Craft beer cheaper without 3 tier system?

That's weird, not sure how that happened, oh well.

 

You use lots of absolutes in your posts... "all", "every", "only"... which is convenient since all you would have to do is produce one example to "win".

But, in general, yes, I believe that the retail price of craft beer is based on the perceived value in the market, and that when costs go down, businesses along the chain use that to increase profits rather than pass along a price cut and thereby undercut the market-estabilished perceived value.

Exceptions would be businesses who are trying to "buy" market share using "discount" pricing ... looking at you, Total Wine, Costco, etc. Retail grocery is a tough business with slim margins, so you bet they will maintain prices on a high margin product. Given that everyone needs groceries, if I were managing a grocery chain I would use convenience to attract craft buyers, not price.

Is that true for "all" breweries, and "every" distributor/retailer? BFOM... I don't have acess to all the "all's" and every "every" or access to anyone's books.

But, given the relatively stable pricing structure for craft beers across a very broad spectrum of brewers, distributors, and retail outlets, concluding that it is value-based pricing is a sound conclusion, IMO. I am nearly 100% certain it is not cost-based in "most" cases.

PS (with edit): Sorry for using a non-standard acronym... BFOM = "Beats the F--k Outa Me" aka, IDK.

 

I buy direct from the brewery in NJ and NY and im still paying $16-$20 for a 4 pack of 16oz cans...not really cheap

 

One example is Toppling Goliath. They self-distributed to their home state (IA) and to Wisconsin. They could not self-distribute to Minnesota due to MN's laws (have to be in-state to self-distribute). They eventually went with a distributor (Johnson Brothers) as part of their effort to increase sales and therefore be able to penetrate other states (both legally and logistically, I suspect).

 

With PA on the lower end why do we pay so much for beer?

Enjoy

PS.......I am loving Global Warmer

 

Yes but Here in PA a grocery store typically has the most expensive prices. Whole Foods use to have prices equal to busting a case into 4 six pack or sometimes less. In the last few years they have joined the upper tier of price and have lost 99% of my money.

I can go to Jersey and buy SN for around $14-15 a 12 pack and Here its closer to $20 and $38 a case. I can get it in MD sometimes for $25 a case when I pass by State Line. North Jersey has a much higher cost of living than here in PA but still has substantially less expensive beer.

I dont get it

Enjoy

 

Fair point, but your original post that started our back-and-forth was fairly absolute.

You would really need a long term study of a particular brewer's costs - which considering most are privately held, that's not going to happen anytime soon.

I don't think there is a "stable" pricing structure.

Troegs and Southern Tier are similar sized regional breweries, with similar quality of beer, based in PA and NY respectively.
The same grocery store chain is selling a 6 pack of Troegs beer for a higher price in NY than in PA. They are selling a 6 pack of Southern Tier beer for a higher price in PA than NY. In both cases, the price in the local state is $9.99, and the price in the other state is $10.99. This would point to transportation costs being a contributing factor to the retail price. If there was a flat "market value" of the beers, the price would be same in both locations, no matter the transportation costs.

 

Why does SN have to cost more? If SN can make the beer and sell it for $6 and still make the money they need then so be it. It really has nothing to do with your perceived taste

Enjoy

 

If you have a Wegmans or Weis store near you, check them out. I agree Whole Foods has now jacked their prices, but the other two chains seem to have better pricing. Both do a flat-rate "mix your own" six pack.

 

You're failing to see the big picture. In general (while I'm sure there are examples of a distributor getting a brand and making no investment whatsoever, it's the exception, not the rule) a distributor will take on brewery X and then make a significant investment in POS/POCM (signs, banners, shelves, events, etc.) to let customers know that Brewery X is now in the market. Then also invest significant amounts of their rep's time in selling Brewery X's beer in to retailers and restaurants, doing sampling to attract consumer demand etc. Wholesalers do this job because, in many cases, the brewery can't afford the people on the ground to do the same thing and grow the brand.

So, what you're advocating is that wholesaler Y can just be jilted by Brewery X and they can leave a distributor any time they want. For those of us in the real world, the impact would be that wholesalers would simply not invest in many (most?) craft brands because the investment could go up in smoke tomorrow. Thus, if breweries want to expand, they'll have to come up with the significant capital required in a market that is completely unfamiliar to them. You could say that overall this is a positive thing and it requires a brewery to be stronger and better capitalized to expand. However, that likely means less variety for us as drinkers.

So, now that I've explained that to you, the reality would become that distributors would probably write their agreements that to leave the distributor, there's a massive penalty. So, I suppose that's the free market solution you're hoping for? Nothing changes, but you feel better about the arrangement?

 

Case laws, 4 tiers of distribution, and numerous other factors....

 

As big as they are, they are still about 1/100 of the production volume of InBev in the US, so their efficiency can't be as good. And their usage of raw materials (particularly hops) is going to be higher per barrel no matter what, due to the style of beer.

 

Weiss is quite expensive. Mix a six is $11.99 and not much worth buying there. I did see grunion or $11.99 and that must be an error. Many six packs are $12 and up while the case will be under $40. They think Bells is filled with gold. I buy there but walk out with nothing 50% of the time.

Wegmans is too far away to stop at and still not the best prices. I prefer to hit DE and NJ every 6 weeks or so and load up on every day drinkers.

Enjoy

 

You missed my point. I get the whole size/ingredient thing. look at the post I replied to. I was not asking why.

Enjoy

 

But, as I understand it (been beer shopping in PA for over 40 years, but have yet to stop into a grocery/convenience store for beer) those are not true "grocery store" sales - say, the way beer is sold across the border in New York grocery stores, in the store across the aisle and in the same sorts of open coolers as the eggs, butter and milk, purchased at the same register as your bread and TV dinners. In PA, aren't they really "bottle shops" with those "food/deli" licenses. IIRC a bottle of Snapple or can of Pepsi in a Wegmans sandwich shop/salad bar isn't the same price as 1/12th the 12 pack price out of the soda aisle.

Similarly, in NJ, while there are a few grocery stores licensed to sell beer, the majority of grocery store name-branded businesses - ShopRite Liquors, Wegmans Fine Wines, A&P Liquors, etc. - attached or not, are just liquor stores, many of which lease the brand name of the grocery company (sometimes the receipts even state as much). Many of the Wegmans are individually owned by members of the Wegman family, and the actual name of the business is the initials of the owner.

 

That wasn't my OP, this was. But, regardless, I stand by that near absolute. I don't know of a single brewer of craft beer that uses a cost+ pricing strategy. That is a strategy used primarily by very low-end products trying to sell at the lowest price possible. Any luxury good producer using that strategy is a very poor businessman. Does the retail price of a Lexus only equal what a Toyota sells for plus the cost of the extras?

The market for craft beer is local, not national, in general. There are other explanations for this, including perceived value of the beers in their local markets v "out of state" beers. Also, not using a cost+ pricing strategy does not mean there is zero cost influence. The retailer will try to pass along cost increases if he can get away with it. But, once a successful price is established for a luxury good, he is unlikely to pass along cost decreases unless forced to by the market (or competition).

 

The Acme based bottle shop and the Wegmans based bottle shop nearest me still have the lowest prices in the area. The Whole Foods chain has recently reorganized their operations, getting rid of some of the individuals who were doing the selection, etc. at indivdual stores, so that reorganization may have something to do with the Whole Foods prices you are seeing. Especially if there's any truth to the stories circulating that they've been "financially challenged" the last few years.

 

Yes they are a separate area of the store. Why would that make the beer more expensive?

The WFM has actually improved the selection 20 fold from what it was. I just cant fathom paying $12 for a six pack of Otter Creek base beer. There are still some good prices there but not many. I buy all the Bells java stout I can find there since its $11.99 vs close to $60 a case price. Since their $ has gone up I dont go out of my way to stop there. Selection wise its great and changes a lot from what I can see. The large bottle formats are really diverse and large.


My main Q here was originally why does beer in Jersey and DE cost so much less for SN than in PA.

Enjoy

 

You began your comment by saying the beer shops associated with Grocery stores were more expensive. I was simply pointing out that was not universally true. So that pricing you are talking about appears to be Whole Foods related, not grocery stores themselves.

Don't recollect saying that having a bottle shop as part of the facilities in the Grocery store would lead to increased prices. Indeed my point was that I'm regularly seeing lower prices than in other eatery/bottle shops.

As for your main question I wasn't addressing that issue but as I pointed out in an earlier post in this thread my experience has been that I sometimes find spirits, wines and beers going for less in PA than in NJ or DE. So it is not universally true that alcoholic beverages always cost more in PA.

Enjoy.

 

Liquor and Wine state taxes are less in DE than in PA (but beer taxes are similar). So there is high demand for liquor and wine in border stores.

So perhaps Total Wine is simply making their main profit off of liquor and wine sales, so they can "afford" to make a thinner margin on beer sales. But beer stores in PA have to make all of their profit off of beer sales only.