Tag Archives: prices

Call to Action: Help find Bargain Craft Beer

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Jess wrote to me recently:

I need advice, and hope. The price of IPAs are just too high. What is the best beer for the value, or is it possible to find a six-pack of quality beer for $6.99 anymore?

Boy, that’s a good question. Beer prices were already going up before this latest financial nightmare. The hop shortage made sure of that. Plus increased transportation costs. Believe me, I’ve had some sticker-shock myself lately.

Unfortunately there’s not a simple answer. What’s a bargain near me may not even be carried near you, and may be a wildly different price. The distributor’s got to get their cut in our three-tier distribution system, and of course federal, state, and local governments each got to get their pound of flesh.

One option is to go for the more flavorful offerings of the large, industrial brewers. They’re each trying to get a piece of craft beer’s impressive growth and offer some craft-y selections. I haven’t seen any of them offer up an IPA, but I did have the Budweiser American Ale, and it’s not too bad. (Damning with faint praise, I know.)

A better solution might be to think more local. I have found that six-packs from the brewery closest to me (Flying Dog in Frederick, Maryland) run a dollar to two dollars less than comparable beers from other craft brewers. (Well, the Wild Goose label does. An awful lot of Flying Dog’s portfolio is pretty extreme and priced accordingly.) If you can go to the brewery to buy your six-packs so much the better: no middle man.

A third option might be to visit your local brewery or brewpub and get yourself a growler. That’s a gallon of beer that you can have refilled and gives you some economy of scale.

So, how about it Hop Talk readers? Can you offer advice and/or hope to Jess? What does a basic IPA sell for in your neck of the woods?

Wall Street Journal

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October 30, 2007

All of the beer blogs are talking about the price increases recently hitting craft brewers, including Hop-Talk’s own beer blogger Al,  and I wanted add my thoughts and a summary of an article I read in the Wall Street Journal, Why Price Increases are Brewing for Craft Beers.

Currently, craft brewers make up only 5% of the beer industry, but it is the fastest growing segment of the beer industry. Like many Americans, I am willing to pay more for a premium product and I am willing to pay the additional 50 cents to $1 more per six pack of beer for craft beer that is hitting the shelves now. I currently pay about $8-$9 for a six pack; I won’t notice the increase, that much.

But just because I’m willing to pay the extra, doesn’t mean everyone is willing. Not just that, my dollar is not completely covering the cost increase, the brewers are eating some the cost lowering their margin and that’s not good, especially in the long run.

The primary causes for this problem are contributed to the increase in cost for hops and barley, the main ingredients in beer. Their price has risen because of poor harvests around the world, the weak U.S. dollar, and farmers shift to more profitable crops. In the previous years there has been a glut of hop farmers, so there has been a recent shift to other crops, such as apples or corn. But that’s not all, glass, cardboard, gasoline and stainless steel are other areas of cost increase.

Big brewers like Anheuser-Busch will also face cost increases but will not be affected as much as craft brewers for a couple of reasons. For one, they use much less ingredients in their beer than a typical craft beer. A typical craft beer will use twice as much barley and 5 times the amount of hops. The second reason is because the big brewers are more likely to secure long term contracts with the producers of the raw ingredients.

An in-between sized brewer, like the Boston Beer Company has been affected and has raised prices 3% in the last year and will likely do so again next year. Boston Beer only buys its hops from Bavaria and the past few years the crops have been smaller making them more expensive, even though they can secure a large contract with the farmers.

Some craft brewers will be substituting the variety of hops in order to control costs. They will try to do so without drastically changing the taste of a successful product. Who knows… maybe it will taste even better? A tricky endeavour, for sure.

Each craft brewer could be affected differently. Some craft brewers obtain their ingredients locally, some secure large contracts, and some buy them on the open market as available. Those that go to the open market may be the most affected. Sadder still, it could put some of the smaller craft brewers out of business. Very sad, indeed.

Another twist on the issue is that products by craft brewers that are “imperial” or have an extra large portion of ingredients, such as Dogfish Head 60 or 90 minute IPA will have a greater cost increase for that particular style as compared to others that they make. It is possible some product lines see a bigger increase in price than others. As an IPA lover and all around hop-head, that is more bad news for me; and, if you read this blog, probably for you, too.

Beer News Sampler

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Pittsburgh Brewing reintroduces I.C. Golden Lager
The maker of Iron City beer prepares to enter one of the only segments of the beer market that has shown any signs of growth: craft brews.

New malting system saves water
Dutch brewer Bavaria says it can use up to 30% less water with a new steeping system.

Greene King to lower ABV of Old Speckled Hen to boost sales
“Feedback from our drinkers is that they love the full flavour of Old Speckled Hen, but a significant number find it too strong,” says Managing director Justin Adams.

Crying in our beer
Edmonton Sun editorial on the failures of the privatized alcohol distribution system in Alberta, Canada.

U.S. Sailors seek beer, not girls
Sailors on leave in Perth, Australia have only one thing on their mind and, according to them, it’s not women.

Sleeman agrees to $300 million buyout form Sapporo
Molson Coors, Labatt’s, and Grolsch all said to have been interested. See also: Sapporo acquires Sleeman Breweries

Japanese beer faces woes despite revival
As the Japanese economy continues to recover, domestic beer shipments are rising for the first time in a decade. But changing tastes, healthier lifestyles and Japan’s shrinking population are all posing huge obstacles for an industry that has already undergone painful restructuring.

SABMiller purchases McKenzie River Corp. for $215 million cash
McKenzie is best known for their caffeinated malt beverage, Sparks, and Steel Reserve, a high gravity lager.

Major brewers expected to raise prices
After expensive price war, the big American brewers look to raise prices in spite of losing market share to wine, liquor, imports, and craft beers.

New York first state to create a “beer trail”
Inspired by wineries to promote the approximately 60 breweries and brewpubs in the state.

Sales of craft beer make biggest jump in a decade
U.S. sales up 11% in first six months of 2006 over same period last year.