What determines beer costs?

You start by asking about costs to put beer on the shelf, and end with asking why beers are priced for specific amounts. Two very different things. The price of a beer (or any product) does not need to have any relation whatsoever to it's cost, except that if you can't sell it for higher than the cost, you don't sell it all (unless you're flooding/underselling a market/gaining hype). Those beers are priced that way because someone said, "X amount of people will be willing to pay Y dollars for Z amount of this beer, and this is our strategy for maximum profit".

Fortunately, capitalism tends to keep pricing somewhat in check with costs.

 

I would assume that, yes, barley is categorized as "Malt" in the chart.

 

Maybe someone could explain why breweries triple the price when they bottle a beer in large format bottles

 

With both Lolita and Sucre (and any barrel-aged beer) you need to factor in the price of the barrels and the "cost" of the beer sitting in the warehouse, taking up space and making no money; time is money (and so is space). With Sucre (and many of the Bruery's beers, as well as any high alcohol beer), you need to factor in the sheer amount of ingredients that it costs to get alcohol that high. Lastly, with Sucre and the rest of the Bruery anniversary beers, they use something known as the Solera method. This entails keeping behind some of the previous years' batches every year. Obviously, the cost of brewing extra and holding into it each year increases exponentially, creating an extremely expensive product.

 

Because they can!

 

In the Beer News forum there is a link to a Huffington Post article just posted which breaks it all out in detail.

 

MillerCoors still operates the Coors malthouse in Golden.

I don't either of the macro malting facilities produces the majority of the malt they use. In years past, a number of larger breweries did their own malting, including Falstaff (in Chicago), Schaefer (outside Buffalo), Genesee (on Lake Ontario) and pre-Prohibition Ballantine (next to their ale brewery on the Passaic River, neither of which survived into the Repeal Era).

And probably a lot more ---- in the mid-west and on the west coast.

 

Today add Coors. Others? The list may be short, very short.

 

Yeah, a reflection of the fact that the list of US precraft era breweries is also short (just about a dozen if you don't count AB and MC) and those were the only ones large enough to consider running their malthouse, I guess. And the number of maltsters has continued to shrink in the US, as well, even as the the number of breweries has grown nearly 60 folld. The "micro-maltsters" have a long way to go...

A couple of interesting graphics

World Largest Commercial Malting Companies
World Largest Brewers' Malting Capacities
​

Looks like they may have listed the Coors Golden facilities under "SABMiller"? And ABInBev's Mexican malting must be from Grupo Modelo (even tho' the chart in dated before the actual merger, when ABInBev only owned 50% of Modelo)? They also have a US based malthouse. I guess that wound up with ABI - unless Constellation now owns it? I don't recall any mention of the malting facility after the merger and split.

 

While the 50% part is true (see my earlier post).. the rest of this bottle graph is debatable and totally depends on whether you are talking about draft vs package beer, wholesale vs direct retail, etc. Consumers may view sales tax as "part of the cost" but I guarantee you brewers do not. Besides, some places charge sales tax, others do not. Rates vary. Shipping really only applies to a brewery that sells in areas farther away from the brewery and then again it depends on the deal they may have made with their wholesaler. I've always worked at a brewery where the wholesaler either picked up directly or they paid the freight. Not sure I've ever seen a brewery sell beer any way other than FOB brewery... (freight on board @ brewery).

 

"Not sure I've ever seen a brewery sell beer any way other than FOB brewery... (freight on board @ brewery)." How do you think Sierra Nevada handles this aspect?

Cheers!

 

They forgot about wax on the breakdown, wax can greatly increase the price

 

Ah I thought I was clear was meaning MICRO brewing tasting rooms. ie no middle man.
yes I know If it hits the bar or store. I was talking about the good profit locals places make selling DIRECTLY to the public. in their own tasting rooms....

 

Hard to know what a micro pub is. If they have food there are all kinds of other associated expenses. But honestly I don't think i've ever been to any brewery that only sold their beer through their tasting room and had no other retailers to undercut. Most are more like brew pubs with both food and beer and lots of associated expenses.

 

well many start up here, do NOT distro yet or self distro. but have tasting rooms. sell lots of growlers....

 

Not sure what that means.... I have yet to run across a brewery that PAYS the full freight for beer going to a distributor. In my experience distributors pay the freight (or pick it up themselves) and freight is part of THEIR laid in cost and therefore would be in the "distributor margin" portion of the chart, not a separate line item.

 

Ah, well in their case I'd hazard a guess that for at least some its possible their charges are determined looking at the going rate in the area and possibly in part by a concern with public perception. There are people in the world who think "Hmmm, if its that cheap compared to other places/beers, how good could it be?"

I know of a University that at one time was able to admit certain groups of students tuition free. However, when they looked around they found exactly that perception. People were down rating them and students were turning down admission because they thought a place that was any good couldn't possibly be offering a free education.

 

So, when Sierra Nevada loads a truck (or train) for shipping beers from Chico, CA to New York City the Wholesale Distributor is paying for the Sierra Nevada truck costs (or train car)?

I am simply asking because I was under the impression that Sierra Nevada would handle the transportation (including transportation cost) to get their product from the West Coast to the East Coast.

Cheers!

 

As I said, I've never personally run across a brewery that pays all of the freight when shipping to the distributor... no matter how far away it is. I've been working on both the distributor side and brewery side for the last 13 years. There could be some freight cost sharing in your specific scenario, but freight is almost always on the distributors end.

 

Thanks for your post; I learned something new today.

Cheers!