Infinite Demand Breweries?

If [insert favorite beer from favorite brewery] cost $1 million then no one would buy it; at least, no one of ordinary means. I think the real question should be, how much would I be willing to pay for X brew (and for comparison's sake, how much can you get it for in actuality)?

 

I don't know about infinite demand breweries, but Hair of the Dog seems to have come closest to a beer that commands a seemingly infinite price. A dozen bottles of their aged brew "Dave" were offered up at $2000/bottle, and sold out within hours.

 

Infinite... I assume hyperbole here. Others gave great examples so I won't repeat them.

But very significant demand that is clearly much higher than what corresponding supply and pricing are currently at - absolutely yes. I'm not an advocate of extreme price increases, but I do think we have far too little price differentiation between quality of beers, and rarity of beers to commonplace beers.

 

Intrigued - please continue. What examples would you give, seeing as how we are still in the throws of BCBS at anywhere from $19 - $24 per 4 pack depending on locale, and Tweak which is $12 -$15 per 12 oz. bottle, likewise. How would you define price points as a quality indicator without either matching macros on the low side or making a purchase cost prohibitive for 80% of the target audience on the high side? Also, is the price differentiation, in your opinion, the answer to more supply without having to drastically increase supply? I'm a geek when it comes to economic theory, and you've struck an inquisitive cell in my brain.

 

DFH?

 

What kind of rice are we talking? White rice, no thank you. Koshihikari rice, absotootly!

 

Sorry to not be specific with a dollar amount, but the right answer is probably something that dramatically improves the current problems such as long lines, changing clothes outside a retailer for one more bottle, extreme hoarding, truck chasing, etc. (though not necessarily solve them completely). Compared to wine and premium spirits, the best and rarest beer is just stupidly cheap, relatively speaking. You don't have to be Richie Rich to admit that maybe you'd rather pay more than experience problems such being able to buy none, or be outside in the line before sunrise in freezing temperatures (and possibly get none in this scenario as well).

With price differentiation aside from special releases, but still good quality, I think we're still at the far end of the spectrum of having so little differentiation. Sure, many of us give a nod of praise to Sierra Nevada having good value, especially something like their Torpedo IPA. But you have such a minority of people who are seriously constrained by budget that they "have to" drink Torpedo IPA and wish they could pay a couple bucks more for Stone or Firestone Walker IPA. Value means so little here, for so many.

With regard to quality, I'm not necessarily talking about infected beers, carbonation issues, etc. And not to make too much of the ratings here or elsewhere, but if you look at the macro trends within a style you can see my point. It's odd that so many mid to upper 90's American IPAs are so close in price to those that have the worst scores on BA. That's a pretty large gap, yet the prices hardly reflect that at all.

 

There is relatively no demand for beers at $20+ a bottle. There is vastly more demand for bud light at $20 per case. The amount of people willing to spend the kind of money breweries like HF charge is very small. No beer could sell at those prices on a large scale, because no beer is worth those prices to enough people.

 

Russian river

 

Nothing wrong with what you said, but help me understand the relevance of your point. HF is not trying to be large scale like Budweiser. HF sells out at the prices HF charges, so there's plenty of people willing to pay more, arguably a lot more, for their bottles. I don't know the magical $ amount, but the likes of HF or RR could go a lot higher in price before their insufficient supply issues will ever go away.

 

I went to Hill Farmstead last year and they only had a few bottles for sale when I stopped. Not sure which they were but I passed on them because they were $20+ for a 12 oz and 750ml bottle. I'm sure the beer was great but that's too rich for my blood. I grabbed a few growlers and still left happy.

 

There are a few interesting observations about Bordeaux in particular that are relevant to the beer world. The reason to pick a specific wine area, and in particular Bordeaux, is that some of it is the very high end luxury first growths, quite a lot of it is in the middle, but there is also a ton of good quality every day priced wine that happens to come from Bordeaux. I think this represents a good microcosm of the beer world - Whales, damn good beer, and the everyday.

- Great first growth Bordeaux averages in the $1,000-1,500 a bottle - this is the 'stupid' end of the market where rarity and status are driving price (I am looking at you big whale hunters ) and I think this nicely aligns the Whales of the beer world.
- For the same vintage, the middle of the Bordeaux market that produces very very good wine is in the $100-300 range - think of this as your BCBS or Heady Topper - not impossible to get but still limited in supply, sells out, and highly desirable.
- Then there is the everyday Bordeaux - it all sells for between $20 and $50 a bottle and there are entire isles of the stuff at every liquor store

Interesting fact - if you divide Bordeaux prices by 10 and then go on craigslist (liquor store for the everyday stuff) you have just defined the price of beer as it sells on the secondary market:

Everyday good craft beer sells for $2-5 a bottle in the liquor store

Damn good desirable beer (middle of market) sells for $5-10 a bottle in the liquor store (and sells out in minutes based on BCBS) but it sells for $10-50 on craigslist in the secondary market

Whales sell for $20-30 a bottle in the store, but sell for $100-150 in the secondary market (Craigslist is covered in proprietors for $100-120 a bottle right now...)

Back to the point of the thread - as yemenmocha points out, there is very little differentiation in the beer market right now - the biggest baddest most desirable whale sells for less than $30 in the store, but immediately appears on craigslist for $100+. The same is true of the middle of the market - the $25 4 pack of BCBS will be selling on craigslist in a month or so for $40-50. The only beer that is actually priced to the market right now is the everyday craft stuff.

 

Appreciate your insight.

I think there's also little differentiation in what you're referring to everyday craft stuff. On a very modest budget someone can walk into a mega beer store in most major metros and buy a good assortment of the best IPAs available in the US., or heck, best in the world for that matter. You can drink many of the world's best. The very top tier. But also for about the same price per sixpack, they could end up buying some of the worst, lowest rated crap that exists on shelves. It is NOT like that in wine.

 

These are very interesting observations. There has been a fair amount of discussion on the "why don't they price whales higher", but much less on the quality-price relationship in the middle and low end of the craft market.
I'd speculate that the relative maturity of the market as a whole (with so many breweries as well as consumers entering the market) as a major factor.

 

So much agree on the delta being small in beer vs. quality. I was in store Sunday picked up 6 of Miller Lite as was going to friends house to watch football and he doesn't like craft. The Miller Lite was 7.49, I passed Anchor Porter at 8.99 and Sierra Nevada Celebration 9.99 for example for 6ers

Even the #1 rated beer Heady Topper at $3 can if you are in VT and buy the case is only 13.5 a 12oz sixer which is basically only double the price of the cheapest sixer and the ABV is higher. Not the best example since Heady has such small distro, but still proves point versus wine which even without looking for rare wine the there are plenty of $5, $10 and $50, even $100 bottles in every liquor store.

So overall I agree that the best beer is cheap vs. demand. But my personal opinion is that I choose not to spend a lot for the highest ranking or rare beer all the time as there is plenty of cheaper beer that is still great quality so there is no need and I'm glad for that

 

True to a certain extent, but I get a lot of fantastic wine for $10-15 a bottle which I consider very cheap - spain and south america provide amazing wine bargains, but I take your point - these aren't really the same as getting headdy topper for $3 a can..

 

Not sure where you were this past Friday, but Vanilla and Proprietor's BCBS (~$24+) sold out easily within minutes everywhere it was distributed. Hill Farmstead stuff sells out no problem (the demand for Art B3 was incredible, and that beer was something like $30+). Surly Darkness ($23) sold out within days across MN and Chicago; 30,000 bottles is pretty large-scale. New breweries start up and sell their 750s at $15+ with ease. Drie Fonteinen and Cantillon are on and off shelves in the USA within hours of every shipment, and they go for upwards of $20 for a 750ml (~$10 for a 375ml); this is of course not to mention the Armand'4 Seasons which sold for $60 and easily sold out online. There is plenty of demand for these things, and if all of them were on a larger scale they would sell just as easily. If BCBS was year-round and nationwide, there still wouldn't be enough for everyone, and it would still sell out.

 

Clown Shoes and Founders come to mind, maybe.

 

Stone has become the Sam Adams for people just getting in to beer. I think they can bottle just about anything and it will sell. Even that smoked saison eventually sold.

 

Mikkeller. One of their beers was a single 12oz bottle 3 or 4 percent wheat ale for $6 at Total Wine. They have different styles and most are on the higher price when compared to similar styles.