What determines beer costs?

A 750 ml bottle of Chimay Blue costs around €6 here, so it's probably safe to say that about half the cost of that Chimay Blue sitting on the shelf in Illinois is related to shipping costs.

 

You will find numerous example of the cost breakdown of commercial beer, often conflicting and with different criteria, but one constant is that the actual cost of the ingredients add up to be a very small percentage. Here are two such examples:



Ultimately, the final retail price is determined simply by which price segment the brewer decides to market their beer in any given region/market (after all their costs are covered, of course), and then the mark-up the wholesaler and retailer each decide to add onto the price they pay.

 

The only way to know will to get information from a brewer. The commodity prices will depend on the size of the brewer. Ones that buy malt by the bag pay more than the ones that buy by the truckload, and those pay more than the ones that buy by the railcar load. Hop prices depend on the contracts they have, some buy on the spot market which can be volatile. Breweries buy pitches of yeast from a supplier, but the big ones maintain and propagate the house yeast themselves.

One thing you need to know is that very few breweries malt their own barley, AB does and I can't think of others. They buy from a maltster.

There is not one answer to your question.

 

The costs question is very interesting.

Sometimes I found it hard to understand why some beers are so expensive and others wonderful beers are cheaper.

 

Interesting breakdowns

 

Honestly... the closest, across the board approximation to determine how much $ a brewery receives is to calculate 50% of the average retail price for package beer sold at the store. So if beers retail for $10 a six pack ( $40/case) the brewery received somewhere around $20. The only significant variation on that would be if the brewery self distributed or retailed the beer itself. While this doesn't directly answer the question, it gives you and idea of what 1 brewery charges for their cases versus another brewery. Distributors and retailers don't mess with the pricing formulas too significantly on a day to day basis.

In terms of actual costs, most manufacturers of any product look at their COGS cost of goods sold. That is usually everything but labor and non-recurring expenses like equipment repairs/replacements, rent/mortgage. It's just what goes into the case for sale, including the cardboard case, bottles, grain, etc. The last time I did a calculation for COGS on a keg of beer it worked out to around $.22/oz.. for keg beer. That was for a 3,000 bbl production microbrewery.

 

on the other hand think about them selling you the same beer at $5 plus for 14oz at the micro pub. talking profit then.....
yea baby....ka ching. lol

I know a few of them don't even pay the beer tenders they work for just TIPS!!!!
so in that case there is no labor charge for the tenders,..
some folks even work at these places for just beer!

 

Hype, catchy names, good sponsors, hot girls promoting (ok, scratch that last one),...occasionally quality ingredients, etc.

 

Greed, hype and ABV (in that order)

 

It's sometimes what the market will bear but it's always like illegal drugs. There's a middle man who gets a cut.

As an example of what the market will bear pricing - I recently paid $4.99 for one bottle of Bell's The Oracle simply because I wanted to try it and it's all that I was allowed to buy. Would I buy it again for that price? HELL NO.

 

Pictures explain it better than anything. About 50% of the markup comes via Distributors and Retailers.

 

It's all the law of supply and demand and as long as demand is higher than the supply then the sky's the limit!

 

Interesting. Per this graph, buying a pint at a taproom-only brewery should be less than half the cost of the same pint bought at a retail establishment. Since that's not anywhere close to reality, that lends a lot more support as to why a new brewery is opening in the Twin Cities every week.

 

There was a unicorn that was found wandering in a hop field in Yakima many years ago. Years of 'unicorn whispering' later, he was taught how to use basic Microsoft Office functionality. He is not a good with water-cooler chit chat but he has an eye for numbers. Unfortunately he occasionally gets hammered before printing price labels which results in the occasional outlier.

 

Breweries make a ton more off stuff served on site - they try and sell as much as they can this way to make up for the rather sad margins associated with off-site sales.

 

The chart (and the article it came from) only talked specifically of packaged beer costs, not costs of beer directly from breweries. Of course there is going to be a larger markup of beer sold directly from a brewery as well. There is a lot of profit for breweries who have direct sales to the public via taprooms, etc.

 

Most breweries sell their beer to a distributor who then sells it to a retailer who then sells it to you. So breweries don't sell you the beer for $5 or up. The bar does. Those extra costs include profit for the distributor, profit for the bar, and the costs of doing distribution and of running the bar.

 

All I know is that the price of barley will increase this year and next, so beer prices will most likely increase. FU mother nature.

 

This chart neglects the price of barley. http://goo.gl/sGvyXe

Edit: Maybe it is the malt percentage?