Are Breweries Over Charging or Not?

First time? No, hops have a shortage about 1 year in 10.

 

Some breweries are a bargain and other's poo-poo is "special". Demand is really in charge. Also, some brewery folks have very little business experience and seem to price arbitrarily. Victory is a brewery that knows what's going on. Sierra Nevada is flat out the best value of all.

 

Depends on the brewery and the beer. And even then it's hard to say. So I'll go with "sometimes"

 

#PleaseGodNo!!

 

Something is worth what someone is willing to pay for it. If people are buying it, it is not over priced. Just because a specific person isnt willing to buy a beer because they do not feel it is worth the price, does not mean it is over priced. If a beer sells out immediately, if anything it is under priced.

 

There probably isn't one definitive answer, as different businesses do different things. Some breweries are started purely for attempting to take advantage of the market trend, whereas others are clearly in it for the art and craft.

As for the bottle pricing question, I'm sure it angers some but is okay by others, as people obviously pay for whatever. It really seems to depend on the specific beer and the work involved in acquiring it, as others have pointed out.

Free market economy comes to mind.

 

The beer community has been changing into a pompous (snob) community over night it seems.

EDIT: I know this doesn't exactly play into the topic 100%, but I hope when you think about the prices of these beers you also think about the community and what is becoming of it.

 

Good topic. All markets are self correcting in the long-term. If there continues to be a demand at that price point, the prices will remain high (relatively).

Limited distribution greatly affects perception of value. Also, in the short term, if the "overall craft market share" continues to increase and new consumers enter the mix, demand will at least hold its course.

IMO, the $15-$25 bottle range has incredible breadth, quality and value. Which is good given my level of consumption, I need those characteristics. But I also like to splurge and try new things.

 

Everything is worth what its purchaser will pay.

 

I just paid 16$ per 4-pack for Todd the Axe Man , and while I think this price is fucking ridiculous, I'd pay >$4 a glass to have this at a bar. Only way I can justify the price.

 

Wait, market forces set prices? WHAT?!

 

The bottles you're referring to that generally run above $20 from those specific breweries (HF which I know very well) are all small batch productions. HF doesn't run regular shelf bottles much above $12 (not including magnums, obviously). Do I think the small batch stuff should cost more than regular batch?

A lot of the small batch items are aged considerably longer than the regular shelfies. There is a major opportunity cost therefore to the brewer for dedicating certain equipment for multiple months to one batch versus turning over that equipment multiple times for more common, less complex shelfies. Do I think that opportunity cost should be reflected in the ultimate small batch brew with a higher cost? Yes.

Now for guys like Bruery who put out non-small batch releases at $30 a bottle, that is really dumb and I know a lot of people in the beer community, including myself, who don't even bother trying new Bruery releases because of the price point. Plus Bruery has a mixed record. Granted the bottles are large, I think they'd be better off with bottles half the size charging $15 or less. I think they would move more than twice the half sized bottle volume than full size and encourage more people to purchase a regular Bruery bottle.

 

The only time a beer is overpriced, is if no one buys it and it sits on the shelf. In that case, either the price needs to be lowered or stop production. You stop production if your price of production is more than the price you can charge, or the margins are too small.

To sum up.

 

“…charging 20-40$ per bottle,” If beer consumers are willing to pay those prices than the term of “overcharging” is inappropriate.

If the question is more along the lines of: are prices like 40 bucks for a bottle of beer ridiculous? My personal answer (i.e., my personal opinion) is yes, those prices are ridiculous.

Until a sufficient number of beer consumers ‘rebel’ and stop paying large amounts of money for a bottle of beer it is not going to change. The breweries are making HUGE profits when they sell a bottle of beer for 20-30-40 bucks and they will be happy to make those profits as long as consumers are willing to fork over their cash.

When it comes to breweries like Cascade there is an old saying that comes to mind: Laughing all the way to the bank.

Cheers!

 

I think the answer, like most things in life, is "it depends." If you think of craft beer as a luxury item, then whatever price people will pay is fair. If you think of it as a commodity, then prices need to be kept reasonable in order to support long term growth.

One thing I will say about the wine analogy is that brewers aren't dealing with high priced real estate for growing barley in prime "terroir." Outside of large hop or fruit additions, most producers are dealing with similar costs for ingredients. Part of the reason wineries can justify high prices is because guys can pay 10k a ton for prime Napa grapes.

 

I see many older bottles on the shelves of 'specialty beer stores'. A local store has what I call the 'shelf of shame' where expensive unsold beer gets marked down to move it out. And then it moves.

IMHO the market is saturated with overpriced beer (not all beer is overpriced) and will self-correct at the macro level.

 

Leaving aside the question of "overcharging" per se, I've always been curious about how much of the differences in beer pricing are driven by "cost to produce" vs. "all the other stuff that goes into pricing". And here I'm thinking mostly about relatively mass market beers within the same category, rather than small batch runs or explicitly difficult to make styles.

Just as a for instance, how much of the difference in price between a sixpack of Ballast Point Sculpin and a six pack of Sierra Nevada Pale Ale is explained by the economy of scale and the price of the ingredients and how much is due to conscious decisions about marketing/branding etc.

 

I think about this a lot when I see Lagunitas on the shelf. Also, when they charge more for the same beer in a bigger bottle, that is definitely overcharging.