What is driving up beer prices?

I think when I first started and found BA, I just wanted to try all the big hitters without caring about price. The more you sort through a lot of these beers, you realize the hype greatly influences the price. Also, the longer the lines the more people want it. Goose Island does this deliberately with BCBS releases here in Chicago. Less information about how much they will have, so that people waiting in line overnight draws attention. In the end its just business for a lot of places.

 

I always find it interesting that people consider $6/$7 for bomber cheap and regularly pay $10 for a bomber but complain about $14-$15 six packs. I guess they should package expedition in a bomber and sell it for $10. Less complaints and more profits.

 

I wish the guys at Tree House and Trillium were so kind.

 

Calling people dumb for purchasing beer they want is pretty lame. Capitalism drives pricing. If you do something rare and special you can charge what people will pay. Breweries are for profit companies. If the beer they sold at the high prices was not worth it then it would not sell. So they are obviously doing something right. If I ran a brewery I would do the same thing as I am sure you would. But I understand your viewpoint of not buying. There are many great beers that are inexpensive. But we all know the best are more pricey. I just wouldn't call people dumb for buying it.

 

"I remember when minimum wage was $1 p/hour. Now I have to pay a employee $10 for the same work."
Prices go up on everything. Seems like some people wouldn't be happy unless every rare beer was under $10. Sorry won't happen.

 

Hmmm, my local Giant store has been lowering their prices . . . I love it. Can get Old Chub for $8 a sixer.

 

Admittedly I'm new money, but I haven't noticed a big jump in the price of shelf beer. I still find plenty of stuff in the $10-12 range for a 4/6 pack. Sure, there are some I would buy more if they were cheaper (Todd the Axeman comes to mind, $18/4 pack is tough given the alternatives), but I can't think of any single beer that has jumped significantly.

Now limited release beers, that's starting to get a bit nuts. The new format for Bourbon County blows, but I'll still chase it like an idiot.

 

I'm prepared to take the abuse, but many beers are underpriced.

For example Maine Lunch.
When it gets to these parts it sells out instantly. In many places it doesn't see the shelf. It is sold at 6.99 or 7.99 a bottle. People are always criticizing MBC for being too expensive.
I would argue that it is being undervalued. The price point should probably be 9.99 or more. At that price it would still sell out. But maybe it would last a day or 2.

 

That's if your bottle shop does a discount shelf. Every place I go now has a little shelf with old seasonal stuff at the same damn price. I hope someone enjoys their year old Pumking, because that probably went to the front of this year's display.

 

I wish I could but CT law does not allow discounting Alcohol. CT law sets a minimum price Alcohol can be sold for. I believe Total Wine is fighting this in our state.

 

If enough people thought it was over priced and let it sit on the shelf that would change things. But we know it'll never happen , the guy walking in behind you wants it and will clear the shell if he's allowed. If you don't like the price don't buy, there's other beers on the shelf thst are worthy. No matter what you do you can't set the market, and they will charge what they think the market will bear.

 

I suppose you might get abuse from people who don't understand basic economics, but this is certainly and obviously true. Pretty much any beer that people line up for is underpriced. This also applies to beer that is gone in an hour after a beer store posts on social media that they have it.

People line up for KBS and BCBS and Heady Topper because they are awesome beers at an awesome price. People do not line up for Fifty Fifty Eclipse or Cascade sours. Why? Because they are $30 a bottle. If Eclipse was $10 a bottle, it would be gone in an instant. If BCBS was $30 a bottle, it would sit around.

I think it would be interesting to see breweries raise prices to true market value. For one, it would decimate the trading and black markets. For two, it would help these breweries raise capital, expand, make more beer, and in the long run, be able to lower prices through higher supply. For all the talk of a craft beer bubble, the number of people standing in lines to get beer tells me that demand is nowhere near being met.

 

I'm a big fan of Eclipse beers, they are phenominal across the board. I agree with you here when I'm home in Pa and I see Eclipse beers I let them sit at $32 a bottle. If it was $15 I'd clear the shelf.

 

Your logic is sound but remember one thing. Those folks standing in line for beer are probably the same people clearing out the shelf of desirable beer. Once they get their fill from standing in line they no longer have to rely on old staples, beer distributors, or larger regional breweries. There is steady demand but the supply on the other hand

 

Total Wine a few years ago had so much FBS in stock they cut the price in half, sold it out at $4.50 a 4 pk, it was gone in a few days.

 

I agree with big chunks of this. Just a couple of things to add / point out.

1. Eclipse. Great beer. And personally I really like the fact that I have the option of buying it close to my apartment when I feel like it. But in terms of the perception of a given beer among the beer nerd community - it's either on the shelf or it's not. If it's on the shelf there are often negative connotations with that. How many times have we seen a beer go from highly sought after truck chaser category, to "Shelf turd", due to increased production/price. The right price balance where a beer is available on the shelf long enough for it to be available to everyone who wants it, but not to last too long and hit "Shelf turd" must be practically impossible to accurately calculate and maintain. So probably many breweries err on the cheaper side, both to appear sought after, and to retain the "affordable" nature of beer that people seem to think they're entitled to a lot of the time.

2. Then when we talk about lining up for something - let's use Other Half for example. Aside from perception/reputation, as people have pointed out in the OH thread who are close to the brewery, they want those releases to be done and dusted in a day. Yes they could charge more and/or lower limits, but then they'd be sitting on product for longer, and probably have to worry about extra staff / stale beer etc. So better for them to charge less and know they can turn things around in a day. So as far as brewery releases go, there is definitely a benefit to cheaper beer aside from the perception type reasons.

3. People don't necessarily want to / have to expand. It's a big commitment that's not without a large amount of risk. If you have people lining up for your beer and you're making the amount of $ you want - why mess with a good thing

 

To add to your point 3, it can also entail a major lifestyle change and distancing oneself from the very activities and ways of doing business that made you successful in the first place. This has been seen as a loss and the major rationale offered by several, e.g., Russian River, for not wanting to expand beyond current capacity.

 

Lots of respect to those Brewers and owners that stay within their comfort zone and refuse do it any other way than their way. Even in their market I take it it's not as simple to wander into any given beer store and pluck 3 day old Pliny, the brewery is packed, guys stand in line for drafts. Hill Farmstead is remote, the last few miles of road isn't paved, their market is a 30 mile radius and no reason to do more, it doesn't fit their business model. IMO it's very difficult to expand into a region and have great coverage and great beers. You lose the ability to closely monitor your product when your depending on a three tier system to reach your customers. Go nationally the difficulty is staggering. I think Stone does this well, SN does this extremely well, I don't think Ballast Point as an example does this very well, at least here. Price and freshness is always a concern or a problem.

 

I had a 1600 word response which proved you wrong in detail, but was nastier than I needed to be because I was mercilessly hungover from a meeting that ended at 3 am discussing beer pricing strategy with buyers from one of the largest retailers in the country (ok, we didn't discuss beer pricing till 3 am, there was some karaoke, a ton of beer, and discussion of sports in there too). Why was I out with suppliers and retailers talking beer pricing? It's what I do for a living for some of the largest retailers in the country. I have a pretty good idea about what I'm talking about. In your rush to point out how wrong I am, used a hypothetical package with a 49%/21%/30% split, which pretty much matches my back of the envelope math of 33% splits. If your bugaboo is that your example is a few percentage points off of my clearly stated rough numbers, good work! you nailed it! glad you're on the case.

Simple question, if your statements about self distribution are true, why does any brewery over 10,000 bbl self distribute? I think my examples above were Sun King who are self distributing around 30k bbl (the Indiana cap), Rhinegeist who's around 40k bbl (the majority of it self distributed, though they have taken on some third party distributors outside their immediate home market), and NoDa who's at the beginning of this year was going to hit the 25k self distribution cap and was pushing for a change in NC law. I'm sure I could think up a few more breweries with large scale self distribution if I pondered it a bit longer.

The thing is though, you completely missed my point. I didn't actually come here to discuss the advantages or disadvantages of self distribution (it's an interesting conversation with a lot of ups and downs to be sure, but that's beside the point of the thread, tag me in on the self distribution discussion thread for more of that). I thought my point was clear, if you have a distributor who wants to increase revenue, they can inflate the price to retailer, making a beer more expensive to the consumer, even if the brewery price to wholesaler and the retail markup percentage don't change.

 

Most people miss the real culprit for rising prices: inflation.

Do you know what the minimum wage was in 1964 (the last year our money was backed in any way by silver and/or gold)? It was $1.15 an hour in September of 1964. That was one silver dollar, one silver dime, and one nickel/copper nickel. Excluding the actual value of the nickel in today’s terms, the silver dollar and silver dime would be worth about $21. Consider that for a moment.

That means that the minimum wage in 1964 had an equivalent buying power in today’s dollars of about $21 dollars an hour. That was minimum wage.

Without getting too political, let me just say that ALL OF US are getting screwed by this "invisible tax". Everyone is getting poorer each and every day, as the value of the dollars we have is worth less and less. Our "lawmakers" know that we won't stand for higher taxes, so this is their answer.... and it ain't gonna magically just come to an end unless the good people of this country put a stop to it.

(I'm sorry if I'm out of line for posting this here, but it's something I think about everyday and I believe it to be pertinent to this discussion.)