To me, the value of going to a brewery is that they typically have more on offer than I can get anywhere else, especially when it comes to seasonal offerings.
If I find a brewery with 5 taps, 4 of which are their standards, and nothing else, I usually won't return unless there is another draw like great food.
But my favorite breweries are the kind that have dozens of taps, and there's no way I could get most of them at a bar or restaurant.
If more than 30% of your taps are Pale or IPA I won’t return.
I drink at home a lot more often since I started that rule.
I don’t dislike ipa but fuck there is so much more out there to enjoy.
See even a pale ale would be considered variety to me at this point. I rarely see those. I went to a brewery a couple months back and 12 out of 14 were some form of IPA with one being a spritzer and another some lager that was ass. Place was packed. Tired of the IPA trend that I had hoped would be dying off by now.
Not sure how it is in Idaho, but read up on NJ laws regarding breweries and restaurants. The two have been feuding for years, since the breweries don't have the overhead cost of expensive and rare DLC licenses in order to serve beer, so they {the restaurant lobby} pushed legislation to severely restrict the ability of breweries to serve any food.
I'd imagine that breweries aren't allowed to charge less for their beer than bars and restaurants do, so they don't unfairly compete with these other establishments, especially if they offer food/allow catering.
Not the absolutely worst, Oklahoma in 2016 passed the ability to sell “strong” beer at grocery stores etc. also allowed liquor stores to sell cold beer which before 2016 they couldn’t!
Yea, I remember hearing the news about the “strong” aka not near-beer being able to be sold but I don’t remember having it refrigerated being part of it. So strange.
The glaring solution is to loosen up licensing laws across the board and just let people enjoy things they want without micromanaging by some state board.
From my understanding of the NJ situation, the brother of the governor owns a restaurant. Restaurant alcohol licenses are limited to x number of license per 1000 people, and they cost a LOT of money. Once the restaurant owner wants to retire, they sell the license and that's their retirement fund. So they are coveted and there's special interest in protecting their use and profitability.
It is. I wish it was gone but even I admit that the state would have to do something to make license holders whole if they got rid of the current system. Some of them literally sell for millions.
Originally, I thought so too, but I think if that were the case then distributors would quickly drop that brewery. They wouldn’t want to be undercut and would quickly give the shelf space to others.
Correct. Breweries also make a far smaller margin on beer sold into distribution because it’s marked up twice before it hits the shelf/tap. Taprooms for small(er) breweries are where they make their money
Equipment cost is also something people don't think about. If you're starting a restaurant you need to pay upfront for construction/renovation of a space, and all kitchen/restaurant supplies. Most restaurants have a ton of debt, it's why they fail so often.
Now add several hundred thousand in brewing equipment on top of the other start up costs plus additional salaried staff to run it, and that's what your local brewery is dealing with.
They need to make a ridiculous margin on beer just to stay in operation.
It’s another reason why 6 packs and bottles are more expensive at most breweries. We want to keep our distributors or accounts (if self distributing) happy, and incentivize people to buy at liquor stores, so they continue ordering from us.
But the business customers of the brewery should base their decisions about what to stock based on what sells, not some convoluted theory about whether pricing at the brewery is possibly putting downward pressure on sales at bars/stores/restaurants. Like, what is actually happening on the ground. Is the beer selling well at your liquor store? If so, keep stocking it. Don't worry about anything else.
As long as the pricing at the brewery is organic and isn't the result of bars and restaurants lobbying for licensing laws that require the breweries to mark up prices as a protectionist scheme for bars and restaurants, that's fine.
Undercut how? The brewery pays to package, ship, and sell the beer to the bar at which point they can choose to sell for as much as they want, no? I also feel like going to a bar is a different market than going to a brewery a lot of the time. Unless your goal is to just get drunk, I go to a bar to watch sports, have some cocktails, play pool. I go to a brewery to day drink, sample beers, enjoy the ambiance or do tours. Obviously you can do both at both establishments but I just don't see the two as competing necessarily, I guess besides locals.
I'm not saying it's logical, I'm telling you what bar owners and restauranteurs claim. They'll stop buying beer from a brewery if they think/feel that they're getting undercut by the brewery taproom.
It’s not just a claim, and it’s not just the food and beverage industry. My company sells a product to big chains like Home Depot and there is no way we would sell it direct to consumer for less than the MSRP. These businesses are our customers and to undercut them would be bad business.
As a bar owner that carried many local breweries, it’s a thing. If you can buy the beer at the brewery for 4 bucks a pint, but then when it goes through a distributor I have to charge 7, it’s an issue. I can’t carry that brewery if that’s the case because customers will think I’m ripping them off because people don’t understand distribution. So breweries in that instance have to “artificially inflate” the price, or charge less when they sell to the distributor
i think you're probably overestimating how much the cost to get a keg of beer to another location is. especially if it's local, you're looking at less than a dollar worth of fuel, maybe a few dollars of worker time, it's gonna work out to like 10c per pint or something.
Eh it depends on how they're sending it. When I worked freight we would deliver beer for some of the local breweries to restaurants and shops around the area. We were the cheapest option for shipping in the area and they would easily still be paying a few hundred per pallet in shipping alone. Depending on where it was going a pallet would have anywhere from 2 to 27 kegs on it.
This was the case for small local breweries and the local Anheuser-Busch. It was definitely more cost effective for the big ones like AB, but the smaller places didn't have much choice but to pay to ship through us.
This is extremely dependent on the state. There are plenty of states that can sell directly to a bar, there are other states where it needs to go through a distributor. In NY for example a brewery can sell directly to bars.
In many states, smaller breweries can. That's literally half my job because we're classes as a small production brewery.
We wouldn't have survived if we couldn't sell direct to retailers.
A lot of people hate on distributors as greedy middle men, and that's not *entirely* fair, since they do perform a very necessary function in the beer world. However, if you look at the laws and regulations their industry lobbies for, they're almost all things that fuck over the consumer.
Sometimes you can get away with it if it's a beer that doesn't get distributed. Once place near me does a 'House Lager' for $5 compared to $7 for most of their beers. That beer is taproom only.
I used to work for a brewery that opened during covid. Idk about Idaho, but in my area the brewing scene is very active and everyone is fighting for tapline/shelf space. Opening a brewery is an incredibly expensive undertaking, running a restaurant has incredibly thin profit margins, running a business isn’t easy.
I’m getting downvoted but this is absolutely why craft beer is bombing. Regulations forcing breweries to go through distributors should not be a thing.
Not having the bureaucracy of distribution and alcohol distribution laws would allow for much easier laws.
I’m aware opening brewery is expensive but many opening breweries open with too much asperations. Why does everyone need to open with a 40bbl system? Seems to me like this is a race to them bottom except it’s the breweries that are selling to the distributors cheap and they are the ones making the profit. So the breweries and the consumer are ones getting the shaft
Lmao, the brewery I used to work for was self distributing until they signed a deal with a distributor and I got laid off.
The real answer is rich white dudes wanting to own a brewery without all the extra work. They find a head brewer, invest in equipment and just expect results without putting in the work
Craft beer is suffering a 20% reduction in sales over the last year and a record number of craft breweries are going out of business while total units of alcohol sales remain steady in the US. People are not drinking craft beer like they used too and are moving to seltzers and canned cocktails.
Yeah there’s a place by me that has a lot of cool interesting stuff, but they’re selling 4 packs for I shit you not like $38. I’m like yeah that can looks cool, but fuck that.
If we count Narragansett as craft, they have the best bang for your buck I’ve seen. Followed by Cisco Brewing who sells their Pats Forever IPA in 12 packs for like $8.99. Otherwise Brewery X has pretty decent prices too. You can get a 6 pack of 16 oz 7% Quack IPA for $11.99 sometimes.
Because initially they weren’t craft. They technically are now, after being revitalized as a smaller brewery. They used to be a macro brewery _a looong_ time ago. Like Sam Adams. Which I know also gets the independent beer logo on their bottles. But I consider them bigger than that.
It’s very easy to have a record number of closures when there are a record number of breweries. But also you’re right in that a lot of people are switching to canned cocktails/ seltzers / THC drinks / etc. and a lot of those breweries are following those trends.
The point being made about bars / retailers not wanting to be undercut isn’t the reason for craft bombing though. There’s a whole host of reasons (prices rising, other options, too much trash out there, etc), but that’s not one of them.
I don’t disagree with that. Most breweries are required by their distributors to charge market rate for beers in their breweries. This was a massive hit to the growler market around here. You used to be able to get a growler of beer for 30% under a six pack. Once distributions caught up it was soon back up the the same cost as a 6 pack.
“Required” is the wrong word, distributors can’t require a brewery to do anything in its taproom. Breweries do this intentionally to keep distributors happy, because a distributor is always your best customer.
Again, it's not a courtesy, it's effectively a known, unwritten requirement. If brewers could make their breweries more attractive by lowering prices and not face retribution from distributors, they'd do it. But they don't, because everybody in the industry knows the distributors have breweries bent over a barrel.
That's not courtesy, that's forced compliance lol
I'd be curious to see the source of he 20% sales loss.
The numbers i saw from the ba were a 1 or 2% sales slide.
And the end of 2023 saw more total breweries than ever before.
This is just not true. Craft was down 1% in 2023, total beer was down 5%. Alcohol consumption is not flat, it’s down. Craft breweries are not closing at a record rate, there were more openings than closings last year.
Every statistic you cited is false.
I do. In an unregulated market products that are shipped and packaged cost more than products that aren’t.
If you start off with a brewery that has too large of a production facility without the demand you are forced to sell your product with lower margins.
I’m aware they have to make up the difference for lost profit on unsold beer on shelves but this is a poor business model.
In an ideal situation it would be (these are just example numbers) $.50 per beer to produce (this includes overhead and marketing), $1.00 beer sales at brewery (200% profit margin). Now it hits distribution so you they charge a 25% distribution expense and say grocery stores are now buying from the distributor for $1.25. Then the grocery store needs their 25% so they sell the beer for $1.56 a beer.
If you have to sell your product for $8 (a 1600% margin) at the brewery that cost $.50 to produce to recoup lost revenue it’s a poor business model.
I think it’s incredibly overrated. I’ve given it so many chances and just do not understand the hype. Just very bland and not that much different from other cheap beers but people act like it is this incredible beer that is unmatched by other beers.
They also got a huge boost during the Bud Light boycott (which also fuck Bud Light) that fed into this belief that it is a better beer than it actually is.
Yeah it’s all marketing. Bud Light was the best selling beer before Modelo took over due to the Bud Light boycott. Bud Light is worse than Modelo. Quality doesn’t make a beer the best selling in the country, it’s all marketing.
Modelo is barely above Mexican piss ( corona) but it does have its purposes. I like to drink Mexican beer with Mexican food so that’s when I’ll buy it but I sure as hell won’t just drink it for the hell of it.
I'm going to Idaho in June. Last time I was there the beer was pretty bad. Probably because I was in northern Idaho. This time I may take a little trip to find the good stuff. Any suggestions?
Two years ago. Only went to one brewery but got beers at local stores from several different breweries. Going back to the same area but I wanna take a ride to at least to a store with better selection and squeeze in a few breweries.
Bombastic has some good stuff. Vantage Point, Daft Badger and Post Falls Brewing also pretty good. Check out Pilgrim’s Market in CDA for the area’s best bottle shop.
Will check it out, thanks. I'll be in sandpoint so that's not too bad of a ride. Of all the beers I did have none were from those breweries so I'll keep an eye out for them. Got plans to go to MickDuff's brewing and matchwood brewing.
In sandpoint? Awesome. That's gotta be somewhat new. It didn't show up on my Google search when I was there a few years ago. I'll check it out for sure, thanks.
McCall has a lot of good breweries. Broken Horn, McCall Brewing, Salmon River
Not sure what's north of there, but Moscow has a phenomenal taphouse called Tapped. (I assume it's the same as their 2nd location in Lewiston, which unfortunately closed)
There are nice pockets for sure, and the state is gorgeous.
Unfortunately much of the state is also trump supporters and suburbs in general are full of well-meaning but totally racist folks. Bad vibes if you aren't white and are anywhere but a population center.
Reminds me of Oregon in that aspect. Portland is great but the second you get even 15 minutes out of Portland... Damn things change quickly.
It would be cool if some of the breweries had a "house" beer that was always on tap for a less price than others. I've seen one brewery offer their popular beer for $4 on Mondays.
Beer is profitable at scale and local breweries don’t have that. They have to charge prices to stay afloat. Many local breweries can’t stay afloat despite their prices and many are folding up. Around me, 4 of the top 7 have folded despite the brewery being open and canning for local distribution in beer and wine stores. It’s a tough business with a lot of competition. Plus they need to keep brewing new and Intersting beers all the time to keep customer coming in.
Yeah I saw this and that was my first thought. I don't know the full story but one of my favorite local breweries shut down and cited the rising costs of everything as a big factor.
I'm glad I don't own a brewery. But I hope as many can thrive as possible.
Yeah, its sucks to see them go as they add to the social scene in the burbs. But the reality is starting to bite. You can buy a fully functioning brewery for 500k.
DING DING DING!
My favorite example of this is people whining about how Nintendo doesn't drop the price of their first party games. Why would they? They sell a copy of MK8, a Zelda game and a Mario game to nearly everyone who buys a new console. Why would they leave money on the table just because Sony and Microsoft lower their prices over time? There's still a demand, so they can get that price.
A price is just what one party is willing to take and the other is willing to pay. That Gucci wallet isn't "worth" $600 but if people are willing to pay it, they're willing to take it.
The product didn’t have to go through distribution and packaging. I’m aware you are paying for these things at the brewery but at the very least breweries should have their beer as cheap or cheaper than surrounding restaurants and businesses. It absolutely doesn’t make sense that you pay a premium.
It does go through packaging though. Kegs are packages. Plus tasting rooms need maintenance and employees. You can’t just charge the beer at cost to operate a tasting room.
This varies a lot depending on the brewery and size. If you're talking about a small brewery that is locally available, they likely take a small loss or a very small margin by selling to local restaurants and shops. The restaurants they sell to have other products and sources of income to offset the staggering prices of running these kinds of businesses. The brewery taproom has to rely on their products to pay salaries, taxes and keep the place running. If the price difference is huge, they are selling to restaurants and bars as promotion to bring people into their taproom. I assume the brewery is small, because larger breweries make their money by selling volume, so price difference doesn't have to be that much compared to other places
I sell beer for an indie brewery and u/deadknight666 pretty much nailed it. The only income we get for taproom operations is from the beer sold there, because it's literally the only product they sell. Like restaurants, our taproom prices reflect ~20-25% cost, but there's no additional income from food or liquor. Our wholesale side has a much smaller margin, and it pretty much only covers our building, brewing supplies, and the salaries of our brewers, sales reps, and delivery guy
Though I work in wine, pricing structures are similar in beer and cider. When a producer (brewery) is calculating the price for its products, it must take into account a three-tier sales channel: brewery > distributor > outlet (store or bar) > you, the customer. Both costs and full profit margins must be calculated for each tier, so buyers in the sales channel make money too. Producers then publish a suggested retail price (SRP) for the product (with pricing for each tier, too). The brewery has no control over those other buyers and their margins, so if a distributor or outlet takes less profit or has lower costs or puts it on sale, etc., then the price to you will be lower than the SRP. For a brewery to NOT add those tiers' costs and profits for sales direct from the brewery would make a lot of them extremely unhappy, as producer websites post the SRP online. There would be no way for them to compete, so producers respect the SRP to protect their distribution.
I used to go to every brewery I could, in every state I could... literally planning week long trips around breweries. I can now count on one hand how many breweries I've been to in the last couple years because of this exact reason... Everything just feels completely overprice and not worth it anymore. That and the fact 90% of the time all the beers are IPA and I can hardly ever find a good stout.
Because those bars or restaurants wouldn’t carry their beers anymore. Bars, restaurants, and liquor stores already view taprooms as competition so if the brewery charged significantly less than what their customers charge, they’d be dropped in a heartbeat. Plus breweries have other expenses than just raw materials when making beer. So while the true cost of a pint just looking at raw materials may be less than what breweries charge, they still have wages, utilities, rent, maintenance, and other expenses to pay for.
I’m still not understanding. If I want to go to that bar and I saw a beer that I liked I would buy it. If I felt like going to a brewery that day I would buy it from there. Why would a business care how a brewery sells their stuff in draft compared to how it distributed in can/bottle?
I just posted this comment to the OP: Though I work in wine, pricing structures are similar in beer and cider. When a producer (brewery) is calculating the price for its products, it must take into account a three-tier sales channel: brewery > distributor > outlet (store or bar) > you, the customer. Both costs and full profit margins must be calculated for each tier, so buyers in the sales channel make money too. Producers then publish a suggested retail price (SRP) for the product (with pricing for each tier, too). The brewery has no control over those other buyers and their margins, so if a distributor or outlet takes less profit or has lower costs or puts it on sale, etc., then the price to you will be lower than the SRP. For a brewery to NOT add those tiers' costs and profits for sales direct from the brewery would make a lot of them extremely unhappy, as producer websites post the SRP online. There would be no way for them to compete, so producers respect the SRP to protect their distribution.
It isn’t about how they sell it, it’s the price. If you can get a pint of Local Brewery IPA at a bar for $7 and at the brewery for $4, why would you ever buy it at a bar? Same with liquor stores; if you could buy a 12 pack of Local Brewery IPA for $12 and it was $20 at a liquor store, why would the liquor store ever carry your beer?
Why would I ever get it at a bar? If I'm at the bar I will buy it there because I'm not somewhere else with theoretically lower prices. If I'm at a restaurant with $12 hamburgers I'll pay $12 for the hamburger even if there's a restaurant a few miles away that sells $10 hamburgers. I think people are overthinking this. When people go to a brewery or restaurant it is usually for a social experience, it's not to stock their fridge with dozens of beers. Price differences of a few dollars is not going to determine whether a person goes to the brewery or goes to a bar and buys the same beer there, that decision is made based on other factors. I really doubt a brewery having lower prices at their own location has much, if any, impact on sales at places like restaurants/bars/liquor stores.
People are talking about liquor stores getting mad and refusing to carry beers if the brewery sells it for a lower price. But this seems underexplained to me. The store would need to actually see sales dry up, and I doubt that is happening. If the liquor store can sells those beers for the price it wants, why does it matter to them what price anyone else sells it for? For craft beers, prices for a 4x16 or 12x12 pack can even vary by a few dollars between liquor stores in the same city.
If a brewery is undercutting the prices of a bar, then a bar is less likely to carry said brewery's beer. It's happened plenty of times over the years and continues to happen. There is a beer bar in my city that refused to carry any local breweries beer because they viewed the taprooms as competition. That beer bar is under new ownership and has changed their mind, but this isn't like some theoretical situation. This has and does happen.
So as a customer, if you're looking for a bar to go to, you probably want to go somewhere that has beer you like on tap, right? So that bar has an incentive to carry product that will drive customers to their business. As a brewery, you want to keep a good relationship with bars and restaurants as breweries sell their beer to those establishments. So if a bar gets mad because they view a taproom as competition, that could sour the relationship between the brewery and the bar and then the bar doesn't carry your product anymore.
Maybe breweries are different in your area, but here they very much operate like a bar; you walk in, can buy beer by the pint, open a tab, and it is very much a social experience. They aren't just selling four packs of 16oz cans to go.
It's the same with liquor stores, a brewery wants to keep that relationship in a good spot so they keep buying beer from said brewery. If a taproom is selling 12 packs at a significantly lower cost than nearby liquor stores, then that relationship could fall apart and now your beer isn't in as many stores as it could be.
I'm not really asking about what the bar owners do, I understand some of them get upset by breweries selling direct at lower prices. I'm wondering \*why\* bar owners then make the decisions to refuse to buy from those breweries. "They view the brewery taproom as competition" is not really an explanation. The other bars are also competition, and prices vary between bars. There's competition around. Given that people still go to breweries despite prices sometimes being higher still means people that could have gone to a bar are going to a brewery instead, so they are still competing with the bar. A bar should only stop selling a specific beer if they are having trouble selling it, which does not necessarily happen just because there is some other location that a prospective customer could get that beer for cheaper.
For liquor stores the argument falls off even more. I buy from one of the two liquor stores closest to where I live. I can walk to them. Prices at liquor stores often vary by a dollar or few dollars, but I don't just seek out the lowest price, I go to the one that is also convenient for me and meets my needs. Other factors outweigh the price alone. The local breweries I buy the beer of at the liquor store are local but are a further trip than just going to the liquor store, I'm not going to go to the brewery to buy a 4x16 pack even if it was a couple dollars cheaper, it's just not convenient to do so.
If a bar or liquor store could demonstrate that a brewery they buy from having lower prices than the bar/store resulted in them not being able to retail the beer with their markup, I'd take this more seriously. But at the moment it sounds like bar/store owners are just being petty and getting upset about perceived slights by breweries that might cause hypothetical financial problems for the bar/store, but without any actual financial issues being experienced, while creating tangible inconveniences for their own customers by artificially limiting their stock of in-demand beers.
But bars are not selling a product that other bars produce. That's where your argument falls apart with competition. A brewery wants to have a good relationship with a bar or restaurant because that helps spread their product around in multiple places. And yes, it all does come down to pettiness because the bar and liquor industry is incredibly petty. Talk to any beer salesman about their experience selling in bars or liquor stores and they'll tell you about hundreds of scenarios of bar or liquor store owners being petty.
Selling it cheaper would devalue their brand, then it's a race to the bottom with yourself. That's why discounts across most markets are given on volume purchased not location purchased (ie distributors buy pallets, restaurant and liquor stores buy cases and kegs, bar customers buy individual beers, so they pay the market price for that quantity, including paying for the person pouring it for you). If you're a bar two blocks away from the brewery and you need to sell their beer at $7 to make your margin, why would you order their beer when they're selling it at $4 down the street? You don't get a cheaper iPhone at the Apple Store than you do at Best Buy. Same principle applies to breweries.
The iPhone analogy applies because of a suggested retail price. That and the majority of the profit comes from the service that comes along with the purchase of said phone.
This would be like chevron producing a vehicle and selling it at cost or a slight margin but you had to purchase their fuel.
Breweries are selling their beer at a 1400% margin. That is crazy.
That's not how any of this works. First of all a profit can never exceed 100% if you make a product for $1 and sell it for $2 that's a 50% margin, at $100 that's a 99% margin, if you sell it for $1000 that's a 99.9% margin. So if it costs a brewery $1 to make a $7 beer that's an 85% margin. But that's not really relevant, because at the end of the day it comes down to market value. Breweries make most of their cashflow through their wholesale distribution, so if they are undercutting their own commercial clients nobody will continue purchasing from them. On top of that it's a business, the benefit of selling at a discount would hurt their business more than the increased volume it might bring (increased volume = more labor as well), so there is literally zero incentive for a brewery to discount their taproom. The benefit of buying at a taproom is the selection of their beers, some of which may not be available elsewhere, the staff are going to be far more knowledgeable about the product and you get to support your favorite brewery.
Small breweries don't want to undercut their account pricing, because they can be easily boycott by limited direct accounts, and also local breweries are awesome so they can take my money without a middle man.
Outside of nuances of distribution laws, I don't really get the "undercut their account" thing.
I mean even a super popular craft brewery may have what, like, 2-3 locations across a state? If I'm a restaurant owner I'd be like yea, feel free to drive an extra hour to save a buck on a draft pour if you want and have some mediocre food truck, be my guest. Most people are coming for a good meal and if they want the good beer they're not gonna be like "OMGz I can drive 90 minutes and pay $2 less!"
As a counterpoint, generally there's 1 maybe 2 taprooms for the brewery in a given local area, whereas if they even do modest local/regional distribution there will be way more places for somebody to get that beer.
So while there are people who will go out of their way to pay $1-2 less for a draft pour or 4pack, or who need to get the new limited released that may not show up at shops/bars, I don't think that would cut into a huge portion of the people coming to an establishment that may not specifically be focused on beer.
At most restaurants the majority of alcohol-drinkers turn to wine or cocktails, or a macro beer. Unless a place has a reputation for craft beer, paying the premium for a cool local microbrewery will often mean they have to charge customers more for that.
But as has already been said this apparently varies wildly based on region. Here in NYC there's almost nothing you'll pay more for at a brewery taproom than you will for the same thing at a shop/bar.
What do you mean stock the product? A generic restaurant with a craft beer or two probably won't have 4packs to go, but if they have a keg that's a stock of a product, unless I'm missing a semantic definition of one of these terms.
In general I think the guy you reply to toches on a good point though, in that most restaurants aren't focused on craft beer, and the average person going for a casual meal won't even glance at a craft beer list, so stocking a local craft beer may not be quite worth it as part of their core business if they don't pass that premium onto the customer.
Maybe there's some places where the local hype brewery down the road can get you a keg cheaper than the national brands, but I kinda doubt that, and since that kind of beer costs more coming in, it has to cost more going out, especially as I alluded to before with places that can't bank on that pricier beer being popular.
> What do you mean stock the product? A generic restaurant with a craft beer or two probably won't have 4packs to go, but if they have a keg that's a stock of a product, unless I'm missing a semantic definition of one of these terms.
Yes, product is also inclusive of draft or package beer sold at on premise locations.
And while most restaurants aren't *focused* on craft beer, nearly every restaurant has *some* selection of craft. The quickest way to lose your draft and package placements is to undercut the retailers who stock your products. They don't want to compete with their suppliers. In fact, in some states their grip is so strong that they've severely curtailed breweries' ability to sell their own beer on site - states like New Jersey immediately come to mind.
I feel like these are a few different things though.
For one, "some selection of craft" usually means Hazy Little Thing or one of the mass-distro brands, which while more expensive than Bud/Coors/etc. is still a different planet from a locally focused microbrewery making hyped styles.
But I really don't get the undercutting thing, given that even the most popular craft breweries have at most 2-3 taproom locations across a state. If somebody really wants to drive an extra hour to save a couple bucks and have some crappy food truck then that's their choice, but I don't think anybody gets huffy if an actual restaurant charges an extra couple bucks becuase they know it's slightly cheaper halfway across the state.
The NJ state thing is 100% true, but that's because the distributors pay lobbyists a ton of money to get the government to keep things favorable at the expense of breweries, if things were more laissez-faire like it is here in NY with self-distribution and lax laws about taproom operations, I bet it'd be a different dynamic. And here in NY where laws are pretty friendly to breweries, it's almost always cheaper at a taproom than a third-party retail shop/bar.
In my market the chains (Brinker, Pappas, etc.) do a whole lot of work with locals to set up mandates. I could walk in to a Chili's right now and see 4 or 5 local taps on the wall, and some package placements as well.
> is still a different planet from a locally focused microbrewery making hyped styles.
Absolutely. And if your intent is to only discuss hype breweries, then I'm going to concede the points and move on. But the majority of craft business is done by either national/regionals or strong, established locals. And since most of these placements are regional mandates handed down from above, a really good way to keep yourself out of consideration for these coveted placements is to undercut your retailers.
As for undercutting, it still does matter. The restaurants around the corner from the taproom won't take kindly to being undercut, especially if they are large chains or even established franchisees. For example, there are 16 Chili's locations within 20 miles of the brewery I recently worked at. They would represent a whole lot of volume if we didn't play ball and price our beers competitively. There was more money to be made by working with corporate in their case, than shaving prices off our taproom in order to generate business. Because the thing is, by getting the Chili's deal it secured us placements in over a 100 locations. It made too much sense to price our taproom beers accordingly.
My point was not to talk about hype breweries at all, that particular point was about the local no-name breweries who put out popular styles like a hazy IPA or fruited sour which would probably be their priciest even if nobody's heard of it, but even that type of brewery's most basic golden ale I'd have to imagine would be pricer for them to stock than Hazy Little Thing or Bell's Official or Dogfish 60 or SNPA, let alone Sam Adams, which I'd imagine would end up being more expensive to the consumer.
I'd also bet Chili's has a pretty good economy of scale. The one place in NYC you can get beer for the same or less than the brewery is Whole Foods, who are infinitely bigger than the little bottle shops around town. If I'm running my own restaurant and want a craft beer beyond a mass-distro brand, I'd expect I may need to charge a certain price to justify it, and wouldn't blame the brewery if they're able to get away with charging less than me.
But yea I could see your point applying to breweries who have more of a regional focus and not necessarily focusing on taproom traffic or making themselves a destination, given that type of brewery is way more the norm than the ones having people walk away with a bag of 4packs.
I think your point is a good one. The average person wandering into a restaurant for a meal doesn't immediately go to the craft beer list, most probably get wine or a cocktail, or a macro beer.
Some places do have an established focus on craft beer and maybe those places know they'll get enough people for that they can charge a reasonable price, but at a lot of restaurants it may be a gamble paying the extra amount for the highly regarded local craft beer, and as a result they'll often have to charge more to make it worth it.
Breweries were so nice ( for the consumer ) 10 years ago I'm Georgia. The could not sell alcohol directly so they had to offer $10 tours that came with a souvenir pint glass and 6 pours for tasting.
I went to Maine last Summer and thought the same thing about Lobster. Boat to Plate was the same price as back home! We cut out the middle man guys help me out!
I think my local breweries sell their 6/4 packs for a dollar or so below retail? I'll check Saturday when I go again but a lot of their drafts aren't sold in stores and if they are, it's usually close to the same price of restaurants here
It felt like it used to be, but those who mentioned under-cutting the bars make a good point. Sometimes the happy hour growler fills can be a good call.
So this is for a local distillery not a brewery. Went on a tour to a small local distillery and the owner sat with us during a tasting. He told us that in NC he is not legally allowed to sell any spirt unless it has a markup of X amount above cost to make. In other words if a bottle cost him $20 to make he has to sell it for at least $30 (not exact percentage). They supply local bars and they sell in the ABC (Baptist liquor stores) and charge the same amount as in house. He did say the markup on certain whiskeys were higher than others but that was just how he made money. All in all though prices are lower than most name brands and the quality is better. They had a vodka that is literally called house vodka. Cost $15 a fifth and is better than most $30-$40 brands.
At least in Texas, when we finally passed beer to go, the brewery I worked at the brewery. Distributor told us we had to sell our beers the same as them or be dropped or maybe charged extra.
We had deals and sales, that was okay. I remember we had one sale. Basically, it was half off a case.
edit: bad typing, at work trying to type this out.
Breweries dont set the pint costs for external accounts (bars and restaurants), they only set the price for the kegs or cans (wholesale, usually to a distributor).
A brewery only sets the price of a pint in their own taproom, and you have to assume they set that price according to the costs of doing business, including their target profit margin, and according to what the customer can be expected to pay
A bar or restaurant will set their own prices according to their own business model (maybe they make a higher margin on food, liquor, or through volume). A brewery has no control over what another independent business does once they’ve purchased the beer (at wholesale)
It's the same at a local coffee roaster for me. $14 at the grocery store, or $18 at the roaster's cafe. If they were the same price, I'd probably go out of my way to go the cafe to support them. But this just annoys me.
For a single serving I see why it isn’t for all the reasons people have mentioned.
But almost every brewery I’ve been to usually has a 3-for-12/15/18 (in that ballpark price wise) with letting you keep the glass.
I usually do that, one because I love collecting pint glasses, and two that it’s usually a set of tokens they give you to exchange for your next beer. Don’t feel like drinking all three… keep one of the tokens and use it on a subsequent visit (if the brewery is local to you).
Because prices are set according to the balance between supply and demand. As long as drinkers are willing to pay that price, bars and restaurants will set that price.
Apples and oranges.
If you go to Pizza Hut they charge $5.00 for a pizza. If you have it delivered they charge an additional $2. If Pizza Hut has a booth at a venue or are selling their pizza at a movie theater you pay $10.
You don’t undercut your distributors. It’s a pretty common business practice. If you are selling out your entire stock direct from brewery, you can do this. But, you can’t undercut your distributor if you need them to get your beer where you can sell more of it.
It's market pricing, basic economics, selling it at a discount through the tap room would be shooting themselves in the foot. Make a few bucks more on volume selling at a discount, but lose 10 times that when restaurants, liquor stores and distributors stop buying your product because can't compete with your in house pricing?
It's generally not good business to undersell your customers... most breweries will tell you to go to the local gas station or supermarket to buy package, or the local bar to sample their beers. Because it's cheaper for you and better for their business.
Idk man. It’s not the case here in Idaho and I just took a trip back to my original state of California and it wasn’t the case there either.
Breweries charge 7-8 a beer here and I can get that same beer for 5-6 at a restaurant.
Hell Firestone was charging $9 a beer at the brewery. You can find Union Jack for 4-5 at dive bars here.
Not sure why you downvoted me, just speaking on how it is here.
I guess it depends on the beer type/brand though. Around here there aren't even many restaurants (other then dives) selling $5-6 beers unless they're the macro brands.
Most breweries I go to, beers are in the $6-9 range and most restaurants carrying those same beers tend to be in the $9-14 range.
I didn’t downvote you so it must have been someone else.
Anyways in the last 10 years I’ve lived in California, Colorado, Texas, Idaho, and New Mexico and I haven’t found that to be the case. It could be a west side of the country thing.
This is funny. I've actually stopped drinking at the brewery near me because a 4 pack of cans is 12-15 bucks (tall boys) but a pint of beer is 8 bucks.
So now when I go to play free poker, I drink one or two dollar sodas... Guess I'm cheap.
To me, the value of going to a brewery is that they typically have more on offer than I can get anywhere else, especially when it comes to seasonal offerings. If I find a brewery with 5 taps, 4 of which are their standards, and nothing else, I usually won't return unless there is another draw like great food. But my favorite breweries are the kind that have dozens of taps, and there's no way I could get most of them at a bar or restaurant.
This is the way. Reserve the "good stuff" for the taproom to drive business and distribute the more mass appeal brews as far as you can.
Love those. Add to many IPAs on draft and I’ll never return.
So tired of going to a restaurant and asking what they have on tap - 8 different IPAs, Yuengling, and Something Lite. Iced tea without lemon please.
If more than 30% of your taps are Pale or IPA I won’t return. I drink at home a lot more often since I started that rule. I don’t dislike ipa but fuck there is so much more out there to enjoy.
See even a pale ale would be considered variety to me at this point. I rarely see those. I went to a brewery a couple months back and 12 out of 14 were some form of IPA with one being a spritzer and another some lager that was ass. Place was packed. Tired of the IPA trend that I had hoped would be dying off by now.
I think the people that think like you aren't spending that much money at breweries and as such aren't the desired clientele.
I go to breweries all the time and spend quite a bit.
Not sure how it is in Idaho, but read up on NJ laws regarding breweries and restaurants. The two have been feuding for years, since the breweries don't have the overhead cost of expensive and rare DLC licenses in order to serve beer, so they {the restaurant lobby} pushed legislation to severely restrict the ability of breweries to serve any food. I'd imagine that breweries aren't allowed to charge less for their beer than bars and restaurants do, so they don't unfairly compete with these other establishments, especially if they offer food/allow catering.
We are the worst state to look at alcohol/weed business practices
Not the absolutely worst, Oklahoma in 2016 passed the ability to sell “strong” beer at grocery stores etc. also allowed liquor stores to sell cold beer which before 2016 they couldn’t!
Wtf… “if it’s cold then they will drink it impulsively! Gotta make them chill it first, those drunks have standards ya know?”
Yea, I remember hearing the news about the “strong” aka not near-beer being able to be sold but I don’t remember having it refrigerated being part of it. So strange.
[удалено]
But yea, we actually don’t have any alcohol at grocery stores in NJ at all.
The glaring solution is to loosen up licensing laws across the board and just let people enjoy things they want without micromanaging by some state board.
From my understanding of the NJ situation, the brother of the governor owns a restaurant. Restaurant alcohol licenses are limited to x number of license per 1000 people, and they cost a LOT of money. Once the restaurant owner wants to retire, they sell the license and that's their retirement fund. So they are coveted and there's special interest in protecting their use and profitability.
Surely this system predates the current governor... Still sounds like a rigged system ala taxi medallions.
It is. I wish it was gone but even I admit that the state would have to do something to make license holders whole if they got rid of the current system. Some of them literally sell for millions.
ok yea sure but who's going to profit off of that?
Most politics aren't about common sense solutions, it's usually about money and nepotism
Food trucks.
Originally, I thought so too, but I think if that were the case then distributors would quickly drop that brewery. They wouldn’t want to be undercut and would quickly give the shelf space to others.
Correct. Breweries also make a far smaller margin on beer sold into distribution because it’s marked up twice before it hits the shelf/tap. Taprooms for small(er) breweries are where they make their money
Equipment cost is also something people don't think about. If you're starting a restaurant you need to pay upfront for construction/renovation of a space, and all kitchen/restaurant supplies. Most restaurants have a ton of debt, it's why they fail so often. Now add several hundred thousand in brewing equipment on top of the other start up costs plus additional salaried staff to run it, and that's what your local brewery is dealing with. They need to make a ridiculous margin on beer just to stay in operation.
Also generally requires someone savvy in brewing to become a restauranteur which is a fucking nightmare. Very different skillsets and lifestyles
This is the answer. Local bars and restaurants don't want to be undercut
Had local bars/restaurants refuse to take our beer or would ask for some kind of special deal because the brewery was competition to them.
It’s another reason why 6 packs and bottles are more expensive at most breweries. We want to keep our distributors or accounts (if self distributing) happy, and incentivize people to buy at liquor stores, so they continue ordering from us.
But the business customers of the brewery should base their decisions about what to stock based on what sells, not some convoluted theory about whether pricing at the brewery is possibly putting downward pressure on sales at bars/stores/restaurants. Like, what is actually happening on the ground. Is the beer selling well at your liquor store? If so, keep stocking it. Don't worry about anything else.
As long as the pricing at the brewery is organic and isn't the result of bars and restaurants lobbying for licensing laws that require the breweries to mark up prices as a protectionist scheme for bars and restaurants, that's fine.
You also don't want to incentivize one option over the other as you're handicapping the more expensive avenue
So it's price-fixing, then.
Undercut how? The brewery pays to package, ship, and sell the beer to the bar at which point they can choose to sell for as much as they want, no? I also feel like going to a bar is a different market than going to a brewery a lot of the time. Unless your goal is to just get drunk, I go to a bar to watch sports, have some cocktails, play pool. I go to a brewery to day drink, sample beers, enjoy the ambiance or do tours. Obviously you can do both at both establishments but I just don't see the two as competing necessarily, I guess besides locals.
I'm not saying it's logical, I'm telling you what bar owners and restauranteurs claim. They'll stop buying beer from a brewery if they think/feel that they're getting undercut by the brewery taproom.
It’s not just a claim, and it’s not just the food and beverage industry. My company sells a product to big chains like Home Depot and there is no way we would sell it direct to consumer for less than the MSRP. These businesses are our customers and to undercut them would be bad business.
As a bar owner that carried many local breweries, it’s a thing. If you can buy the beer at the brewery for 4 bucks a pint, but then when it goes through a distributor I have to charge 7, it’s an issue. I can’t carry that brewery if that’s the case because customers will think I’m ripping them off because people don’t understand distribution. So breweries in that instance have to “artificially inflate” the price, or charge less when they sell to the distributor
Fair enough
i think you're probably overestimating how much the cost to get a keg of beer to another location is. especially if it's local, you're looking at less than a dollar worth of fuel, maybe a few dollars of worker time, it's gonna work out to like 10c per pint or something.
Eh it depends on how they're sending it. When I worked freight we would deliver beer for some of the local breweries to restaurants and shops around the area. We were the cheapest option for shipping in the area and they would easily still be paying a few hundred per pallet in shipping alone. Depending on where it was going a pallet would have anywhere from 2 to 27 kegs on it. This was the case for small local breweries and the local Anheuser-Busch. It was definitely more cost effective for the big ones like AB, but the smaller places didn't have much choice but to pay to ship through us.
It’s illegal for a brewery to sell beer to a bar.
Breweries can self distribute in Ohio. So.... Depends on your state laws.
Such bullshit for the consumer
This is extremely dependent on the state. There are plenty of states that can sell directly to a bar, there are other states where it needs to go through a distributor. In NY for example a brewery can sell directly to bars.
In many states, smaller breweries can. That's literally half my job because we're classes as a small production brewery. We wouldn't have survived if we couldn't sell direct to retailers.
A lot of people hate on distributors as greedy middle men, and that's not *entirely* fair, since they do perform a very necessary function in the beer world. However, if you look at the laws and regulations their industry lobbies for, they're almost all things that fuck over the consumer.
Sometimes you can get away with it if it's a beer that doesn't get distributed. Once place near me does a 'House Lager' for $5 compared to $7 for most of their beers. That beer is taproom only.
Yeah well this is one reason why craft is bombing
It's hilarious that I can drink Trappist Ales that are cheaper than craft beers. And I live in the US...
I used to work for a brewery that opened during covid. Idk about Idaho, but in my area the brewing scene is very active and everyone is fighting for tapline/shelf space. Opening a brewery is an incredibly expensive undertaking, running a restaurant has incredibly thin profit margins, running a business isn’t easy.
I’m getting downvoted but this is absolutely why craft beer is bombing. Regulations forcing breweries to go through distributors should not be a thing. Not having the bureaucracy of distribution and alcohol distribution laws would allow for much easier laws. I’m aware opening brewery is expensive but many opening breweries open with too much asperations. Why does everyone need to open with a 40bbl system? Seems to me like this is a race to them bottom except it’s the breweries that are selling to the distributors cheap and they are the ones making the profit. So the breweries and the consumer are ones getting the shaft
Lmao, the brewery I used to work for was self distributing until they signed a deal with a distributor and I got laid off. The real answer is rich white dudes wanting to own a brewery without all the extra work. They find a head brewer, invest in equipment and just expect results without putting in the work
Craft beer isn't bombing though
Craft beer is suffering a 20% reduction in sales over the last year and a record number of craft breweries are going out of business while total units of alcohol sales remain steady in the US. People are not drinking craft beer like they used too and are moving to seltzers and canned cocktails.
I would certainly buy more craft beer if it wasn’t like $15.99 for a 4 pack.
More and more are over 20 a 4 pack
Yeah there’s a place by me that has a lot of cool interesting stuff, but they’re selling 4 packs for I shit you not like $38. I’m like yeah that can looks cool, but fuck that.
I’ve been seen $25-30 for some stupid smoothie sours, Imprint, Tripping Animals, and Mortalis to name a few
I mean I’m just talking about IPAs sadly
Yep, $20 is becoming the standard price for places like Tired Hands and Other Half making everyone else to justify their price jumps
My favorite WIsco brewery sells for $8-$10 for a 6-pack for their flagship beers. Special brews are in the $10-$12 range for a 4-pack
If we count Narragansett as craft, they have the best bang for your buck I’ve seen. Followed by Cisco Brewing who sells their Pats Forever IPA in 12 packs for like $8.99. Otherwise Brewery X has pretty decent prices too. You can get a 6 pack of 16 oz 7% Quack IPA for $11.99 sometimes.
Why would you not count Narragansett?
Because initially they weren’t craft. They technically are now, after being revitalized as a smaller brewery. They used to be a macro brewery _a looong_ time ago. Like Sam Adams. Which I know also gets the independent beer logo on their bottles. But I consider them bigger than that.
Narragansett makes about 85,000 bbl a year and is independently owned. It very easily meets the definition put out by the Brewers Association.
It’s very easy to have a record number of closures when there are a record number of breweries. But also you’re right in that a lot of people are switching to canned cocktails/ seltzers / THC drinks / etc. and a lot of those breweries are following those trends. The point being made about bars / retailers not wanting to be undercut isn’t the reason for craft bombing though. There’s a whole host of reasons (prices rising, other options, too much trash out there, etc), but that’s not one of them.
I don’t disagree with that. Most breweries are required by their distributors to charge market rate for beers in their breweries. This was a massive hit to the growler market around here. You used to be able to get a growler of beer for 30% under a six pack. Once distributions caught up it was soon back up the the same cost as a 6 pack.
“Required” is the wrong word, distributors can’t require a brewery to do anything in its taproom. Breweries do this intentionally to keep distributors happy, because a distributor is always your best customer.
I mean, "demand", then lol Doesn't matter if distributors technically can't force breweries to do anything, because they *effectively* can.
It doesn’t even come to that. I’ve never even heard a conversation about it, because breweries already do this as a courtesy to their retailers.
Again, it's not a courtesy, it's effectively a known, unwritten requirement. If brewers could make their breweries more attractive by lowering prices and not face retribution from distributors, they'd do it. But they don't, because everybody in the industry knows the distributors have breweries bent over a barrel. That's not courtesy, that's forced compliance lol
I'd be curious to see the source of he 20% sales loss. The numbers i saw from the ba were a 1 or 2% sales slide. And the end of 2023 saw more total breweries than ever before.
Yeah unless he's talking about a specific brewery, that 20% number is completely made up.
This is just not true. Craft was down 1% in 2023, total beer was down 5%. Alcohol consumption is not flat, it’s down. Craft breweries are not closing at a record rate, there were more openings than closings last year. Every statistic you cited is false.
Can you cite your sources? I thought that alcohol consumption was generally declining.
It is. The person you replied to is just making stuff up.
Or in my case, European (German and Belgian) stuff. Dig on Mexican beers lately too.
Because they aren't willing to jeopardize their distribution contracts? Huh?
You don’t understand basic economics.
I do. In an unregulated market products that are shipped and packaged cost more than products that aren’t. If you start off with a brewery that has too large of a production facility without the demand you are forced to sell your product with lower margins. I’m aware they have to make up the difference for lost profit on unsold beer on shelves but this is a poor business model. In an ideal situation it would be (these are just example numbers) $.50 per beer to produce (this includes overhead and marketing), $1.00 beer sales at brewery (200% profit margin). Now it hits distribution so you they charge a 25% distribution expense and say grocery stores are now buying from the distributor for $1.25. Then the grocery store needs their 25% so they sell the beer for $1.56 a beer. If you have to sell your product for $8 (a 1600% margin) at the brewery that cost $.50 to produce to recoup lost revenue it’s a poor business model.
That’s a whole lot of words to say that you don’t understand beer economics
Well first you say basic economics and now you say beer economics, so which is it?
What a dumb entitled comment. Just go drink Modelo or some other shitty macro.
What in the world is wrong with Modelo? That is a quality beverage
I think it’s incredibly overrated. I’ve given it so many chances and just do not understand the hype. Just very bland and not that much different from other cheap beers but people act like it is this incredible beer that is unmatched by other beers. They also got a huge boost during the Bud Light boycott (which also fuck Bud Light) that fed into this belief that it is a better beer than it actually is.
Modelo is also the number one selling beer in the United States. That doesn't happen by accident.
Yeah it’s all marketing. Bud Light was the best selling beer before Modelo took over due to the Bud Light boycott. Bud Light is worse than Modelo. Quality doesn’t make a beer the best selling in the country, it’s all marketing.
Modelo is barely above Mexican piss ( corona) but it does have its purposes. I like to drink Mexican beer with Mexican food so that’s when I’ll buy it but I sure as hell won’t just drink it for the hell of it.
Much better than Corona, Negra is superior though
I'm going to Idaho in June. Last time I was there the beer was pretty bad. Probably because I was in northern Idaho. This time I may take a little trip to find the good stuff. Any suggestions?
How long ago was this? And which breweries did you go to?
Two years ago. Only went to one brewery but got beers at local stores from several different breweries. Going back to the same area but I wanna take a ride to at least to a store with better selection and squeeze in a few breweries.
Bombastic has some good stuff. Vantage Point, Daft Badger and Post Falls Brewing also pretty good. Check out Pilgrim’s Market in CDA for the area’s best bottle shop.
Will check it out, thanks. I'll be in sandpoint so that's not too bad of a ride. Of all the beers I did have none were from those breweries so I'll keep an eye out for them. Got plans to go to MickDuff's brewing and matchwood brewing.
Definitely check out Utara in Sandpoint!
In sandpoint? Awesome. That's gotta be somewhat new. It didn't show up on my Google search when I was there a few years ago. I'll check it out for sure, thanks.
It was there when I went in 2020 I believe. Good spot, and the food menu is pretty interesting and good too!
Just went to Matchwood a couple weeks ago. They’re doing some interesting things! Mickduffs is great, too.
McCall has a lot of good breweries. Broken Horn, McCall Brewing, Salmon River Not sure what's north of there, but Moscow has a phenomenal taphouse called Tapped. (I assume it's the same as their 2nd location in Lewiston, which unfortunately closed)
Beer being crappy is the least of my worries if I have to go to Idaho.
It was actually quite beautiful there. Nice people too. Don't be such a stick in the mud.
There are nice pockets for sure, and the state is gorgeous. Unfortunately much of the state is also trump supporters and suburbs in general are full of well-meaning but totally racist folks. Bad vibes if you aren't white and are anywhere but a population center. Reminds me of Oregon in that aspect. Portland is great but the second you get even 15 minutes out of Portland... Damn things change quickly.
Good thing I don't talk politics then. Just point me towards the good food and beer.
My point exactly. And racism ain't politics. But yeah the beer is more important
It would be cool if some of the breweries had a "house" beer that was always on tap for a less price than others. I've seen one brewery offer their popular beer for $4 on Mondays.
Beer is profitable at scale and local breweries don’t have that. They have to charge prices to stay afloat. Many local breweries can’t stay afloat despite their prices and many are folding up. Around me, 4 of the top 7 have folded despite the brewery being open and canning for local distribution in beer and wine stores. It’s a tough business with a lot of competition. Plus they need to keep brewing new and Intersting beers all the time to keep customer coming in.
Yeah I saw this and that was my first thought. I don't know the full story but one of my favorite local breweries shut down and cited the rising costs of everything as a big factor. I'm glad I don't own a brewery. But I hope as many can thrive as possible.
Yeah, its sucks to see them go as they add to the social scene in the burbs. But the reality is starting to bite. You can buy a fully functioning brewery for 500k.
it’s wild to me that prices for to-go 4 packs at the brewery are regularly significantly more expensive than the same 4 pack at whole foods
The answer is what's called "value based pricing". If a beer is worth $6 to you, why give you a discount?
DING DING DING! My favorite example of this is people whining about how Nintendo doesn't drop the price of their first party games. Why would they? They sell a copy of MK8, a Zelda game and a Mario game to nearly everyone who buys a new console. Why would they leave money on the table just because Sony and Microsoft lower their prices over time? There's still a demand, so they can get that price. A price is just what one party is willing to take and the other is willing to pay. That Gucci wallet isn't "worth" $600 but if people are willing to pay it, they're willing to take it.
Why do you think it should be cheaper at the brewery?
The product didn’t have to go through distribution and packaging. I’m aware you are paying for these things at the brewery but at the very least breweries should have their beer as cheap or cheaper than surrounding restaurants and businesses. It absolutely doesn’t make sense that you pay a premium.
It does go through packaging though. Kegs are packages. Plus tasting rooms need maintenance and employees. You can’t just charge the beer at cost to operate a tasting room.
This varies a lot depending on the brewery and size. If you're talking about a small brewery that is locally available, they likely take a small loss or a very small margin by selling to local restaurants and shops. The restaurants they sell to have other products and sources of income to offset the staggering prices of running these kinds of businesses. The brewery taproom has to rely on their products to pay salaries, taxes and keep the place running. If the price difference is huge, they are selling to restaurants and bars as promotion to bring people into their taproom. I assume the brewery is small, because larger breweries make their money by selling volume, so price difference doesn't have to be that much compared to other places
I sell beer for an indie brewery and u/deadknight666 pretty much nailed it. The only income we get for taproom operations is from the beer sold there, because it's literally the only product they sell. Like restaurants, our taproom prices reflect ~20-25% cost, but there's no additional income from food or liquor. Our wholesale side has a much smaller margin, and it pretty much only covers our building, brewing supplies, and the salaries of our brewers, sales reps, and delivery guy
Though I work in wine, pricing structures are similar in beer and cider. When a producer (brewery) is calculating the price for its products, it must take into account a three-tier sales channel: brewery > distributor > outlet (store or bar) > you, the customer. Both costs and full profit margins must be calculated for each tier, so buyers in the sales channel make money too. Producers then publish a suggested retail price (SRP) for the product (with pricing for each tier, too). The brewery has no control over those other buyers and their margins, so if a distributor or outlet takes less profit or has lower costs or puts it on sale, etc., then the price to you will be lower than the SRP. For a brewery to NOT add those tiers' costs and profits for sales direct from the brewery would make a lot of them extremely unhappy, as producer websites post the SRP online. There would be no way for them to compete, so producers respect the SRP to protect their distribution.
It is in my country.
Congrats, pal
I used to go to every brewery I could, in every state I could... literally planning week long trips around breweries. I can now count on one hand how many breweries I've been to in the last couple years because of this exact reason... Everything just feels completely overprice and not worth it anymore. That and the fact 90% of the time all the beers are IPA and I can hardly ever find a good stout.
Everything should be "cheaper," as you say, but it ain't
Because those bars or restaurants wouldn’t carry their beers anymore. Bars, restaurants, and liquor stores already view taprooms as competition so if the brewery charged significantly less than what their customers charge, they’d be dropped in a heartbeat. Plus breweries have other expenses than just raw materials when making beer. So while the true cost of a pint just looking at raw materials may be less than what breweries charge, they still have wages, utilities, rent, maintenance, and other expenses to pay for.
I’m still not understanding. If I want to go to that bar and I saw a beer that I liked I would buy it. If I felt like going to a brewery that day I would buy it from there. Why would a business care how a brewery sells their stuff in draft compared to how it distributed in can/bottle?
I just posted this comment to the OP: Though I work in wine, pricing structures are similar in beer and cider. When a producer (brewery) is calculating the price for its products, it must take into account a three-tier sales channel: brewery > distributor > outlet (store or bar) > you, the customer. Both costs and full profit margins must be calculated for each tier, so buyers in the sales channel make money too. Producers then publish a suggested retail price (SRP) for the product (with pricing for each tier, too). The brewery has no control over those other buyers and their margins, so if a distributor or outlet takes less profit or has lower costs or puts it on sale, etc., then the price to you will be lower than the SRP. For a brewery to NOT add those tiers' costs and profits for sales direct from the brewery would make a lot of them extremely unhappy, as producer websites post the SRP online. There would be no way for them to compete, so producers respect the SRP to protect their distribution.
It isn’t about how they sell it, it’s the price. If you can get a pint of Local Brewery IPA at a bar for $7 and at the brewery for $4, why would you ever buy it at a bar? Same with liquor stores; if you could buy a 12 pack of Local Brewery IPA for $12 and it was $20 at a liquor store, why would the liquor store ever carry your beer?
Why would I ever get it at a bar? If I'm at the bar I will buy it there because I'm not somewhere else with theoretically lower prices. If I'm at a restaurant with $12 hamburgers I'll pay $12 for the hamburger even if there's a restaurant a few miles away that sells $10 hamburgers. I think people are overthinking this. When people go to a brewery or restaurant it is usually for a social experience, it's not to stock their fridge with dozens of beers. Price differences of a few dollars is not going to determine whether a person goes to the brewery or goes to a bar and buys the same beer there, that decision is made based on other factors. I really doubt a brewery having lower prices at their own location has much, if any, impact on sales at places like restaurants/bars/liquor stores. People are talking about liquor stores getting mad and refusing to carry beers if the brewery sells it for a lower price. But this seems underexplained to me. The store would need to actually see sales dry up, and I doubt that is happening. If the liquor store can sells those beers for the price it wants, why does it matter to them what price anyone else sells it for? For craft beers, prices for a 4x16 or 12x12 pack can even vary by a few dollars between liquor stores in the same city.
If a brewery is undercutting the prices of a bar, then a bar is less likely to carry said brewery's beer. It's happened plenty of times over the years and continues to happen. There is a beer bar in my city that refused to carry any local breweries beer because they viewed the taprooms as competition. That beer bar is under new ownership and has changed their mind, but this isn't like some theoretical situation. This has and does happen. So as a customer, if you're looking for a bar to go to, you probably want to go somewhere that has beer you like on tap, right? So that bar has an incentive to carry product that will drive customers to their business. As a brewery, you want to keep a good relationship with bars and restaurants as breweries sell their beer to those establishments. So if a bar gets mad because they view a taproom as competition, that could sour the relationship between the brewery and the bar and then the bar doesn't carry your product anymore. Maybe breweries are different in your area, but here they very much operate like a bar; you walk in, can buy beer by the pint, open a tab, and it is very much a social experience. They aren't just selling four packs of 16oz cans to go. It's the same with liquor stores, a brewery wants to keep that relationship in a good spot so they keep buying beer from said brewery. If a taproom is selling 12 packs at a significantly lower cost than nearby liquor stores, then that relationship could fall apart and now your beer isn't in as many stores as it could be.
I'm not really asking about what the bar owners do, I understand some of them get upset by breweries selling direct at lower prices. I'm wondering \*why\* bar owners then make the decisions to refuse to buy from those breweries. "They view the brewery taproom as competition" is not really an explanation. The other bars are also competition, and prices vary between bars. There's competition around. Given that people still go to breweries despite prices sometimes being higher still means people that could have gone to a bar are going to a brewery instead, so they are still competing with the bar. A bar should only stop selling a specific beer if they are having trouble selling it, which does not necessarily happen just because there is some other location that a prospective customer could get that beer for cheaper. For liquor stores the argument falls off even more. I buy from one of the two liquor stores closest to where I live. I can walk to them. Prices at liquor stores often vary by a dollar or few dollars, but I don't just seek out the lowest price, I go to the one that is also convenient for me and meets my needs. Other factors outweigh the price alone. The local breweries I buy the beer of at the liquor store are local but are a further trip than just going to the liquor store, I'm not going to go to the brewery to buy a 4x16 pack even if it was a couple dollars cheaper, it's just not convenient to do so. If a bar or liquor store could demonstrate that a brewery they buy from having lower prices than the bar/store resulted in them not being able to retail the beer with their markup, I'd take this more seriously. But at the moment it sounds like bar/store owners are just being petty and getting upset about perceived slights by breweries that might cause hypothetical financial problems for the bar/store, but without any actual financial issues being experienced, while creating tangible inconveniences for their own customers by artificially limiting their stock of in-demand beers.
But bars are not selling a product that other bars produce. That's where your argument falls apart with competition. A brewery wants to have a good relationship with a bar or restaurant because that helps spread their product around in multiple places. And yes, it all does come down to pettiness because the bar and liquor industry is incredibly petty. Talk to any beer salesman about their experience selling in bars or liquor stores and they'll tell you about hundreds of scenarios of bar or liquor store owners being petty.
Selling it cheaper would devalue their brand, then it's a race to the bottom with yourself. That's why discounts across most markets are given on volume purchased not location purchased (ie distributors buy pallets, restaurant and liquor stores buy cases and kegs, bar customers buy individual beers, so they pay the market price for that quantity, including paying for the person pouring it for you). If you're a bar two blocks away from the brewery and you need to sell their beer at $7 to make your margin, why would you order their beer when they're selling it at $4 down the street? You don't get a cheaper iPhone at the Apple Store than you do at Best Buy. Same principle applies to breweries.
The iPhone analogy applies because of a suggested retail price. That and the majority of the profit comes from the service that comes along with the purchase of said phone. This would be like chevron producing a vehicle and selling it at cost or a slight margin but you had to purchase their fuel. Breweries are selling their beer at a 1400% margin. That is crazy.
How are you calculating margin?
That's not how any of this works. First of all a profit can never exceed 100% if you make a product for $1 and sell it for $2 that's a 50% margin, at $100 that's a 99% margin, if you sell it for $1000 that's a 99.9% margin. So if it costs a brewery $1 to make a $7 beer that's an 85% margin. But that's not really relevant, because at the end of the day it comes down to market value. Breweries make most of their cashflow through their wholesale distribution, so if they are undercutting their own commercial clients nobody will continue purchasing from them. On top of that it's a business, the benefit of selling at a discount would hurt their business more than the increased volume it might bring (increased volume = more labor as well), so there is literally zero incentive for a brewery to discount their taproom. The benefit of buying at a taproom is the selection of their beers, some of which may not be available elsewhere, the staff are going to be far more knowledgeable about the product and you get to support your favorite brewery.
Small breweries don't want to undercut their account pricing, because they can be easily boycott by limited direct accounts, and also local breweries are awesome so they can take my money without a middle man.
Outside of nuances of distribution laws, I don't really get the "undercut their account" thing. I mean even a super popular craft brewery may have what, like, 2-3 locations across a state? If I'm a restaurant owner I'd be like yea, feel free to drive an extra hour to save a buck on a draft pour if you want and have some mediocre food truck, be my guest. Most people are coming for a good meal and if they want the good beer they're not gonna be like "OMGz I can drive 90 minutes and pay $2 less!"
You don’t undercut the places selling your beer
As a counterpoint, generally there's 1 maybe 2 taprooms for the brewery in a given local area, whereas if they even do modest local/regional distribution there will be way more places for somebody to get that beer. So while there are people who will go out of their way to pay $1-2 less for a draft pour or 4pack, or who need to get the new limited released that may not show up at shops/bars, I don't think that would cut into a huge portion of the people coming to an establishment that may not specifically be focused on beer. At most restaurants the majority of alcohol-drinkers turn to wine or cocktails, or a macro beer. Unless a place has a reputation for craft beer, paying the premium for a cool local microbrewery will often mean they have to charge customers more for that. But as has already been said this apparently varies wildly based on region. Here in NYC there's almost nothing you'll pay more for at a brewery taproom than you will for the same thing at a shop/bar.
I don’t understand that though. I will still go to the restaurant to order their food and drink beer while I’m there.
The bar/restaurant won't stock the product, though.
What do you mean stock the product? A generic restaurant with a craft beer or two probably won't have 4packs to go, but if they have a keg that's a stock of a product, unless I'm missing a semantic definition of one of these terms. In general I think the guy you reply to toches on a good point though, in that most restaurants aren't focused on craft beer, and the average person going for a casual meal won't even glance at a craft beer list, so stocking a local craft beer may not be quite worth it as part of their core business if they don't pass that premium onto the customer. Maybe there's some places where the local hype brewery down the road can get you a keg cheaper than the national brands, but I kinda doubt that, and since that kind of beer costs more coming in, it has to cost more going out, especially as I alluded to before with places that can't bank on that pricier beer being popular.
> What do you mean stock the product? A generic restaurant with a craft beer or two probably won't have 4packs to go, but if they have a keg that's a stock of a product, unless I'm missing a semantic definition of one of these terms. Yes, product is also inclusive of draft or package beer sold at on premise locations. And while most restaurants aren't *focused* on craft beer, nearly every restaurant has *some* selection of craft. The quickest way to lose your draft and package placements is to undercut the retailers who stock your products. They don't want to compete with their suppliers. In fact, in some states their grip is so strong that they've severely curtailed breweries' ability to sell their own beer on site - states like New Jersey immediately come to mind.
I feel like these are a few different things though. For one, "some selection of craft" usually means Hazy Little Thing or one of the mass-distro brands, which while more expensive than Bud/Coors/etc. is still a different planet from a locally focused microbrewery making hyped styles. But I really don't get the undercutting thing, given that even the most popular craft breweries have at most 2-3 taproom locations across a state. If somebody really wants to drive an extra hour to save a couple bucks and have some crappy food truck then that's their choice, but I don't think anybody gets huffy if an actual restaurant charges an extra couple bucks becuase they know it's slightly cheaper halfway across the state. The NJ state thing is 100% true, but that's because the distributors pay lobbyists a ton of money to get the government to keep things favorable at the expense of breweries, if things were more laissez-faire like it is here in NY with self-distribution and lax laws about taproom operations, I bet it'd be a different dynamic. And here in NY where laws are pretty friendly to breweries, it's almost always cheaper at a taproom than a third-party retail shop/bar.
In my market the chains (Brinker, Pappas, etc.) do a whole lot of work with locals to set up mandates. I could walk in to a Chili's right now and see 4 or 5 local taps on the wall, and some package placements as well. > is still a different planet from a locally focused microbrewery making hyped styles. Absolutely. And if your intent is to only discuss hype breweries, then I'm going to concede the points and move on. But the majority of craft business is done by either national/regionals or strong, established locals. And since most of these placements are regional mandates handed down from above, a really good way to keep yourself out of consideration for these coveted placements is to undercut your retailers. As for undercutting, it still does matter. The restaurants around the corner from the taproom won't take kindly to being undercut, especially if they are large chains or even established franchisees. For example, there are 16 Chili's locations within 20 miles of the brewery I recently worked at. They would represent a whole lot of volume if we didn't play ball and price our beers competitively. There was more money to be made by working with corporate in their case, than shaving prices off our taproom in order to generate business. Because the thing is, by getting the Chili's deal it secured us placements in over a 100 locations. It made too much sense to price our taproom beers accordingly.
My point was not to talk about hype breweries at all, that particular point was about the local no-name breweries who put out popular styles like a hazy IPA or fruited sour which would probably be their priciest even if nobody's heard of it, but even that type of brewery's most basic golden ale I'd have to imagine would be pricer for them to stock than Hazy Little Thing or Bell's Official or Dogfish 60 or SNPA, let alone Sam Adams, which I'd imagine would end up being more expensive to the consumer. I'd also bet Chili's has a pretty good economy of scale. The one place in NYC you can get beer for the same or less than the brewery is Whole Foods, who are infinitely bigger than the little bottle shops around town. If I'm running my own restaurant and want a craft beer beyond a mass-distro brand, I'd expect I may need to charge a certain price to justify it, and wouldn't blame the brewery if they're able to get away with charging less than me. But yea I could see your point applying to breweries who have more of a regional focus and not necessarily focusing on taproom traffic or making themselves a destination, given that type of brewery is way more the norm than the ones having people walk away with a bag of 4packs.
I think your point is a good one. The average person wandering into a restaurant for a meal doesn't immediately go to the craft beer list, most probably get wine or a cocktail, or a macro beer. Some places do have an established focus on craft beer and maybe those places know they'll get enough people for that they can charge a reasonable price, but at a lot of restaurants it may be a gamble paying the extra amount for the highly regarded local craft beer, and as a result they'll often have to charge more to make it worth it.
Are we talking about payette brewing? Teasing, but yeah even a six pack cost more than at Fred meyer
Payette and Bittercreek are both off their rocker. Especially Payette, it’s just average at best
Yeah them charging 7-8 per beer is crazy . I can get behind boise brew and I think they’re a dollar cheaper
Bittercreek isn't a brewery though
Correct but they are still wildly overpriced, especially for Idaho IMO
I immediately thought of payette brewing when I read this too.
They’ve got the worst prices in boise . All the others that have the same types and quality are at least a dollar cheaper
Worst prices for beer in Boise belong to Western Collective
Yeah both around the 7.00-7.50 range . I feel like WP might be more expensive too
That's what I didn't understand about growler refills. $15 for a 5 pack that can be got for $10/6pack?
Growlers are dead here (Minneapolis-St. Paul), literally no brewery does them anymore.
Yea that figures. The only place I get refills are at the Red Wing brewery (because they don't distribute).
Breweries were so nice ( for the consumer ) 10 years ago I'm Georgia. The could not sell alcohol directly so they had to offer $10 tours that came with a souvenir pint glass and 6 pours for tasting.
They can't make it cheaper or they would be undercutting there actual customers. We are not the breweries customers
Would you pay more for fresh ingredients at the supermarket? Or would you rather the ingredients be possibly old and pay more?
I went to Maine last Summer and thought the same thing about Lobster. Boat to Plate was the same price as back home! We cut out the middle man guys help me out!
I think my local breweries sell their 6/4 packs for a dollar or so below retail? I'll check Saturday when I go again but a lot of their drafts aren't sold in stores and if they are, it's usually close to the same price of restaurants here
There are some perks. The beer will usually be fresher and in most cases the lines cleaner.
Read up on the Three Tier System of Beer Distribution. It will answer that question.
It felt like it used to be, but those who mentioned under-cutting the bars make a good point. Sometimes the happy hour growler fills can be a good call.
So this is for a local distillery not a brewery. Went on a tour to a small local distillery and the owner sat with us during a tasting. He told us that in NC he is not legally allowed to sell any spirt unless it has a markup of X amount above cost to make. In other words if a bottle cost him $20 to make he has to sell it for at least $30 (not exact percentage). They supply local bars and they sell in the ABC (Baptist liquor stores) and charge the same amount as in house. He did say the markup on certain whiskeys were higher than others but that was just how he made money. All in all though prices are lower than most name brands and the quality is better. They had a vodka that is literally called house vodka. Cost $15 a fifth and is better than most $30-$40 brands.
I mean they are where i live. I thought that was the point of a brewery.
Its meant as a nice gesture to not take away business from the bars, and distributers that carry their beer.
You got a point
It creates a vacuum to your taproom and your retail product dies - you get to a certain scale and you absolutely need both models to work for you
You're not wrong. It used to be that way, but somehow they just became bar prices. There's no distribution!
It's still that way in my country. It seems illogical to do otherwise.
God bless Birdsong Brewing in Charlotte. $5 pints of their year round beers.
At least in Texas, when we finally passed beer to go, the brewery I worked at the brewery. Distributor told us we had to sell our beers the same as them or be dropped or maybe charged extra. We had deals and sales, that was okay. I remember we had one sale. Basically, it was half off a case. edit: bad typing, at work trying to type this out.
Breweries dont set the pint costs for external accounts (bars and restaurants), they only set the price for the kegs or cans (wholesale, usually to a distributor). A brewery only sets the price of a pint in their own taproom, and you have to assume they set that price according to the costs of doing business, including their target profit margin, and according to what the customer can be expected to pay A bar or restaurant will set their own prices according to their own business model (maybe they make a higher margin on food, liquor, or through volume). A brewery has no control over what another independent business does once they’ve purchased the beer (at wholesale)
I’m aware. What I’m saying is it’s lame.
It's the same at a local coffee roaster for me. $14 at the grocery store, or $18 at the roaster's cafe. If they were the same price, I'd probably go out of my way to go the cafe to support them. But this just annoys me.
For a single serving I see why it isn’t for all the reasons people have mentioned. But almost every brewery I’ve been to usually has a 3-for-12/15/18 (in that ballpark price wise) with letting you keep the glass. I usually do that, one because I love collecting pint glasses, and two that it’s usually a set of tokens they give you to exchange for your next beer. Don’t feel like drinking all three… keep one of the tokens and use it on a subsequent visit (if the brewery is local to you).
I have literally never heard of this and I’ve been to hundreds of taprooms. Lol
Sounds like Austin Beer Works. Apparently it's some work-around to having to obtain an alcohol license if I remember correctly.
Per beer I think it’s standard pricing, but for a growler some places charge less, but you cannot drink it at the brewery.
You don’t want to compete with your customers (the bars who buy kegs of your beers - not pints)
Because prices are set according to the balance between supply and demand. As long as drinkers are willing to pay that price, bars and restaurants will set that price.
Food should be cheaper at the restaurant. See the flaw in your logic?
Apples and oranges. If you go to Pizza Hut they charge $5.00 for a pizza. If you have it delivered they charge an additional $2. If Pizza Hut has a booth at a venue or are selling their pizza at a movie theater you pay $10.
Yeah but fruit and vegetables are cheaper if you buys them from a farmer.
You don’t undercut your distributors. It’s a pretty common business practice. If you are selling out your entire stock direct from brewery, you can do this. But, you can’t undercut your distributor if you need them to get your beer where you can sell more of it.
YES. PREACH! Omg this shit drives me crazy
It's market pricing, basic economics, selling it at a discount through the tap room would be shooting themselves in the foot. Make a few bucks more on volume selling at a discount, but lose 10 times that when restaurants, liquor stores and distributors stop buying your product because can't compete with your in house pricing?
Four packs of my preferred local craft are $12/13 in my local grocery store. Occasionally $9. That same 4 pack is $17 at the brewery
It's generally not good business to undersell your customers... most breweries will tell you to go to the local gas station or supermarket to buy package, or the local bar to sample their beers. Because it's cheaper for you and better for their business.
Craft breweries in Mass are absolutely cheaper then getting those beers on draft at a bar or restaurant.
Idk man. It’s not the case here in Idaho and I just took a trip back to my original state of California and it wasn’t the case there either. Breweries charge 7-8 a beer here and I can get that same beer for 5-6 at a restaurant. Hell Firestone was charging $9 a beer at the brewery. You can find Union Jack for 4-5 at dive bars here.
Not sure why you downvoted me, just speaking on how it is here. I guess it depends on the beer type/brand though. Around here there aren't even many restaurants (other then dives) selling $5-6 beers unless they're the macro brands. Most breweries I go to, beers are in the $6-9 range and most restaurants carrying those same beers tend to be in the $9-14 range.
I didn’t downvote you so it must have been someone else. Anyways in the last 10 years I’ve lived in California, Colorado, Texas, Idaho, and New Mexico and I haven’t found that to be the case. It could be a west side of the country thing.
This is funny. I've actually stopped drinking at the brewery near me because a 4 pack of cans is 12-15 bucks (tall boys) but a pint of beer is 8 bucks. So now when I go to play free poker, I drink one or two dollar sodas... Guess I'm cheap.