Price gouging

Very, very true. I completely agree.

 

The Bruery & Cascade immediately come to mind.

Wait, those are their standard prices... Oops.

 

Nowhere in my post did I say that being a distributor has no costs or even little costs. My premise is that those costs add nothing to the product. In fact it adds another level to screw up the product. Also in today's beer industry I think the distributor has way too much power over the whole industry. The large reason why breweries sign up with distributors is that they cannot sell their beer with out one. Not because they are not able to, but because the retailer is so locked into the distributor that they dare not go behind their back.

 

Not true. Even in states like mine that allows self distribution most breweries still use a distributor. As far as adding nothing to the product that makes as much sense as saying the car adds nothing to the race car driver in a race. Imagine what the cost of your favorite craft brew from a different state would cost if it didn't piggy back on the already set up distribution network the distributor already runs. In fact, we already have a very good group of folks right here! Ask any trader if shipping small amounts of beer is cost efficient, they will all tell you no. It is far cheaper to buy the beer from a retailer.

 

To answer the OP's question, in Chicago I check the prices at Binnys to know what the 'correct' price should be. They are by far the largest big box liquor retailer in my area and have a pretty good online store with prices and availability. I would suggest finding whatever the equivalent store is in your area and using that as a reference.

When something is released I want, I try Binnys first knowing I will have to be lucky, but it will be the lowest price. If they are out of stock, I try the smaller stores (one of which I know charges a much higher mark up) in sequence of lower to higher price and if I find it at a big markup I have to decide if I want it at that price.

So this. I mean, if prime steak was always delivered on say a Tuesday and sold for $10 a pound and sold out in minutes in grocery stores, is the store that charges $30 a pound and has it in stock for a few days really gouging, or is it that the stores who are selling it at $10 are undercharging? It all depends on your perspective.

There are plenty of people with families / jobs / lives that don't permit them to be at the store on a mid week morning when there is a special release beer delivered (or respond instantly to twitter, chase trucks / hunt these beers) but are happy to pay extra to get a bottle a few days later at a store that 'jacks up' prices. Do they wish it was cheaper? Probably. I mean, I wish a Ferrari was $50K because then I might one day be able to afford one, but they aren't - they are $300K, so I aspire to a Corvette instead. Sure the Ferrari is a little bit better than a Corvette (but certainly not 6 times better) and rarity and cachet drive the Ferrari price - no-one seems to complain that Ferrari is gouging... (yes yes, not the same as beer; distributors and retailers are jacking up the price, whatever, I am making a point about price)

You could make the same argument for a BMW or Audi that costs $50K - I bought a new car a few years ago, and instead I bought a $20K Hyundai because the price difference to the fancy German car was way too much for what I was getting - For ME the Hyundai was 80% as good for 40% of the price - clearly this isn't true for everyone because lots of people buy the german car. Versions of the price topic seems to come up weekly and descend into a litany of complaints interspersed with 'free market' vs. 'gouging' type arguments, but rarely do people acknowledge that rarity / cachet / branding / marketing that leads to social desirability and increased demand almost always results in higher prices in just about any other type of good.

Eventually beer is going to head this way (I am already seeing it happen) and prices of the limited rare stuff with cachet attached to the label will increase. We will all then just have to decide if we give enough of a shit about Firestone XX to pay the premium.

 

Can I bet on the race between a driver with no car and the driver with a car?

My beer tastes the same or worse when I get it after it goes through a few hands. The beer is not improved by the process. I have no where said that distributors are not sometimes ( and I will even say most times) needed for the marketplace. My premise is that too much of the cost of beer industry wide is coming from middlemen and too little of the total cost at retailer gets back to the brewer than I BELIEVE it should. Agree or disagree with this point instead of making straw men to argue with.

 

Well just how much should go back to the brewer? And what about brewers that sell their product for nearly the same price at their establishments as what you pay at a retail store? (A whole lot of them) And how would that effect the brewers that self distribute? Would they have to lower their prices, and thereby their own profits?

 

I was at a brewery several years back and was shocked to find the price higher there than at the store down the street ! I still go there but only for what is on tap.

 

I would like to see 74.21% go back to the brewer instead of the 50% now. The biggest reason that brewers sell their beer for the same price or a bit more at the brewery is to not undermine or piss off their distributors. If they sold their beer for less they would sell a lot more of it therefore increasing their profits while lowering their profit margin. I would love to see a complete open competitive market where a 3 tiered system is not mandated and everyone can make decisions on what is good for their business.

 

If somebody will drop X dollars on a beer, then it seems that the beer is worth that price. The idea that there is some objectively "appropriate" price at which to sell given products is a myth. If a store is successfully charging $X for a beer, sounds like they are gettig the message just fine.

It sucks to be the guy who isn't willing to pay what's being charged, but it's no different with beer than any other product. I'd argue hat the reason there is the impression that retailers are unfairly jacking up prices is because as a whole craft beer prices are artificially depressed by the producers who don't want to rack the boat by raising prices to what the market will bear. It's expensive and difficult to accurately project price elasticity. Much easier to just undercharge and guarantee that you will sell your stock.

The vast majority of distributors and retailers increase the price by a straight percent margin. They arrive at that margin in part by calculating their own operating costs. Contrary to popular belief they aren't just hiking up prices on a whim.

Nope. Brewers aren't getting "peanuts", and to my above point, they likely have considerable room to increase prices without severely hindering demand. I'm also fairly certain that the ratio of revenue to operating costs is likely fairly consistent across the producer, distributor and retailer roles. In fact, if I'm remembering the beer supply chain cost/revenue article that was posted on BA a few months ago correctly, I believe brewers make the largest margin over costs compared to distributors/retailers.

The idea that a distributor's job consists of nothing more than "handing" the product to another person is laughably over-simplified.

I found the article I was talking about. It notes that the brewer gets 8% of the cost of a six-pack in pure profit (aka, net margin). Comparatively, the distributor and retailer get 21% and 31% (respectively) in *gross* margin--i.e., revenue before calculating their own operating costs. Without seeing what percent of that gross margin goes to operating costs, it's impossible to determine how the members of the three tiers compare in profit margin.

In order for the distributors'/retailers' profit margin to match that of the brewers', they would hove spend 62% and 74% (again, respectively) of their cuts on operating costs. For comparison, based on the numbers in the article, the brewer spends 84% of it's cut on operating costs.

http://m.huffpost.com/us/entry/5670015

Even if you eliminated the three-tier system, there is no way any distributor and retailer would be able to work with a brewer who took 3/4ths of the cost of product without a significant increase in retail price that enabled the distributors/retailers to cover the margins they need to stay in business. I promise you there are no distributors/retailers getting rich on the backs of brewers.

 

In my experience, the mom and pop or smaller stores have the "gouged" prices -- but I love supporting them. They'll usually spend time getting to know you and spend more than a few seconds talking to you. Totalwine, Whole foods etc are great (and ive seen some crazy inflated prices at TW) -- but the mom and pop shops help you break into craft beer easier.

 

It costs as much if not more to transport beer than it does to brew it.

 

Bestway here is within pennies of TW, they don't gouge at all, a few are a bit pricy though.

 

Yikes. This was when it first came out.

 

Price gougers and beer re-sellers are human garbage (in any market).
Interesting that this site is supposed to be a conduit for the appreciation/celebration of beer, but has become a stock market for beer.
Side note, the free market isn't free.

 

I was in line at a nice bottle shop yesterday and the gentleman in front of me had a pretty good sized haul, most of which was fairly ordinary. One bottle that stood out to me was the $30 bottle of 50/50 Eclipse, not sure which color wax. I asked him if he had tried it or not, and he said no, he just wanted to buy himself a gift. I wonder whether he would have bought it if the bottle had been priced at $20.

Regarding the OP's question, I'm perfectly happy to let over-priced beer rot on the shelves. It's not my business to tattle on the store owner to the brewery regarding pricing. Bottles past their freshness dates on the other hand...

 

This isn't generally about the distributors, it's about the other retail outlets nearby. If you, as a brewery, are undercutting the restaurants/bars/etc that sell your beer, they won't be selling your beer for very much longer.

 

makes sense

 

What I wonder is why do the defenders of the 3 tier system always present their argument as though distributors couldn't or wouldnt exist without the 3 tire system? Allowing direct wine sales doesn't seem to be too big of a problem so what's it going to take to get direct to consumer beer sales.

 

Case in point: BCBS this year was at least 25% higher in cost to retailer. What was it that happened before that and who was involved?