Which beers are most profitable?

I too recognize that beer consumers are for the most part reluctant to pay 'top dollar' for lagers. I am personally that way as regards Rothaus Pils which is priced at $16+ a six-pack at my local beer retailers and this price keeps me from buying it.

For a craft brewery what is the business strategy/decision making process here? It seems that beer geeks are willing to pay very high prices ($20 and more) for four-packs of Juicy/Hazy IPAs but not a lot for lagers (e.g., Helles, Pilsners, CDL, etc.). When a small craft brewery decides to produce lagers is this sorta a labor of love situation?

Cheers!

 

At a smaller scale, absolutely. Tying up a tank when you're a small brewery can be a tough thing to do. Having more cellar capacity, whether more fermenters or horizontal lagering tanks, certainly helps.

That being said our German Pilsner, Kayak Pils, is consistently one of our top sellers in the taproom. People typically don't mess with short pours or tasters of something like that. So while it does take longer, it's a consistent mover for us. That and we love to drink it, so there's that too

 

I suspect for about half of the population that doesn't go for craft beer - it would be the AAL's.

But for craft beer fans it has to be the hazy IPA's, which really isn't a choice in this poll. Just about every craft brewer in my area makes multiple variants of the hazy IPAs using different hops. And when I go to a good craft beer store, a majority of the craft beers I see are hazy IPAs. So they must be selling if so many are brewing them.

 

And that is indeed an important aspect.

Cheers to lagers!!

P.S. I will be attending the Logjammin' lager beer festival tomorrow and I will be drinking lots of lagers then:

https://www.eventbrite.com/e/logjammin-lager-fest-part-deux-tickets-327314254747

 

Logjammin, a Jackie Treehorn production starring Karl Hungis.

 

well IPA's been thing for some time now but right now in my city mostly people are buying mostly mainstream beers bud light or coors ect. but there has little change right now there is a lot craft beer brewery's opening up almost every new year now.

 

I'm guessing it depends entirely on the brewery. Every brewery has that one beer that "keeps the lights on." For Bell's, it's Two Hearted. For Founders, apparently it's All Day. For AB...I think it's still Bud Light, iirc.

 

Specific to the question, I chose non barrel aged sours including saison for net profit. Why? Hops are expensive. Ipa and pale ale are out. Time is money, barrel aging is out. Sours are naturally lower in abv than stouts and Porters, this means less cost of goods going in. An argument can be made that a true sour takes more time to Ferment than a stout or even a blonde and this is true. I am pointing at kettle sours and saisons specifically as being the most profitable style regarding the cost of goods, the time needed to Ferment, and the price of most cans being fixed by demand. Kettle sours and saisons can go grain to glass in a week on the homebrew level. I'm sure it can go faster in a pro brewery. So fast turn around time, lost cost of goods, it's the perfect beer for profits. These beers seem to be priced on par with other non ba four and six packs in my markets.

I'd bet a dime to a dollar that pseudo sue is far more profitable.

 

Probably, but not higher margin.

 

when I saw how easy and profitable it was for small local breweries to make seltzer i understood why so many are opting to do so.

 

I really can't find any information regarding the grist of KBBS, the time spent in barrels, or the flavorings involved on TG website. I'd probably venture a guess that KBBS has lower margins than pseudo sue, especially with the $$$ spent on the lottery and dinner held as well.
Edited after reflection..
In every industry I can think of it isn't the speciality one off products that generate the highest margins. It's the ancillary products that are sold as a result. It's not the $40k subaru my shop builds that generates the best margins, it's by far the diesel emissions testing. It's not the MacDonalds quarter pounder or big Mac that generates the best margins. It's the Coke they sell on the side. Why would this somehow be different?

 

Margin = Sell price - COGS.

Time spent in barrels, cost of the lottery, cost of the barrels themselves, cost of the barrel house, or the cost of the labor, etc., etc. does not enter the margin calculation. If it is not "goods" that are "sold" in the product, it is not included.

Those would have to be some damned expensive ingredients to make the margin of a $100/bottle beer less than the margin of a $2/can beer.

 

I'm glad you aren't my accountant. I'd be bankrupt. Those costs are ABSOLUTELY part of the cost of the final product. The price of the barrels must be factored in as well as the price of the rent on the facility housing those barrels. Those are fixed costs of producing KBBS.

 

Economic and business accounting terms have definitions and specific meaning.

I am talking about "margin" only (also called gross profit), not net profit.

The costs I emphasized above are part of the net profit calculation, but are NOT part of the margin equation.

 

Part of calculating the gross profit and margin rates would be factoring the cost of goods, which also includes the cost of production. Can you explain to me why you wouldn't include the rent on the building that houses those KBBS barrels as part of those COGs? I could see a possi le argument that rent would be part of the fixed operating costs and not necessarily specific to the cost of production for KBBS, but for what we are discussing here I think it should be considered in the cost of producing the beer.

 

I'm not a brewery tax accountant, but I believe that IRC Section 263A requires businesses to capitalize the direct and indirect costs associated with producing, acquiring, and maintaining their inventory (for tax purposes). So gross margin would be net of the inventory cost (and include a portion of rent, etc...)