Limiting Case Count: Supply and Demand

I've seen some bottles of Cascade around, they seem to retail for $30+ and sell quickly. The places that have Cascade are the going to be the same places with consecration and supplication.

 

So my guess is you haven't been to Jester King? Its a tiny place I am always amazed they make as much beer as they do in such a limited space. To suggest they are limiting beer to spike prices or demand on the black market just has me speechless.

 

I've seen cases and cases of Cascade at PA wholesalers, and various bottles at the Center City "shops." They make many great, expensive, sour beers aged a variety of barrels and aging treatments. If you look up their labels I bet you'll recognize them, if you do indeed frequent the shops.

 

To the OP, yes brewers are highly interested in creating 'rare' beers with high trade value and high value for the "razzles." They think nothing of brewery capacity, materials availability, margin, whether they can sell through what they make in a timely manner, without "out of dates" being billed back, etc

Most of them hawk the trade forums hoping their latest brew is trading hot. That's where they make their $$.

 

That's just their tasting room. They've been around since the 90s and have at least one more facility. They actually have a fairly large distribution footprint and I see their sours on shelves in several areas of the country

 

Silly me, why don't I just pull up the balance sheet and income statement for 3 Floyds and give you the numbers....Huh, oops must have left those in my other pants today.

Ok, using high level numbers, assume the bottles on the shelf have a 33% split between brewer, distributor and retailer. So, if a 16.9 oz bottle of BCBS this year was $10, that means GI got $3.33 of that per bottle = 20 cents per oz. The average six pack of Goose IPA is around $8.99, so Goose got $3 of the package = 4 cents per oz. If you stop thinking here, it would seem like a no brainer to make less IPA and more BCBS. But...

Time is money, amirite? Using the example above and back of the envelope math, Goose can sell 12 cents per oz worth of IPA in the same amount of time it takes them to brew one batch of BCBS and that's just in fermentation. Next, they take the liquid and throw it in bourbon barrels (which aren't exactly cheap) for roughly the same time as fermentation. Now, using that same space, on time alone, Goose could have sold 24 cents of IPA in the time they have into just the BCBS. We haven't accounted for the hundred other differences (more expensive ingredients, more expensive packaging, barrel cost, etc.) and in time alone, they can sell 6x more IPA than they can BCBS making 20% more money per oz in just time.

But, let's stick with another unfortunate reality of your question. Let's say that 3 Floyds does nothing but BA Dark Lord for 9 months a year and they have a bunch of it, the brewery has two choices. First, they could sell it at Dark Lord Day and pocket all of the money for it or they could put it into normal three tier distribution and lose 66% of the retail price to the other two tiers of beer sales.

If your actual question is "does beer become less valuable when it is more widely available", it absolutely does and you don't even have to use rare beer to make that point. Yuengling came to Ohio about 5 years ago, before that, people in Ohio talked about how great Yuengling was and it was sought after. I have a buddy who traveled through West Virginia about once a week and made a nice profit just filling his truck up with Yuengling cases and selling it to people in Ohio. Yuengling is now in full distribution and the brand is down double digits every year. People drank it, it didn't change their lives, they went back to their normal beer.

This will probably be my last post though on this issue. If I keep going, I might have to call the evil beer overlords at BMC (because that's who really controls the beer industry, along with the illuminati) and find a better cover story for us depriving the market of great anniversary ales.

 

Surely you must know that nobody has this information and if they did, they would probably not be at liberty to divulge such business-sensitive information on this public forum.

Suffice to say, if I had to guess, I'd say that the ROI on Dark Lord is much lower than the ROI on their other beers. You have to remember that the vast, vast, vast majority of beer drinkers are not interested in paying $10, $20, $30 for a single bottle of BA Whatever.

I go back to the oft-quoted stat that 75% of Allagash sales are White. Allagash has excellent sour and barrel aging programs, but the market for those kinds of beers is so small and the cost is so much higher, that they limit how much they produce. The market for White is huge and brings in the money so that they can do the sour and barrel programs to appease the one percenter BAers.

 

Cascade bottles sit on the shelves around here because not many people want to pay $30 for a bottle of beer. Don't get me wrong, Cascade does some phenomenal stuff, but once you start getting up to $30/bottle, normal people really start doing the cost/benefit analysis.

It was asked above, what's the difference between Cascade and Jester King on the secondary market, well, there's one (another being that Cascade distributes while Jester King has very limited distribution). People always ask how to eliminate the secondary market and I always say, "The breweries need to raise prices". Cascade isn't traded much because the starting price is so high. Traders/hoarders won't be able to make the profit off of Cascade that they can make off of other beers without trading at like $60/bottle. And nobody is going to pay that for Cascade.

 

It really depends on what cascade beer you're talking about. Some do indeed sit while others don't.

And the reason that 75% of Allagash sales are White is because people have discovered it is a great tap for restaurants. It goes well with food and therefore is in demand in that industry.

 

Great responses, @mwa423

This sounds like a thinly-veiled version of the many "I want breweries to make more of the beers I want them to because I deserve to get it easily" threads out there. To the OP, a few in here have fully explained why breweries can't pound out unlimited amounts of their BA/triple dry-hopped/soured beers and it doesn't really revolve around driving up price due to scarcity.

 

:-)

In other words, few and far between.

Makes good sense that those would be the places that have something like that.

Thanks!

 

Hmmm, guess I've been going to the wrong places.

Actually most of the places I frequent these days are in the surrounding counties since I don't have as much need to be in Center City. I'll check them out. Thanks!

 

Tom, maybe Whole Foods Devon carries this beer?

I was there a couple years ago and some guy started talking to me:

Guy: "Have you tried xyz beer yet? It is great and it only cost 30 bucks."
Me: "No I haven't" While thinking to myself: Are you crazy? You paid 30 bucks for a single bottle of beer?"

Needless to say I have not drank any Cascade beers.

Cheers!

 

Learn something everyday.

 

A budget...

 

I've only bought one bottle of Cascade in my life, at the Whole Foods in Plymouth Meeting. Apricot for $30ish. My friend was getting married and i was throwing money around. Got my Trauger fix on that day as well. I'm not sure where you guys are located exactly but i figured i'd throw it out there. Cheers SEPA folks

 

Good to know, but with the changes in the way Whole Foods manages their line up these days (centralized rather than each one having a beer guy) I'll check a few other places that are closer first. Although that 30 is probably not somthing I'm willing to pay either. I've only once paid that much or more for a single 750 ml bottle was from the last time Drie Fonteinen was able to bottle and ship their 100% Schaerbeekse Kriek. I don't regret dropping $35 for that at Pinocchios since I now understand what has given those cherries their desirability for use in Kriek. (But i'm not sure I got for that price again. )

Plymouth Meeting is someplace I occasionally pass on the way to some where else, so I can stop in and at least take a look. Thanks!

 

I believe the costs being reflected on the end product would make your eyes curl. Barrels are a lot more labor intensive to handle, and take a lot more steps, and also the time it takes in aging them. Also. They take up an immense amount of room, and for the purposes being discussed here. Are only used once. The costs would add up.

 

One thing that needs to be mentioned, there are a certain number of barrels that are rejected due to off flavors. That will drive up the cost of production, as the investment has been made, and the sample at the end is the blend or dump decision.

 

What's wrong with a beer being available for a limited time?
I love Nugget Nectar. I would love to have a fresh one right now. But the fact that it is only available Jan/Feb makes it a bit special and gives me something to look forward to each year. I would rather have it that way than always have 2 month old bottles available.

Its kind of like prime rib. Its great on Christmas and your birthday. If you had it every Thursday, it would become that fatty meat.