Author Topic: Why craft beer costs so much  (Read 813 times)

Offline Stevie

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Why craft beer costs so much
« on: September 14, 2014, 06:10:24 PM »
I'm sure most of us have a fairly good idea why our favorite 6 pack is $10+, but here is a graphic showing the breakdown.

Originally from huffington post. http://m.huffpost.com/us/entry/5670015

Their prices in the article must be in a major city like New York or San Francisco. $8-10 is what I perceive as the average for a six or four pack here.

« Last Edit: September 14, 2014, 06:15:15 PM by Steve in TX »

Offline denny

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Re: Why craft beer costs so much
« Reply #1 on: September 14, 2014, 06:36:15 PM »
No sales tax in OR!
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Offline Stevie

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Re: Why craft beer costs so much
« Reply #2 on: September 14, 2014, 09:04:38 PM »

No sales tax in OR!

Yeah, I don't think sales tax should be included in the chart personally. If the price on the self included tax, sure; but seeing how we in the US don't include tax in the price, it should be omitted.

I knew packaging was a very large swath of the materials costs, but 50%+ was a bit of a shock to me. I guess that's why all the trendy session ipa's are $8-10 per six pack.

Offline a10t2

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Re: Why craft beer costs so much
« Reply #3 on: September 14, 2014, 09:27:49 PM »
I knew packaging was a very large swath of the materials costs, but 50%+ was a bit of a shock to me.

Purchased in bulk, blank 12 fl oz cans run about $0.12 apiece. With all the other materials, it's hard to get under $5 per case. Bottles are a little more. And that's before shipping and breakage - nothing else used in the process has to be shipped, intact, twice.

31% is a pretty stiff retailer margin. 28% is standard in the places I've worked. Not that that's a huge sample size.

Excise taxes also vary widely. Here in CO it doesn't even round to 1%, but there are states that are at 10x our rate.
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Offline Thirsty_Monk

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Why craft beer costs so much
« Reply #4 on: September 15, 2014, 12:18:39 AM »
I agree that retail margin is much less but distributor margin is bigger.

From brewer perspective. It is low margin business if you do good old business model as a packaging brewery with distributor.

If you want to survive and prosper as a small brewer you need to increase your margin without increasing price of final product.
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Offline hopfenundmalz

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Re: Why craft beer costs so much
« Reply #5 on: September 15, 2014, 12:28:46 AM »
A few pros that I know say that they have more in the bottles, crowns, labels, and cardboard carrier than the standard production beer inside.
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Offline Thirsty_Monk

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Re: Why craft beer costs so much
« Reply #6 on: September 15, 2014, 12:42:26 AM »

A few pros that I know say that they have more in the bottles, crowns, labels, and cardboard carrier than the standard production beer inside.

that would be correct from volume buying perspective. You would buy bottles by truckload, crowns by pallets, six pack carriers by 10,000 pieces...  Inventory that you carry can easily come to 50k. There is additional cost of storing all the inventory.

Brewing is quite capital intensive business.
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