Are Breweries Over Charging or Not?

Again, it kind of comes back to what you mean by "overpriced," but I think the original question leaned towards asking if brewers were "taking advantage" of customers. Are there bottles that brewers make egregious per bottle profits on? Probably, but those net profits are probably miniscule compared to the profits on core items that sell through thousands of bottles. Limited releases are such a different animal from core products. If a famous brewer sells his 5 gallon batch at $200 a bottle its not necessarily overpriced if you believe the buyer is paying for a unique experience. If the brewer uses his fame to raise the price of readily available 4 packs $1, that may be overpriced.

I think fashion is a good analogy. If a Calvin Klein hand sewn dress someone wears to the Oscars costs 20k that's a unique item and its "worth" what the market will bear, but if he then raise the prices of his jeans that sell 10 million pairs a year by $2 because of that visibility you could argue that he is taking advantage of customers (although if they still sell then the price is fair in an economic sense).

Part of the disconnect is that many brewers, being basically decent people, would like their high end products to end up in the hands of people who support their core products on a daily basis. Calvin Klein doesn't care if I bought 12 pairs of jeans this year, but Firestone Walker isn't selling Parabola for $50 a bottle even if the market would bear it, because they would prefer not to alienate their core buyers.

 

@greensparkplug Westbrook brewery has started charging more for Mexican cake than bottle shops

 

I see over-charging more in the brewery itself than in bottles for the most part... The value (for me) is fine in bottles, however, many breweries tend to overprice stuff right at the source.

Usually, a few I am thinking about you are looking at $5.25-$6.50 or so for most beers. However at Southern Tier, Founder's and Brew Kettle to name a few examples, you can get most styles from $3.75-$4.25 which to me is pricing done right (for exceptions for the big beers). Once you cross over the $5 mark on draft, at a brewery, it feels a bit expensive... Again, for most of the standard type offerings.

 

There was a day Founders could bottle about anything and charge about anything, Goose Island too. Nice to be one of the only quality games in town.

That level of quality is now available, more locally, fresher, and cheaper, in many parts of the country, soon to be all of the country as we approach 5000 breweries here. These higher priced distribution breweries will soon find that we actually prefer local, cheaper, and fresher to beers priced at ridiculous margins with a lot of hands taking their cut before it reaches us.

There will always be a market for the higher priced products, but that market is largely unable to be cornered and exploited, as it is by wine makers who actually have reasons why no one else can make wine of equal quality to the best. Anyone with skill can make great beer, anyone with skill can get great beer ingredients, and good water, and equal in every way all the overpriced beers.

I laugh when I see a saison for $20+ a bottle. If only consumers knew how easy it is to make a really tasty saison, and for how little cost of ingredients.

 

I chose "Other". Some overcharge and some do not. Pretty much just like any other item that is sold by multiple companies.

 

Sure, some are riding the wave of hype while others do not, so much. Some ingredients are costing more, but most items bought go up in time till they fall out of favor. I think some brewery's use the limited release method to boost profits, while others appear to be more reasonably priced.

Of course, I brew my own and the cost is much less than what a for profit brewery should charge.

Everybody is paid with somebody else's money, and they are getting paid!

 

Yes, it does. A first growth Bordeaux will sell for hundreds of dollars a bottle (possibly over a thousand). Some finely crafted amazing, barrel aged (because that's several costs, effort, barrels and deferred revenue just as it is with wine) beer might cost $30. So beer is still a bargain.

The biggest difference is that hops are hops in the eyes of a beer advocate. Nobody cares which tiny plot of land your mosaic hops came from. In the wine world, grapes from certain specific plots are insanely expensive and valuable. Sometimes that is justified, sometimes not, but it allows a situation where a ton of Merlot grapes from location A can cost much, much more than a ton of Merlot grapes from a different location. That shows up in the price on the shelf, and in most cases is evident to the shopper on the label.

 

Insert <Jeremiah Johnson nod of approval .gif>

 

Scale is a big contributor to costs. There is a reason SN can make beers at easy price points or New Belgium can make a sour in the $13 range for the 750ml whereas smaller shops can't do it. In short the bigger the brewery the cheaper the beer should be. That's the only rule.

 

It's free market capitalism. Create a bigger demand than supply and charge the highest price that consumers will still pay. I think I would have to ask; is the created demand or escalated pricing more crazy?

 

At the same time, ingredients cost money. And they do need to or at least should want to make a profit after spending time and money on said ingredients. Also they could take advantage of supply and demand. I think some prices are crazy myself. I saw a four pack for $22. Highest ive seen. I can see why they'd do that though. Sometimes its justifiable

 

This why you stay single bro...

 

Yes, I believe some breweries are asking too much for their beers imo, but on the other hand they will charge what we will pay and I think most of us are pricing ourselves out of the game unless you just aren't smart with your money...I've quit dishing out $15-$20+ a bomber unless I really think it's justified.

 

Brewers care, they go to the farms and select the hops from samples on a table. Each brewer's cut is a sample from different fields. It makes a difference.

 

I find beer to be very reasonably priced. I don't mind paying a bit more for quality, limited releases, beers that take time to develop. I've found it to be an inexpensive hobby compared to watch collecting

 

Nothing is overpriced if it sells, and I think a lot of brewers are actually undercharging. That said, I won't pay a premium for most breweries when I can get the same quality or better for cheaper. In other words hype, rarity, bottle counts, etc. mean nothing to me.

 

The perceived value of the product is dependent on the consumer, if $50 for a bottle of something seems like a good value in the consumer's mind then people will pay for it. What you tend to have is breweries who have been on a first class ticket of the hype train for quite some time pushing the limits of what people will pay, working on peoples frenzy for "whalez, bro!" and the need of the "collector" beer types who have to have every beer like they had to have every pokemon when they were in 7th grade. The profit margins for many beers are incredibly high and that part is unknown to the consumer.

 

This.

I can't necessarily say that breweries are overcharging because people are still paying (I would do the same), but I think many don't understand how much the brewery is making. Beer is cheap to make. When I started homebrewing, I couldn't believe how much beer I could make for $20-30. And that's buying in very very small amounts compared to the huge bulk prices that breweries get.

Why is every brewery in America barrel aging every beer they make? Because they can charge out the ass for it and people will pay for it (don't get me wrong, me included). As long a brewery has a place to stack a bunch of barrels, it really doesn't cost them that much more to make it. It just takes more time.

And to @Oktoberfiesta - My guess as to the reason new breweries charge more.... they have to pay off the huge startup loans they took out. Also they don't buy their ingredients in as big of bulk as the larger breweries do. Therefore, it costs more. Not saying it's right though

 

No doubt. But consumers don't see that. It isn't evident on the label. If I see a Zinfandel that says "California", those grapes can be from anywhere, even the central valley. "Sonoma County" narrows it down and price increases. "Russian River Valley" narrows it further and price increases. A single vineyard designation in Russian River Valley narrows it further, and the price goes up further. Just from this these wines would likely range from $8 to about $40+.

Nothing like that is happening with beer. We the consumer don't know that some specific hops came from some unique field somewhere. I doubt that the variation in quality is nearly as high either.