Help understanding wholesale and retail prices

Can't speak for others, my form of protest is simply refusing to buy anything I think is overpriced. Admittedly, I make that decision on a case by case basis (pun intended) but I am firm in my resolve.

 

At least here in WA, wholesalers/distributors must offer the same price to all their accounts. Also, if a distributor has a beer available, any account can order it.

That's how it's supposed to be anyway.

 

You can't gouge beer. It's not a needed commodity.

I use my wallet as a tool. I won't buy if it's too much in my mind. I also stay under $1 a beer. Drinking my Deschutes inversion that I paid $15.99 a case for. Best by 30 June and still drinking great.

Enjoy

 

That is true in NJ for the most part expect in NJ a distributor can offer a retailer a volume discount. If a large stores buy 100 cases of Budweiser at a time he pays less per case than a small retailers who buys 20 at a time.

 

Distributors will care about what a store charges if there is more they could have made by jacking the prices themselves. The brewers do care because it reflects on their reputation, whereas the distributors are somewhat invisible to the consumer. If a beer is expensive, consumers will typically blame the store or the brewer, even though know there is a distributor.

A recent example of price-jacking is Prairie Deconstructed Bomb 4-pack which varied between $25 and $43 in different markets. Transportation cost differences are likely not a major factor, and while taxes and other business costs could enter into it, they can't fully explain why it is 72% higher in one market over another. This difference falls on the distributor and retailer. It was so limited and unique, that I expect most of it sold at whatever price was marked. I paid $25 and still felt ripped-off, though nobody was forcing me to buy it.

 

One thing I’ve learned from selling beer in half a dozen states is that laws and regulations greatly vary state to state. This one is pretty consistent, however. Distributors have two sets of pricing and discounts - on-premise and off-premise, and ALL accounts abide by them.

There are some weird exceptions like selling to airports or non for profits, or selling beer to the brewery who makes it.

Why is there such variation in the price the consumer pays? Some of it is just price gouging, but likely not as much as you think. It all goes down to operating cost and business model.

For on-premise, a pint downtown may cost 1-3 bucks more than in the suburbs. More desirable area = more expensive to operate a bar. Pretty self-explanatory. Restaurants often make very little profit off the food, so higher alcohol prices offset this. Wine is like printing money. $7 bottles of IPA are nearly as good. But when that fancy pub burger with locally sourced beef and foraged vegatables only costs $12...they have to make money somehow.

Off-premise has all types of pricing strategies. Gas stations and C stores often break even on their beer. It’s the trinkets, lighters, gum, etc. that you grab in line that keeps them afloat. They also usually get supplier discounts e.g. Modelo brands, which is why you see 10 different beers from the same company.
Big Binny’s and Total Wine type places and Costcos buy in massive volume and basically do their own warehousing for which they receive deep volume discounts which allow them to sell at a competitive price while still making profit.

Wal-Marts usually lose money on beer, food, and many other products. Their strategy is to make themselves a ‘one stop shop’ and lose on some products and gain on others and hopefully come out making money. Seems to be working for them... So you go in for cookout supplies. They lose money on the beer and food, but make money on the charcoal, grill utensils and lawn chairs you bought for guests.

Tl;dr, everyone pays the same for the beer. Few people are straight-up price gouging.

It may be frustrating to see a six pack for $2-$3 more than another store, but I will say, there are very few liquor store or gas stations owners who go home to mansions. These guys operate under extremely tight profit margins.

 

Why did you feel ripped off when regular Bomb! goes for ~$10 a bottle in most markets?

 

This is great info, thanks for sharing this!

 

Price gouging? Vote with your wallet.

 

I didn't see this mentioned yet, and I don't know if it is true for every state, but I believe most states set a minimum retail price for alcohol products, and whatever the retailer wants to charge above that minimum price is entirely up to the owner of that business. So gouging is permissible but low-balling is not.

 

I feel ripped off by the price of all of the Prairie Bomb, Noir, and BA stouts. Don't get me wrong, they populate my top 25 list, and my favorite beer is Pirate Bomb, but they cost way too much, and I despise that I am compelled to buy them in quantity. Prairie seems content with keeping volume down and prices up, and that must work for them. Then distributors and retailers pile on, for outrageous pricing.

 

I got it for $25.99, so essentially $26 in Minneapolis and that's the lowest I heard of. The $43 price was NYC. I know that NYC has some crazy issues, like delivery drivers having to assume they'll get a ticket, tolls, etc. But - there were other who posted from other states where it was selling for upper $38 to $40.

 

Can you provide an example of how/where a large chain store "acts as [its] own distribution company?"

 

Large multi-million dollar chain store buys 1,000 cases of beer X.
Large multi-million dollar chain store transfers 100 cases to 10 of its other stores.
Large multi-million dollar chain store saves the most money possible from purchasing the maximum 'drop' price on beer X, allowing their price to out-compete everyone else around.

Regardless of the dubious legality in certain states / regions, stores do it all the time.

 

Is the price of 2% milk the same everywhere?

Is the price for Cheerios the same everywhere?

Is the price for Budweiser the same everywhere?

Capitalism works. Especially in the 2-step distribution model.

Sometimes, it even works overtime.