Are Breweries Over Charging or Not?

The brewery establishes the price they sell to the wholesale distributors. This establishes the profit margin for the brewery.
The margins thereafter are out of the brewery's control other than establishing a suggested retail price.

It is fair to say that if the brewery requires a less than economical price for selling their beer to the wholesale distributor, that beer will never be sold economically to the end consumer. The brewery sets the table.

Cheers!

 

Yes, that's is indeed what I said. And since we don't have access to the brewery pricing structure blaming the brewery is an over simplification of who is taking profit where. Similarly while the brewery may set a price, most have no control or influence over what happens after the beer leaves their hands, meaning bottle shop owners (as in PA) are free to tack on other charges and pick their own margin.

 

It sounds like we are in 'violent' agreement.

Cheers!

 

Another point that I don't think has been mentioned yet is that, as far as the BA/beer consumer that is willing to seek out trans-regional beers goes, is that beers are going to be priced according to the local economy and not the national marketplace. In a place like Oregon or Texas (where the income/sales tax laws are not as stringent/non-existent) beers are going to be cheaper out the door than a beer from California (See DeGarde or Jester King vs Rare Barrel or Lost Abbey), where there are heavier taxes and the mean income of the population is higher so you can get away with selling your beer for more money. Where this example does not apply (and what really irks me about these breweries) is places like Prairie or Against the Grain where you are in the middle of an otherwise less expensive region but still selling your beers at or above the level of places that have way more overhead costs (such as those in California or New York). Perhaps there are other tax or licensing costs in those areas that I am not familiar with, but if not, there is no reason those beers would cost them as much to make as other people.

 

With an industry that is exploding in popularity also comes the fact that we are almost over the amount of breweries that was present in before prohibition. The market is over saturating, every single week a few more breweries pop up in Kansas City... as well as every other US city. Breweries are having no choice but to raise the prices to make a profit that believe it or not is becoming harder and harder to achieve. I have no problem with it but there is a point at which I have to make a decision to not go overboard with my spending and it tends to end up limiting me.

 

I think that is why Lawson's has Sip of Sunshine brewed at Two Roads and distributed. HF did add capacity. Alchemist will soon have more capacity. But all will remain small. For all the craziness that occurs around HF, Alchemist and Lawson's, the overwhelming majority of that beer is purchased and consumed locally (Treehouse and Trillium too). Go to the Warren Store on a Thursday and you will see loads of local older folks filing in to get their fix of Lawson's Finest. So their pricing does allow regular folks in Vermont to get the beer, and if you understand these guys at all you would know that's important to them. There is a reason Lawson's uses the Warren Store as its primary point of sale....to help the Warren Store and help Warren. Those of you driving up may not realize it, but Vermont has major problems and craft beer tourism is one of the few positives.

 

Wicked Weed is damn good, but almost all bottle shop owners in the Triangle agree they are overpriced.

 

You're right, I should have worded that differently. I guess I interpreted your post as saying that he should be doing something about the secondary market for his beers. My bad, dude.

 

They can charge what they want and you buy it or don't buy it. If everyone stops buying it, they will either lower the price or quit making it. Simple marketing. I was at 8th Wonder last nite and was drinking for 3.25 a pint, so no I don't think all are overcharging. We as the consumer control what we will pay. You may not pay it but someone else will.

 

I'm amazed at the prices New Glarus charges - even for their R&D stuff. World class beer at very reasonable price points. I'd love if the rest of the industry would take note and follow suit

 

I agree with most of your post, although I think you underestimate the cost of producing quality old-growth wine. As far as near-equivalent comparisons, Cantillon is in an urban area (Brussels), uses very high quality fruit (likely more expensive than comparable US fruit), spends 3 years making their product, and a 750ml bottle still costs around $10. I'd never begrudge Cascade, Bruery, and the rest their due $$ if people are willing to pay it, but it is not really about cost of production.

 

I agree completely - I was just pointing out that many beers cost at least as much to produce as wine. You make a much better point that some might actually cost more.

 

The beer itself is relatively cheap to make. But have a relatively cheap product to make is great, until you are part of a regulated industry that has a 3-tier system in some fashion in almost every state. The article linked below states that on average the profit margin the brewery sees for a six-pack that is distributed is 8%.

In most cases, when a brewery undertakes the capital costs of expanding, the increased production is only justified by increasing the footprint in which the beer is sold & the volume in which it is sold. There are some rare exceptions (in particular when a brewery goes from nano to micro) where the expansion is only for their immediate geographic area, but that is a different topic.

http://www.pastemagazine.com/articl...own-the-12-in-your-six-pack-of-craft-bee.html

The other thing that many have touched on, but not really went straight at, is that a brewery with a taproom relies on the taproom as a major profit-center. Those $5 pints are at a much greater profit than the six-pack sold that required a distributor.

 

Some breweries overcharge, some don't. If I deem a beer not worthy of the cost, I don't pay for it.

 

I completely agree with you, some of these breweries are definitely riding this wave of the craft boom, and you listed the perfect example, Lost Abbey. Alot of their 375 ML bottles contain great beer, but at 17-20 a pop, it makes me want to buy something else. I have the advantage over some, living 10 minutes from the brewery, so i can try it for 1.50-2 per taster instead of spending $17 on a bottle. i understand some beers take time to age, and they may take up space, but sometimes its just ridiculous. Basic economics (supply and demand) clearly allow this to happen, as everything is sold out in minutes but hopefully we see some pushback. i have noticed that there are tons of Lost Abbey in every bottle shop i go to, so im guessing theyre feeling it, i sure hope so.