"Craft" Brew Pricing - Is it out of control?

Last night I picked up a six back of Bell's Christmas Ale at West Lakeview Liquors. $12.90 out the door. Almost everything there is in the $10.50 to $12.50 range. Today I met with my Skokie Valley rep and he dropped off a current price list (we're looking at changing our draft beers). With tax that sixer is coming in to them around $9.08 (taxes included and assuming they aren't getting any discounts or freebies on big orders).

My question is, what is a fair mark-up on beer?

I've been having this discussion with my father (he just opened up a wine/beer/liquor store in Delray Beach, FL) and he tends to mark up a six-pack about $1.50 over cost. I understand rent and costs of doing business are greater here in Chicago but this place is easily doing ten times the volume he is in a small town in Florida. Opinions?

For high quality beer, I think $2 per bottle at retail is perfectly reasonable (i.e. $12 for a six pack). In a restaurant, I am fine with paying $8-$10 for something really good, esp beers that are harder to find.

I dunno the answer to this. Seems like 10-15 years ago you could get good beer for $6.99 and a good bottle of wine for $10. You can still get a good bottle of wine for $10, but the same beer is $9-10.

Part of the price increase is likely due to an increase in the amount of hops and other ingredients used in a lot of beers (and previously the increase in the price of hops due to shortage) and part of it is an increased demand for quality craft beers. As usual, it's what the market will bear and if Three Floyds can sell out of 6 packs at over $10, then they will continue to raise prices. I think the development of $10-$15 bombers (22 oz) of unique one-off or annual beers has allowed the 6 pack price to creep up. I picked up a 6 pack of Satisfaction Jacksin double IPA from Ale Asylum up in Madison for $15 and thought it was kind of high, but then realized it averaged out to less than $5/bomber which basically only Lagunitas is at any more for their bombers. And you can consume them in 12 oz. portions which is nice relative to drinking 22 oz. of 8%+ beers. It's kind of amazing that you can still get New Glarus for $7/6 pack up in Wisconsin since it's a top micro with consistent quality. In Chicago, $10/6 is the new $6/6 from 15 years ago which isn't surprising given inflation. Another limitation to the comparison with wine is that a lot of beers have increased alcohol, especially the bombers. It's still a great deal to pay $10 for a 22 oz. of what is one of the best beers ever made of that style (think Dreadnaught) relative to buying wine around that price point which puts you around the median of quality.

Beer seems to have a stigma about it that doesn't affect wine. It probably goes back to ancient times, when wine was the drink of choice of the civilized Greeks and Romans, while beer was drunk by the barbarians of the north (where grapes wouldn't grow, but barley would).

Why shouldn't beer and wine be priced comparably? To generalize, a six-pack of of an average craft beer has approximately the same alcohol content, in total, as a typical bottle of wine. A $10 bottle of wine is at the lower end of wine prices, but is toward the upper end of craft beer prices. If you upgrade from a $5 six pack to a $10 six pack, you're almost always sure to get a more complex, more interesting beer. If you upgrade from a $10 bottle of wine to a $20 bottle, there's a chance it'll be better ... but there's also a chance that it may not be as good.

Further, beer is a more complex product to make. With wine, you pick grapes and crush them - voila, you've got a sweet liquid ready to ferment. For beer, you have to pick the barley, wet it and hold it 'til it germinates, then dry the resulting malt and sometimes roast it to precise temperatures, then mash it at one or more precise temperatures before you get a sweet liquid that can be fermented.

Bottom line, I think high quality craft beers are a bargain compared to high quality wines. Still, I do like a nice wine from time to time.

nr706 wrote:Further, beer is a more complex product to make. With wine, you pick grapes and crush them - viola, you've got a sweet liquid ready to ferment

Viola -- didn't he used to pitch for the Twins?

I feel as recently as two years ago, you could get a good six pack for about $8, but most of my old favorites appear to be at $10 or more now. I have tried to mitigate the effect of the increased pricing somewhat by stocking up on beer I like that is on sale when I can (last May, for "Craft Beer Month," Binny's was basically knocking 2 bucks off of all six packs of craft beer and I bought a couple of mixed cases) -- Binny's, Whole Foods, and other chains often have a couple different options per week on sale. When I stopped to do the math the other day after buying a Two Brothers variety case at Costco, I realized just what a good deal the $24 price tag was ($6 per six pack -- even considering I don't much care for the Domaine DuPage, it's still a great deal if you look at it as $8 per six pack of the stuff I like just fine (Bitter End) or a lot (Cane & Ebel)).

nr706 wrote:Beer seems to have a stigma about it that doesn't affect wine. It probably goes back to ancient times, when wine was the drink of choice of the civilized Greeks and Romans, while beer was drunk by the barbarians of the north (where grapes wouldn't grow, but barley would).

Why shouldn't beer and wine be priced comparably? To generalize, a six-pack of of an average craft beer has approximately the same alcohol content, in total, as a typical bottle of wine. A $10 bottle of wine is at the lower end of wine prices, but is toward the upper end of craft beer prices. If you upgrade from a $5 six pack to a $10 six pack, you're almost always sure to get a more complex, more interesting beer. If you upgrade from a $10 bottle of wine to a $20 bottle, there's a chance it'll be better ... but there's also a chance that it may not be as good.

Further, beer is a more complex product to make. With wine, you pick grapes and crush them - voila, you've got a sweet liquid ready to ferment. For beer, you have to pick the barley, wet it and hold it 'til it germinates, then dry the resulting malt and sometimes roast it to precise temperatures, then mash it at one or more precise temperatures before you get a sweet liquid that can be fermented.

Bottom line, I think high quality craft beers are a bargain compared to high quality wines. Still, I do like a nice wine from time to time.

A few thoughts on this. First, you are paying for more than the alcohol. Just because the alcohol content is similar doesn't imply that the price of the products should be similar. Second, good wine is undoubtedly more difficult to make than good beer. Wine is way more than just picking, crushing, and fermenting.

Finally, I agree that high quality craft beers are a bargain compared to high quality wine. For me, a great wine is better than a great beer, but if I have a $10 bill and have a choice between a typical $10 wine and typical $10 six pack, the six pack is likely to be a lot better.

Darren72 wrote:A few thoughts on this. First, you are paying for more than the alcohol. Just because the alcohol content is similar doesn't imply that the price of the products should be similar. Second, good wine is undoubtedly more difficult to make than good beer. Wine is way more than just picking, crushing, and fermenting.

Finally, I agree that high quality craft beers are a bargain compared to high quality wine. For me, a great wine is better than a great beer, but if I have a $10 bill and have a choice between a typical $10 wine and typical $10 six pack, the six pack is likely to be a lot better.

I think we're pretty much in agreement. I was just using the alcohol levels to justify comparing the price of 6 12 oz. bottles of beer to the price of a 750 ml bottle of wine. And I'll admit that it's tougher to grow quality grapes than it is to grow great barleys and hops (although Maris Otter barley has a difficult reputation).

Last night I shared a 750 ml bottle of New Glarus' Wisconsin Belgian-style Red, a cherry-based beer (and I normally don't like fruit beers). It was $7.99 at Woodman's in Kenosha. To my mind, it was a much more interesting, complex beverage than any $7.99 bottle of wine I can think of.

nr706 wrote:Bottom line, I think high quality craft beers are a bargain compared to high quality wines. Still, I do like a nice wine from time to time.

Our table has been trending to beer lately because I think it's somewhat of a "bargain," as you say, but also because it can be somewhat more local (I don't use the local yardstick religiously, but I find it interesting to explore the products of my region, which our beer frequently is but our wine almost never is).

Recently, I went to my local liquor store to pickup a six pack of Bell's Two Hearted Ale at $14.99! It is unrealistic to pay this much for this beer (even though it is my favorite of the IPA's). I have not priced it at Binny's, lately, but I believe it would probably be in the 11.99 range. It seems that just this summer most high hopped beers were priced at 8.99 to 9.99. Is this just the perfect storm of liquor taxes, the increase of hop pricing and retailer markup price matching?

Jeff Armstrong wrote:Recently, I went to my local liquor store to pickup a six pack of Bell's Two Hearted Ale at $14.99! It is unrealistic to pay this much for this beer (even though it is my favorite of the IPA's). I have not priced it at Binny's, lately, but I believe it would probably be in the 11.99 range. It seems that just this summer most high hopped beers were priced at 8.99 to 9.99. Is this just the perfect storm of liquor taxes, the increase of hop pricing and retailer markup price matching?

Not sure about the reason for the high prices, but agree that most "run of the mill" (i.e., non-specialty) hop-heavy beers are at about $9.99 per six. (I keep track of these things, as I tend to always have a six of an American IPA on hand; my wife loves hoppy beers to the exclusion of most others and I am a big fan as well, but not on as much of an exclusive basis -- but lowest common denominator and all that.)

That said, $14.99 for Two Hearted is exorbitant. I believe Binny's is at $10.99 or $11.99 per six pack (website shows $10.99 but I thought I had seen it in the store for $11.99 recently). I believe Whole Foods is at $11.99 per six. I already have a personal aversion to paying more than $10 per six for what is to me essentially a session beer (and one of my favorites), but will grudgingly do $10.99 or $11.99. Once things get closer to $15 it becomes a much harder sell for me, even if it is purely a psychological barrier.

Perhaps it is time for some of you to change your local liquor store?

I generally buy my beers at Danny's Buy-Low on Western (kitty corner from Honey One) and their 6-pack prices are generally several dollars cheaper than anywhere else. Selection is not as deep as some places but it certainly isn't lean.

Honestly, for the time and ease of production of beer, most craft beer is overpriced. It's not a new thing.

jpschust wrote:Honestly, for the time and ease of production of beer, most craft beer is overpriced. It's not a new thing.

ease of production????

nr706 wrote:

jpschust wrote:Honestly, for the time and ease of production of beer, most craft beer is overpriced. It's not a new thing.

ease of production????

As compared to other adult beverages, yes.

I can't think of any other fermented beverage that takes as many steps to produce than beer. Most start with sugars, with beer, it starts with starches.

i'm no expert in it, but an acquaintance of mine made beer at home b/c it was cheaper than buying it. It was good beer too! Kind of runs counter to the "economies of scale" theory.

I make beer at home all the time, and it's definitely cheaper than buying craft beer. I don't have to pay taxes on the finished product, and I don't have to sell it to a distributor, who takes a markup then sells it to a retailer, who takes a markup.

When people don't balk at paying $2 a bottle for water or $1 for a soda then I don't think pricing a "craft" beer at $2 is out of line - there is a little more effort involved.

nr706 wrote:I make beer at home all the time, and it's definitely cheaper than buying craft beer. I don't have to pay taxes on the finished product, and I don't have to sell it to a distributor, who takes a markup then sells it to a retailer, who takes a markup.

Is it still cheaper when you amortize out all the equipment you have purchased in pursuit of the hobby? I am guessing if I did that my 6-packs would be $15 each

When you've been doing it for 10 years and using mostly the same equipment, replacing minor things like hoses from time to time, the price per batch of the equipment is minimal, I don't have a huge rig or anything though, I'm working pretty low tech

Most of my equipment I acquired in the first few years after I started, in 1994. For a five gallon batch, I get the equivalent of about nine six packs. Using, say 10 lbs of malt, that's $15 (at the high end). Hop prices have increased dramatically, but I like a hoppy beer - maybe, $7 for hops. Yeast, about $6 a pack - I can easily get 3 or 4 batches out of a pack, so let's say $2 for the yeast. Add a few cents for water treatment, Irish Moss, etc. Bottles are used returnables ... maybe 5¢ each when you consider they've been reused by me several times. A couple of cents for a cap. Total cost of the brewing equipment might be $250 (not counting books and other things unrelated to the actual brewing process) amortized over 50 batches (I've made many more than that) would add $5.

That comes to about $30 for nine six-packs, or $3.33 each.

But adding in the value of my time to make a batch, yeah, it comes to about $15 per sixer.

Yeah if I factor in the cost of a turkey fryer burner, 9 gallon HLT, 15.5 gallon brew keggle, 70qt batch sparge cooler, grain mill, 50' wort chiller, submersible pond pump for recirculating icewater in summer, 9cf chest freezer/kegerator, 9 corny kegs, 20lb CO2 tank/regulator, 5lb CO2 tank/regulator, 8 carboys, etc it gets pretty expensive.

That is before you even factor in grain/hops/yeast/propane

Hopped Up wrote: I picked up a 6 pack of Satisfaction Jacksin double IPA from Ale Asylum up in Madison for $15 and thought it was kind of high, but then realized it averaged out to less than $5/bomber which basically only Lagunitas is at any more for their bombers.

There's a Wisconsin craft beer headed across state lines for the first time. Ale Asylum of Madison, Wis. will be carried in Illinois starting Feb. 3. (Sorry, New Glarus fans. Still no go there.)

http://www.chicagobusiness.com/article/ ... o-illinois

I paid $100 for 3 bottles of The Bruery's Black Tuesday.

But I also paid $2 for a 10oz pour of fresh LA Aleworks watermelon IPA on Monday. My regular drink is Federal Brewing's growler for $8, and some $4 bombers of Stone at TJ. It evens out. And I'm not brewing at home when there are so many micro breweries down the road. (This should hold true for both Westcoast and Midwest).

Great to know Ale Asylum is coming in. They moved to new, bigger quarters a year or so ago, so I'm not surprised they're coming south. Good stuff.

TonyC wrote:I paid $100 for 3 bottles of The Bruery's Black Tuesday.

Love that beer! I bought a three pack a year or two ago and had a local pick it up and ship it to me.
I like it way more than GI BCBS. I think it is great to get a best in class beer for $35 a 750ml and that's something
you can't do in wine.

The last couple of times I bought a 4-pack of pricey craft beer at my local Binny's, the clerk commented on how much it cost, for beer. I felt a bit sheepish as I explained how a lot of it can keep a long time, but still, felt a little weird.