How much profit is made from craft beer?

I couldn't say that I know anything about specific numbers, but I really doubt that most of the barrel aged ones are priced that high specifically to get more money out of us geeks.
The cost of production of those beers is far higher than the standard stuff. First, they're generally much higher ABV than average, which takes more raw ingredients - being the malt for the sugars. Then there's the extra hops to balance the malt. Next of course is the barrels themselves - those aren't cheap either, especially the in-demand ones from smaller distillers, like the Pappy Van Winkle crazy the past year or 2.
Sometimes brewers need to get a different kind of yeast to handle the higher gravities for the big beers.
Then we're also talking about storing those barrels in the brewery while the beer ages. The racks aren't cheap either, and that space also costs - its square footage that could be used for other things.
Similar with the big IPAs, hops cost a lot, and you still need more malt to balance those hops.
I wouldn't be surprised to learn that the big special beers make far less profit to the brewer than the standard beers.

 

For the brewer there is not much profit. Most of the profit comes from buying ingredients in bulk and at the lowest price possible. The savings on buying your ingredients is basically what profit margin there is. The people who push the product...that's where you make your money. The problem comes when you can get comparable beers much cheaper, or even when you outright know that a manufacturer is jacking to raise every ones else's prices. Like ballast point. which was O.K. to try once, but I won't buy it again at that price when I can get better, at a reasonable price point.

 

All of these are great points to bring up. Space especially is a precious commodity for many of the smaller breweries and having barrels that take up huge amounts of square footage compared to conicals can get expensive. Not to mention the fact that the ambient temps must be controlled properly since barrels don't have built in heating/cooling.

Big beers are as much about getting brand recognition and buzz in the community as making money on the product itself.

 

As you said the real money is in selling boat loads of say Fat Tire which gives a brewery like NB the freedom to make a labor of love like La Folie.

 

I think the only people that can answer these questions are the accountants/financial advisors for these breweries. We can guess all we want but unless you know the breweries costs and overheads it's kind of pointless.

 

9 dollars I think. Well, at least that's what I heard once.

 

State Law matters a lot here. In Virginia, a recent law was passed that made having an onsite taproom very profitable for small breweries. They can basically charge retail on a pint and get the whole margin, which profit wise is easily 3-4x that of the wholesale keg sales. Of course, you don't see deep discounts due to them not wanting to outcompete the restaurants and pubs serving their product locally, but if you want to support a brewery in VA, drink in their taproom, and order them when you see them in restaurants.

 

Profits & margins among privately held companies are a little tricky for us BA's to know since it's quite literally none of our business. You also have to consider that there are a wide variety of strategies for how the net from margin over COGS is used. The "profit" could be zero because of any number of accounting practices.

The bottom line dictates we think outside of the box here. Diverse strategies will reach fruition with bottom-up culture shifts. If we effort client-centric, tSat-focused initiatives, I am certain we can reach the low hanging fruit and demonstrate shareholder value.

 

One thing I have learned is that there is a differing degree of profit for each of various formats and how beer is sold and distributed. As you might imagine the highest profit is made from beers made from least costly ingredients, need to be "processed" for the least amount of time, and which are sold directly by the brewer to the public. The lowest profit is made from beers made of more costly materials and which take the longest to "process" and are sold in kegs to distributors. Barreling programs lose some of the product to Angels Share, and need space, temp. control, and time, which can translate to money.

If you see a brewery selling growlers of a IIPA for 26.00 at the brewery, you can figure that is a huge amount of profit. OTOH a bottle of a Barrel Aged Stout for sale at a bottle shop for 10.00 probably is very little profit for the brewer.

 

They must be making pretty good profits because it seems like all the ones around here are expanding or have made expansions in the last few years.

 

Sounds like you've had practice spouting this type of gobbledygook.

 

It's a gift.

But seriously, these fuckers are making a killing off of all us fools. Rue is selling his beer at $20 a pop or more in advance ffs.

 

I agree !00% ! Granted I think the majority it has to do with just good plain marketing to be really successful.

 

You have to figure that most breweries are NOT serf distributing. With that said they sell wholesale to the distributor which in turn sells it to the beer shop, which sells it to you. Everyone along the line has to make some money. So just because it's $20 down the street doesn't mean the brewery itself made a lot of money from it.

 

I think it varies based on the brewery and the beer. Now FFF bombers are probably sold at an insane profit. There's no way their more limited beers are made for 10$ at a 22 oz. With KBS I actually doubt Founders makes that much of a profit because they don't even have that many bottles to begin with. Also KBS is sold one week of the year and then is gone the rest of the year. I think Founders just keeps making the KBS despite the low profit because people would be so pissed off if they didn't make it every year

 

I'd like to see two numbers.

How many breweries have opened in the last 5 years?

How many have gone under due to financial insolvency?

 

From what I have heard that breweries have very little mark up through distribution, so they need to either make their money through the taproom or through volume in the distribution channels.

 

Fail. You omitted the words synergy and paradigm.

 

There's 3 profits to be made. The Brewery's profit, the Distributor's profit, and the establishment's profit(ie you bought the beer at store x, bar w, ect). So I'm not sure what your question really is, OP. But the best answer I have seen so far is "It's none of our Business". Mostly as consumers we want the best product at the cheapest price. Sometimes other factors come in to play, like convenience. Anyway, Cheers.