Why are "session" IPAs the same price as regular IPAs?

Maybe I need some more coffee….

Peter stated that ingredients (the actual beer) is 10% of the cost of beer production.

The Huffington Post graphic indicates that ingredients (malt, hops, yeast) are 10% of the cost/price of a beer.

Am I missing something here?

Cheers!

P.S. I am assuming that water is part of the 10% in the Huffington Post graphic but just not explicitly indicated.

 

@JackHorzempa

fwiw - that infographic is totally whack

 

Hey gang, I think a lot of the answers here have encapsulated the reasons pretty well. There is one other motivating factor that influences the price: wholesaler and retailer preference.

While not always the case, generally speaking wholesalers and especially retailers aren't big fans of subtle variations in price. So maybe the Session IPA should only be $8.19 per 6 pack while the regular IPA should be $8.49. The retailer would prefer to have an across the board pricing across the brand unless there is a big difference, so they are probably just going to round that $8.19 up to $8.49 anyway (and keep the margin). If we are talking about a $6.99 sixer versus a $10.99 one... that is a different story.

 

it's simple. supply and demand. you people demand hoppy beers at nauseum. they supply them at an inflated price.

 

Is that a technical term!?!

Shane, thanks for that input.

Cheers!

 

The price for most things is what the market will bear. Beer is not immune to this, IMHO.

 

I do see your point though. if a brewery has to barrel age a stout the time cost of the aging process is part of the retail price. a dipa takes more hard to get hops to brew so one would think its reflected in the price. so why isnt a under-abv. beer the same cost as a regular ipa. refer to my last post: demand.

 

As was pointed out in a thread months ago that used this same graphic, the components labeled "Distributor's Margin" and "Retailer's Margin" should more correctly be called "markup" and not "margin". Margin is price-cost. Distributors and Retailers have costs of doing business, too, you know. But, Huff Post has never demonstrated they actually understand business.

 

I was just pointing out that (according to that article graphic) the ingredients are indeed 10%, but that the packaging + labor + shipping that he stated is the not other 90%, only 20%.

 

which percentages do you think are way off?

(Besides the obvious point that it only applies to distributed, bottled/canned beer)

 

I think the point that Peter was getting at was that ingredients are only a small portion of the cost of a beer (e.g., 10%) and that the 'other' stuff is 90%.

You are correct that Peter did not list all of the 'other' cost elements by his specific list of "packaging, transportation, utilities used during production, and labor costs".

Shane (@Sixpoint) made a good point that for craft beer brewing it is entirely possible the estimate of 10% for ingredients is low since: "Materials are not as "tiny" as a portion of the expenses as you'd think IF you are a craft brewer that relentlessly sources the best hops, malt, spices, yeast, and other brewing cultures to make your beer."

I think it is safe to conclude that the cost of ingredients is a minority portion of the cost of a beer.

Cheers!

 

The way I read it, Peter_Wolfe was talking about the brewer's costs, not the not the total retail price the consumer pays.

 

I don't know what source info that article used, hopefully they sourced numbers from a number of brewers that specialize in different styles of beer, and came up with some averages. Is 4% hops cost for an averagely hopped pale ale? I don't know, but this was the statement from within that article:

"All told, a typical six-pack of craft beer contains 53 cents worth of hops, while a six-pack of macrobrew contains maybe 5 cents. And, of course, the sky's the limit on the craft beer side. A super-hoppy double IPA with ultra-premium hops could include more than $1 worth of hops."

That seems to be saying the hops cost could range into 2x the number they use.

 

By definition there is only so much "best" hops and malt. Most malt, even that used by "craft" breweries is adequate without being outstanding.
As for yeast , what happened to growing your own? Many breweries have been using the same strain for decades.It's a by-product of brewing and you end up with more than you started with.

 

Hops are expensive. Malts are not.

 

As an avid homebrewer who makes lots of hoppy beers (IPAs) I can certainly report that the cost of hops can be significant portion of the total homebrew ingredient cost.

At the commercial level where you need to consider aspects like bulk contract purchases I really cannot comment. Anheuser Busch actually owns a very large hop farm in Idaho so they somewhat ‘control’ those particular ingredient costs. Larger craft breweries establish contracts with their selected hop farms to ensure supply of needed varieties and to help manage cost through committed hop buys.

Shane (@Sixpoint) can best comment on the relative costs of hops to brew hoppy beers. Sixpoint is a fairly large brewing company and I am sure that Shane takes steps to ensure hop availability for his core beers (e.g., Bengali, Crisp, Sweet Action, etc.). Sixpoint also produced one-off/rotating beer brands so I would think there are some incremental costs associated with the production of some of those beers. I would guess that the purchase and delivery of fresh hops for the production of Sixpoint Sensei Harvest Ale was a significant cost in that particular brand of beer.

Cheers!

 

Yeah, that is probably what @Peter_Wolfe meant , but that would still put his % in conflict with those Huffington Post article stats.

If you also lump in "Brewer's Margin" figure (assuming this is other overhead, plus profit), and the "Loss" figure, that would put materials as about 33% of the brewer's costs.

But if double that assumed amount of grain could be used for a high ABV beer, or double that assumed amount could be used for a hoppy IPA, then those are definitely figures that would become significant.

 

The portion in quotes above are from Shane (@Sixpoint). You would be better served directing your comments to him.

Cheers!

 

To put it simply, because Coors Light costs the same as Coors Banquet, or Bud light costs the same as Bud, or Lite from Miller costs the same as Miller High Life. PROFIT MARGIN. They shouldn't call it Session IPA, they should be more honest. Call it IPA LIGHT, and see how well it sells. If I want a less strong ale, then I will enjoy a pale ale. If I want some genuine oomph, then I will get an IPA, not an IPA light. IMHO.

 

When DayTime first came out I had it on tap and it was real good. Tracked down a case and did not buy it. The price was the same as the IPA and pale ale. That was three years ago or so. It was not a popular style then. I think its just priced to be in the same range as other core beers. Today I have no issue with the price vs higher abv beers. I like having more beers that taste good rather than stopping at a few

Enjoy