Price gouging

While the 3-tier system is probably less than perfect, I wonder how many folks would have cases of beer shipped to them. We have a number of cases of wine shipped to us from California each year. The shipping cost is in the area of $45-$50 per case from California to Wisconsin. I know I am not going to be having beer shipped to me at those kinds of costs. I guess some folks would for those "special" beers they cannot get otherwise, but I have not gotten my head to the point where it would be something I would do.

 

I'll buy Cascade Blueberry and I'm a stodgy old fickle bitchy down the line consumer. That beer with fresh blueberry pie is one of my great memories of fermentables and food!

 

I simply think that if we're going to call this a free market than we have to address the access issues with craft beer. My area distributors don't appear to me to be trying to meet my needs and when they do, their prices are some of the highest in the country. ($20 Backwoods Bastard $30 BCBS)They've also earned a reputation for being seemingly unmotivated regarding craft beer among the local retailers I've spoken with. I struggle to believe the argument that without the 3 tier system we couldn't or wouldn't still have distributors. Direct to consumer wine sales don't seem to be causing problems so why not treat beer the same? While I recognize the premium that would be involved if I wanted to have a beer shipped from a California brewery, I should be able to in a free market.

 

weed

edit - to be more proper, marijuana

 

I think after looking through the thread that (maybe) 3 replies actually attempted to answer or even acknowledged the OP's original question. With many replies being "you don't like it, don't buy it", I find it interesting how these types of threads give the opportunity for people to become some kind of 'hard-ass of logic'. Thank you Captain freaking obvious. Then you've got ones who take the opportunity to educate us all on how and why beer prices are priced the way they are. Do people even read the opening thread or do they just use the forums to fill a void of hearing themselves talk while they're buzzed up on high end beer? A question for another time, I suppose.

Anyways, I know that a lot of Founders releases will have notes such as "Suggested retail price for this beer will be $xx.xx"
which gives the consumer a general point of reference saying - hey, if you see this beer for more than a couple bucks over this price, you're probably getting screwed over. Not sure if other breweries do this as well, but I think it should be a more commonly used practice across the market. You can always call the brewery and ask for their standard pricing, if you felt the need to. Generally speaking, anything over $3/12oz for standard/seasonal beers is high, and anything over $5-6/12oz for specialty is high.

 

In fairness, there is a bit of a disconnect between the thread title and topic. Based on the OP, it's about the best way to determine "appropriate" price. The question posed is one that, at worst, doesn't have an answer, because the appropriate price is the point at which it sells (hence all the stuff about free market, don't buy it, etc.), and at best, the answer is--to your point--the MSRP of the beer.

The thread was never about "Price gouging". Unfortunately, introducing that term--which can be a bit loaded around here--sets off all sorts of unintended conversational elements related, exactly as has happened.

I think your suggestion is probably the best answer the OP could hope for. Find out what the brewery thinks it should cost as a point of reference and purchase (or not) from there.

 

You certainly implied it:

Got an example of that scenario? Typically, when a brewery self-distributes their own beer in a region, there is no distributor that also carries the brand. There is no "going behind the back" of a distributor- the brewer IS the distributor. It would make no sense - for the brewery or for the distributor - for a brewery to sign with a distributor and also continue to self-distribute in the same market. The industry standard is that a contract between a brewery and wholesaler gives the latter exclusive distribution rights within a region.

Self-distributing breweries and wholesale distributors seem to co-exist fine in the 33 states where SD is legal.

Did anyone in this thread imply that? As stated above, self-distribution is allowed in the majority of US states - noting the services that distributors offer breweries does not constitute defense of a mandated Three Tier distribution system. Outside of the NBWA and some state regulators, I doubt you'll find many people who are against the legal option of self-distribution for breweries.

OTOH, given the distribution system as it exists today, 80 years after Repeal and with two companies controlling nearly 3/4 of the US beer market, totally eliminating Three Tier - thus allowing AB and MC to own their own distribution networks in all 50 states - would play havoc with the still tiny "craft" segment of the market.

That's what brewpubs are - direct sales of beer from brewery to consumer, eliminating both the wholesale and retail tier. Every state in the union had to change their alcoholic beverage laws to allow brewpubs in the past few decades, proving that the image of a rigid, Three Tier system that remains unchanged since Repeal is a fiction.

As for legal shipping of beer from brewery to consumers over state lines, that's still a state by state issue and given the average price of beer vs wine, it is probably unlikely enough brewers would want to get into that sort of market that brewing industry groups in each state would spend the money and effort to change those state laws - as was done in the above example of the on-premise brewpub.

 

I agree 100%. And I'll take it even further and say that there is no such thing as price gouging on essesntial products either. The price is the price. Always.

 

That's a step too far. But I fully agree re: beer

 

This is so much bullshit it's not even funny. I deal with several large distributors multiple times per week, and even more independently distributing breweries, and there's no concern about "going behind anyone's back" or being "locked ito a distributor". In Oregon, any brewery producing less than 5,000bbl per year is allowed to self distribute, and yet in the 10 years I've been doing this job not a single brewery has come anywhere close to that cap before they realize that it's easier and more beneficial to them to sign with a distributor. Hell, Pelican BRewing was largely responsible for pushing for the increased self-distribution limit (it used to be 2,500 IIRC), but even they signed with a distributor before cracking the 2,000bbl mark.

Breweries are in the business of brewing beer, not managing a mini-distribution empire, and they all quickly discover that it's a hell of a lot more efficient to make one delivery to the distributor than it is to manage the small fleet of trucks, drivers, and delivery routes needed to service any decent sized metro area.

You're welcome to your opinions and whatnot, but unless you actually know what the hell you're talking about please don't go spouting crap like this as though it's fact.

 

Some Brewery websites I've been to list a suggested MSRP under the description of their beer. This may be only true for smaller breweries, scope out their websites.

 

Like gas, whatever other goods and commodities whose prices are driven by speculation or someone's opinion, and not by supply/demand or some other forces that have nothing to do with reality.

 

And it's also called capitalism.

 

All I know is DE. You have your Oregon facts and I have my DE facts. I wonder why Oregon has a better craft scene than Delaware? I am very good friends with the owner of a local brewery. He has no choice. He cannot self distribute. He also has 3 choices in a distributor. He does not have the power that DFH has so was told what he had to do to distribute. Since only 1 distributor would talk to them he had to sign an exclusive deal that was a good boning. His words not mine. My OPINIONS come from the talks with him. I agree with him that the person that creates then builds the beer gives up way too much of the retail price to downstream players. I do not believe they shouldn't exist. Many states may run better than DE. I understand they have costs.

Bottom line the crap I am spouting is no different than the crap you are spouting.

 

In the first post I replied to, you said:

My post was meant to point out that this is bullshit and show that even in places where breweries can self distribute, they inevitably sign up with a distributor before they get very big. If you live in a state that doesn't allow self distribution, and your only experience with the matter is talking with one bitter sounding brewery owner, why the hell are you making claims like the one I bolded?

The bottom line is that I've been dealing with this crap for a decade, and am friends with not just one, but many, many brewers (not to mention distributor reps and even the owner of one of the local distributors). We may both be spouting crap, but at least mine is fact-based crap gleaned from years of industry experience, while yours is apparently based on discussion with one disgruntled brewer owner.

Oh, and as a side note, if your friend's brewery was making great beer they would have no problem getting multiple distributor to talk to them and working out a favorable deal. I've watched small up and coming breweries get woo'd by every distributor in town and seen some of the ridiculous "signing bonuses" they've been offered to choose one over the other.

 

Grapefruit Sculpin has been sitting on the shelves for months across the street from our office here in PA. I was pretty unimpressed with it on tap fresh and didn't purchase any bottles.

 

You seem to be missing the point, which is that the vast majority of breweries go through a distributor, not because the law makes them, but because it is a sound business decision to focus on what you do best while partnering with vendors that do what they do best.

It's something called core competency or competitive advantage. Brewers are good at brewing beer. They are not good at managing distribution. Brewers don't typically self-distribute for the same reason that most brewers don't grow their own hops and malt their own grain. That's not the area of their expertise.

This happens in other industries too--restaurants, by and large, don't grow their own food/raise their own livestock because they are in the business of preparing food, not growing it. Heck, the issue of businesses not self-distributing happens in other industries as well--brewers are far from the only type of business that doesn't self-distribute, even in industries where there is no law prohibiting self-distribution. It is most cost effective to focus on performing one's core competency to the best of one's ability and pay someone to do the things that are outside that core competency.

As was noted by @jesskidden, the elimination of the three tier laws would likely have the unfortunate consequence of favoring those brewers who had the size and resources to develop their own distribution networks or purchase distribution partners outright. And I'd hazard a guess that even the largest of the "craft" brewers (Boston Beer Co., Sierra Nevada, New Belgium), don't really have the kind of money they would need to grow their own distribution network or purchase distributors outright.

But I know some companies that do have that kind of money....

 

in the south jersey/philly area, i got BCBS from 10 different places. only one of those places had it for less than $9.99 per bottle - even if you bough 4 packs. it sucks that there was no better alternative available for me, but i still bought plenty of it at that price. i love this beer and it's very common to see worse beer at a higher price per ounce. so it was justifiable. i hate the gouging but what can you do?

 

I am getting your point. In fact I agree with it. My only disagreement is in the restaurant analogy. The product is changed and improved by the restaurant. In the beer industry the product is exactly the same when it leaves the brewery as when I buy it at retail.

My only point is that I would like to see the brewer get more of the final retail price. I would also like to see the farmer get more of the retail price of a box of cereal and the rancher get more of the final cost of my steak. If all of these products need to be more expensive then so be it. I would gladly pay more if that money gets in the hands of the actual producer as opposed to middlemen.

Here is what I am not saying. That distributors are not needed or wanted or even important.

Not to open another can of worms, but......in my original post I mentioned distributors and retailers. Interesting that no retailers are defending their markups. This side of the comment is also more on topic to the op's original question.