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Comparing the price of one beer to one wine

We all know that the best beers in the world cost less than the best wines. However you can buy a quality wine for less than a quality beer.

Why?

I didn’t really get an answer following a presentation by Dogfish Head founder Sam Calagione and wine maven Marnie Old at the Great American Beer Festival, but maybe you can connect the dots.

Beer vs. WineIn all fairness that wasn’t what they were there for during a presentation for GABF attendees on Thursday and the press on Friday. Calagione and Old certainly make a meal entertaining — combining humor, he vs. she, and beer vs. wine — and I’m sure their upcoming book, He Said Beer, She Said Wine, will be a delight.

When they were done I put this question to Old: Why can I buy a bottle of Charles Shaw wine (also known at Two Buck Chuck) at Trader Joe’s for $2.99 and a six-pack of Mission Street Pale Ale costs $5.99?

(I had hoped to have the speakers taste the two blind — maybe straight from brown paper bags — and comment, but this wasn’t the time or place.)

Old would argue about the quality of Two Buck Chuck, but the 2004 Chardonnay won double gold in the California State Fair. Firestone Walker crafts Mission Street. It is the “base” beer for the award-winning Firestone Pale Ale, the difference being that it doesn’t contain a portion (the Firestone Pale Ale has about 3%) of beer that ferments in wood barrels.

“Quantity and quality don’t go together,” Old said, making it clear what she thinks of Two Buck Chuck, which one wine writer at the press luncheon referred to as “a box wine in a 750ml bottle.”

Old is not anti-beer. She talked openly about wine’s image (“snobbishness”) problem. “It’s obvious to me wine and beer are more alike than they are different,” she said, contrasting them as fermented beverages to distilled spirits. Saturday the Brewers Association gave her one of its Beer Journalism awards for “Beer Takes the High Road” published in Sante magazine.

But my question seemed to leave her a little defensive, perhaps because she clearly does not want Two Buck Chuck carrying the banner for “fine wine.”

She repeated a point she made during her talk that the quality of less expensive wine has been improving for 50 years, and the quality of beer (less expensive than most wines to begin with) has been improving for more than 30. A way to compare the two is to consider the cost of a single serving.

In a restaurant that is as simple as looking at the menu. At home figure that a bottle of wine yields six servings and a 12-ounce bottle of beer one. This doesn’t suit higher-alcohol, labor-intensive beers, but works just fine for our Trader Joe’s comparison.

Thus a serving of Two Chuck Buck Chardonnay costs 50 cents and one of Mission Street Pale Ale costs $1.

This would suggest that it is more expensive to reach some minimum standard of excellence in beer than it is wine.

And before you start blasting with both barrels I recognize all the “ifs” here. Does Two Buck Chuck really qualify as quality? How can Mission Street Pale Ale be on (or beyond) the verge of world class and also some sort of “new minimum?”

This is not intended to pit beer versus wine. To have winemakers argue that they can offer more of a “deal” or beermakers that drinking beer isn’t always choosing the “cheap” product.

I’m just noting that at Trader Joe’s a wine that’s always a deal and wins awards is $2.99, and a beer that’s always a deal and wins awards if $5.99.

An observation.

21 Responses to Comparing the price of one beer to one wine

  1. erik_flannestad October 17, 2007 at 11:56 am #

    Stan… I’m going to say that the availability of Two Buck Chuck at that price is simply based on the glut of grapes and wine available in California and the desire of the company to sell a low cost, low mark up wine. I would also disagree with your comparison to Firestone Walker beers. The Charles Shaw wines are industrial products created from tanker loads of grape and juice. According to wikipedia, and a number of other sources, Bronco Wine, (the producer of the Charles Shaw brand,) has the ability to produce 61 million gallons of wine annually and has a total annual sale of 20 million cases. Firestone Walker is self-defined as a mid-size brewery.

  2. Eric Trimmer October 17, 2007 at 12:04 pm #

    Very interesting questions, Stan.

    I can think of a few process-related reasons a basic, but quality beer might be more expensive to make than a basic, but quality wine.

    Beer needs to be heated. Wine doesn’t

    Beer (typically) requires more ingredients than wine.

    Beer (typically) is packaged in smaller containers than wine is, so by volume packaging costs would be higher.

    Also, is it possible that Charles Shaw wine at Trader Joe’s is a loss-leader?

  3. Stan Hieronymus October 17, 2007 at 12:34 pm #

    erik – I brought Firestone Walker into the comparison because Mission Street is one of the low priced beers that Trader Joe’s sells. Just like its olive oil, cheese, organic milk – quality products. Maybe not the quality of Whole Foods, tho sometimes the quality, and certainly for a lot less.

    And they can’t hit the quality level their customers expect without going to $5.99 for beer (usually; the Hopfest, made by Gordon Biersch, was $4.99).

    They can sell a wine (8 out of 100 bottles sold in California are Two Buck Chuck) that hits a minimum standard for people who also buy wine at Whole Foods.

    As to quantity, I wouldn’t argue against your point about industrial products. But Samuel Adams is closing in on 60 million gallons sold and you don’t see them at 50 cents a serving.

    But thanks for the industrial analogy. I’m still thinking about this and it adds to the conversatiion.

  4. Alan October 17, 2007 at 1:02 pm #

    In Canada it is simpler: the best beer (short of the weirdo-marketed stuff) is cheaper than all but the most basic wine. And who wants basic when you can get the same volume of good Belgian ale, say, for less?

  5. Stan Hieronymus October 17, 2007 at 1:34 pm #

    Alan – Agreed. Using Marnie Old’s formula, 6 servings from a bottle of wine, you are left comparing the price of a 6-pack to the price of a bottle wine.

    (Ive also seen the figured 5 used, which means you don’t even get a whole six pack for the price of the wine, but we’ll go with the easier math.)

    Let’s say the Mission Street were price at $7.49 or $7.99, like Sierra Nevada Pale Ale. Or even use Sierra Nevada Pale Ale. As much as I enjoy the sport of shopping for wine I don’t think it can compete in that range.

    To be fair to Marnie, she’s backing wines in the teens and above – and saying we should pay more for beer. Which we should. See what Stephen Beaumont posted today.

  6. Lew Bryson October 18, 2007 at 7:14 am #

    I’d agree with Erik somewhat: Two Buck Chuck is perhaps a temporary phenomenon of the grape glut. But like you, I find Marnie Old’s reluctance to embrace the wine interesting.

    And Beaumont’s absolutely right: don’t ask how much the beer is worth. Ask how much the experience is worth. If drinking an absolutely fabulous drink is not worth that much to you, don’t buy it. Buy something else. And don’t complain about the price being too high for you. It was just a price you weren’t willing to pay, for your reasons, which are just that.

  7. Lew Bryson October 18, 2007 at 7:15 am #

    Oh, and Stan: great question!

  8. Bob Kunz October 18, 2007 at 10:53 am #

    I love this topic. For me, I don’t think the cost of making the product has as much to do with the pricing, I think it’s more to do with how the market sees your product. Is it value-added or a commodity? Usually, beer is seen as a commodity, thus it is cheap, and wine is seen as a value added product, thus it can demand a higher price. It the case of this price comparison of two buck chuck and Mission Street Pale Ale, I think TJ’s is hurting the wine market by placing wine into a commodity sort format. Even with Mission being the more expensive of the two, it is an absolute bargain ($4.99 at my TJ’s in Cali) and still puts craft beer in the commodity section of the market. If your interested, I wrote a bit more on this on my blog http://www.thefermentingbarrel.blogspot.com

  9. Stan Hieronymus October 18, 2007 at 11:31 am #

    Thanks, Bob.

    The commodity/value-added piece of the puzzle is very important. In fact, I added a comment to your post about that.

    However . . .

    I don’t think the cost of making the product has as much to do with the pricing

    Brewers have long been able to charge more for stronger beers because it is obvious those beers contain more alcohol. It gets harder to charge more because of the time and labor involved, let alone the inspiration, although they are making progress there.

    Thank goodness.

  10. erik_flannestad October 18, 2007 at 12:43 pm #

    Sorry if I was a bit curt yesterday! It is a great question to consider.

    Interesting point about Sam Adams!

    Is it fair to assume we see large brewers charging what the market will bear for their products and making huge profits, (how else to explain $4+ Macros?) and small or craft brewers only being able to charge what the market will bear and barely scraping by?

  11. Stan Hieronymus October 18, 2007 at 8:38 pm #

    Erik – There’s a lot to think about there. Small brewers naturally have to operate with higher margins. Otherwise they couldn’t stay in business.

    Brock Wagner of Saint Arnold put it very well a few years ago when he noted that large and small brewers are really in two different business. One is low margins, high volume and more spent on stuff like marketing. The other is better margins, less volume and a higher percentage cost going to labor.

    It takes somebody smarter than me to figure out all the pricing variables there.

  12. Saint Vini October 19, 2007 at 1:41 pm #

    Some interesting thoughts here, but let me see if I can add a bit more info. $2 Chuck is not a loss leader. Fred Franzia (no longer affiliated with the wine-in-the-box brand of the same name) owns a completely vertically integrated company, from land->vineyards->grapes->wine->bottle manufacturing->and even a distribution company. He can keep making this stuff profitably from his own vineyards, irrespective of the oversupply (which is nearly behind us).

    Wine is generally more expensive for a number of reasons: greater agricultural cost per acre (a single vintage with extensive manual labor), pricy production assets are used for a single “batch” per year, use of barrels costing between $2-3 equiv. per bottle, etc.

    I think Stan has it right on margins….For smaller producers, the costs of distribution are the biggest addition to cost, and this is largely the same for small to medium beer producers. Producers sell to wholesalers for 50% of the final retail price! If the three-tier distribution system is eliminated in more states (California being the only major market without it), prices for both beer and wine can come down! That would be glorious……

    Vini

  13. Bill Farr October 19, 2007 at 2:18 pm #

    I’d take issue with the examples picked for a number of reasons:

    –Quality of Charles Shaw varies widely — it’s not made up that folks in California will buy a bottle, open it up in the parking lot to try it, then go back to buy a couple of cases if they like it. There is no guarantee you’re tasting something that tastes like an award winner. And often, it’s gawd-awful.

    –There aren’t that many _other_ wines selling at that price point, even at Trader Joe’s, so maybe $4.99 would have been a better benchmark — there’s a chance of getting non-jug wine at that price at most supermarkets outside of California.

    –There are non-macro-lagers available at 7.99 or 8.99 for a TWELVE-pack. High Falls has the JW Dundee line at that price point. Saranac hits that price point occasionally. Berghoff does occasionally.

    –Macro adjunct lagers win awards, too, and I’m not sure why they’re excluded from the conversation. You noted that the speaker didn’t want Charles Shaw carrying the banner for fine wine — do you have any problems with adjunct lagers speaking for “one serving of beer”? They’re alike in a very important way, because…

    –…Bronco Wine is one of the largest wineries in the country, and the making of Charles Shaw is likely much closer to the making of “beer in vats the size of Rhode Island” than it is to small batch brewing.

    It’s an interesting question you raise, but really, Charles Shaw is at the price it is because it’s Bronco’s equivalent of Pabst’s brands selling at $3-a-sixer, $11-a-30-can-suitcase — they can make money on it and keep that money from being spent on other brands. Bronco _also_ sells wines at higher price points, though they heed Fred Franzia’s dictates of always selling reasonably — they might have a few at $15, but almost all are under $10. Take Two Buck Chuck (a wine available at one retail chain) out of the equation, and price per serving at the low end of wine and beer becomes a lot closer, even if excluding adjunct lagers.

  14. Stan Hieronymus October 19, 2007 at 7:01 pm #

    Saint Vini and Bill,

    Thanks for all the information. Vini, I think the agricultural/land part is significant.

    Bill. You really get to the point. Does Charles Shaw reach the acceptable minimum? I don’t think the JW Dunee line does. In fact the closest I can think of other than Mission Street at this crazy price is the reformulated (all-grain) Michelob.

    Even though Charles Shaw wines made be made in large vats do they include any ingredient comparable to the adjuncts in mass-produced lagers?

    And to the variability of Charles Shaw, first that’s a funny story. The 2004 (the vintage that won) was briefly at our TJ’s. I bought a bottle and thought, “Wow, I don’t remember it being this good.” The 2006 wasn’t.

    It’s fun how much conversation this has generated – I’ve learned a fair amount – but I must admit my premise might have been flawed. The whole Bronco thing doesn’t have a perfect beer counterpart.

    I probably like my original idea to have Sam and Marnie taste the wine and beer blind and comment. That might have been fun.

  15. Bill Farr October 21, 2007 at 7:20 am #

    “Even though Charles Shaw wines made be made in large vats do they include any ingredient comparable to the adjuncts in mass-produced lagers?”

    I understand the wine-making equivalents to be the quality level of the grapes used in terms of sugar content, acidity, harvesting methods end therefore condition); use of oak chips rather than oak barrels; the use of maximum amounts of grapes other than the one named on the label needed for it to still be called “cabernet Sauvignon,” “Chardonnay,” etc.

    As to whether JWDundee meets the accepted minimum… blind tasting! You’ll no doubt conclude the Honey Brown is… pretty awful. But the Pale Ale, Pale Bock, Porter, IPA — they hold up well. The Pale Ale and IPA always make me question why I often pay a few bucks more for Goose Island’s versions (but then I remember Lew Bryson’s frequent exhorting to “drink local”).

  16. Stan Hieronymus October 21, 2007 at 11:48 am #

    Bill, I don’t want to be argumentative but I think that six-row barley and adjuncts are ingredients, while much of what you talk about in wine is process. That’s one of the battles in wine – how important (and how expensive) the land is.

    You pick a bad example, for me, if we are talking about Goose Island IPA vs. High Falls’ version. Goose is one of my favorites, quite distinctive and certainly well above whatever minimum standards.

    That said, I drink Goose when I am in the Midwest and otherwise very rarely, such as when friends bring some directly from Illinois. I drink local IPAs.

  17. Bill Farr October 22, 2007 at 7:21 am #

    You’re not being argumentative at all. I’m just trying to be somewhat helpful on the winemaking side. It’s important to understand that all Cabernet (or Chardonnay or Merlot or…) grapes aren’t the same — they differ dramatically in quality as measured in sweetness, acidity, moisture content, various flavor components. This is why grapes vary widely in cost, and why acreage in Napa costs more than acreage in the Central Valley. It’s why occasionally top wineries don’t put out their top wines every year, and why the amounts they do put out change from years to year. And, since a wine labelled Chardonnay (or Pinot Noir or…) doesn’t have to be 100% Chardonnay (or…), the other grapes in a bottle matter as well. So I’d say two of my three bits had to do with ingredients more than process. It might be simplistic to say that good grapes = really fine malt and poor grapes = adjuncts, but there’s truth there.

    And anybody who says good things about Goose Island is fine in my book! But I do think most folks will be happily surprised by the Dundee products. I don’t like the Honey Brown or the Amber Lager, but my reaction to the rest have ranged to “wow, this is really good” to being floored. So if GI is well above minimum standards for you, you might find Dundee to be fine as well.

  18. Stan Hieronymus October 22, 2007 at 10:13 am #

    I like the idea of comparing ingredients to ingredients and processes to processes – but that’s me. That doesn’t change the validity of what you cite. As brewers continue to widen the range of what is offered then there are a lot of important analogies – barrels vs. wood chips, artificially altering acidity, hop oils (in beer, not wine).

    As to GI and Dundee, some of this is simple preference. I guess I shift into a different mode when tasting blind, a state of “evaluating.” I’m perfectly comfortable to returning to buying and drinking a beer even though I know I evaluated another beer as better quality – and its cheaper.

    Sure, it validates my opinion when Jeff Evans of Beers of the World raves about Goose Island IPA, but that’s not why I drink it. On the other hand, if I lived in Rochester . . .

  19. Bob Mack November 8, 2007 at 2:21 pm #

    Great discussion!

    For one, I would certainly argue that mass produced beers have become a commodity. But I would also argue that craft beers, in general, are not really a commodity at all because they do retain pricing flexibility that the macros have long ago lost. Unfortunately, that flexibility is really going to be tested in 2008 with rising grain and hop prices putting brewers in a tough spot. Prices are certain to rise, perhaps dramatically.

    As to the price comparison with wine, Two Buck Chuck is not a bad example, but it is a pricing “outlier” and does not really represent wine as a category, I think. Beer prices are lower, in general, than wine prices despite that specific example.

    I would argue that while I do not view craft beer as a commodity but they are drawn lower in price than they might otherwise be due to the generally lower perception of beer (versus wine) in the marketplace. (While that might sound like a description of a commodity, I think craft beer still retains flexibility in pricing that keeps it from actually being a commodity.)

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