-$11.50/6-pack for Little Sumpin' Sumpin')

Sure, I want to try their session IPA's (begin flame war here), but I'm cheap enough that I'm sick of spending $10-12 on a 6-pack of something I end up disliking, so in these cases I'll either get the founders All Day 15-pack or the Southern Tier 2X IPA or Lagunita's Little Sumpin' Sumpin'.

 

[Orthobrewsky]

Exactly. like this:

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

I read the article which mentioned the more substantial cost of packing bottled beer. I've been wondering for a while why I typically pay a bit more for a 12 pack of cans (e.g. Sierra Nevada, New Belgium) than I do for a 12 pack of bottles. Supply/demand issues, perhaps?

 

[Peruvian802]

Why is a 2x4 at your local lumberyard more expensive than home depot? Why is a meal at your local Italian eatery more than at Olive Garden?

Volume and quality.

 

[zmanzorro]

There is also something to be said about cannibalizing your current beers on the shelf as well, but would also depend on how price sensitive your assumed consumer base is.

 

[soccerdad]

If it's half as good at 1/4 the price, you should get it. But I doubt that it is AS good I could prob bargain this down to between 60 and 75 but I usually buy a quart at a time ($25) so I don't go looking for deep discounts. I am no connoisseur of homemade liquor, but this is the finest I've ever had. More than a dozen people who have tasted this agree that it is the finest corn liquor they have ever tasted.

 

[ArkotRamathorn]

On a recent Brewing Network podcast, a brewery owner told about how he is expanding, buying new fermentors, brite tanks and such and paying for it all out of cash flow, and all after being in business for only 2 years. The selling price of beer has nothing to do with cost of production. Its about how much the market will bear. I don't begrudge beer businesses the profits if their customers want to pay the price. People are used to paying $10-12 or even $17 a six pack, and $5-6 for pints. I go out for a beer now and then and buy a 12 pack when I want to try something new. But the high prices help justify (in my mind at least) the effort I put into homebrewing.
I keep thinking that the forces of supply/demand will force prices down, but it doesn't seem to be happening.

I really cant imagine paying that much for a 6 pack. I might be spoiled that I can get a 6er of any of the regular New Glarus offerings (non-thumbprint series beers) for 8 bucks or less if its on sale, the thumbprint 4 packs are only 11 bucks for some truly delicious beers. Most places around here its only 4 bucks a pint, I ahve a couple places in walking distance that are only 3 dollars for a pint. Local brewery offers 4packs of 16oz cans for I think 9 dollars if my memory serves... seriously Wisconsin liqour prices, I can't imagine what some of you guys go through to buy good beer.

God, I love living in Wisconsin.

What do commercial breweries spend on ingredients like malts for example? I mean, the difference between a 4% beer and a 6% beer in terms of malts isn't a HUGE jump in terms of malt, neither is the hops. Commercial brewery spends the same amount of time all in on both beers and needs to push them out within 2 weeks to continue being profitable regardless of the ABV (since most breweries do not have the room for aging unless they have an established sour program). In the end try not to think about it, because the way that liqour laws are, thats probably 99% of the issue why you see price differences that seem like complete nonsense.

 

[wailingguitar]

That graphic makes me wonder. If 50% of the cost is distributor and retail margins, how come growler fills and pints straight from the taproom cost as much as they do?

If I can get a 6 pack for $9, and most of that is distributer/retailer margin, how come I pay $5+ for a pint when I buy from the brewery itself and they get to skip those costs?

The margins on wholesale beer (kegged and especially bottled/canned) are razor thin, it is about how much volume you can move if you are going to make any money. Breweries look to taproom sales as a way of supplementing those slim margins and taproom sales have saved many struggling breweries. Further, if a brewery sells a pint for $3 and a local bar, after markups, has to sell that same pint for $5, the brewery will be cutting it's own throat to charge $3... that bar is going to stop carrying the brewery's beer. It is unwise to compete against your customers.

 

[user 198378]

No one's forcing people to buy the stuff. Use your judgement!