A few beer related thoughts to help you shake free of any turkey-infused haze remaining after a long weekend:
– The Milwaukee Journal Sentinel examines if a surprising surge in sales of Coors Banquet means full-calorie, mainstream, premium-priced beers can end their 21st century slide (Budweiser sales, for instance, fell 21% from 2002 to 2006).
There’s also the chance that Coors’ modest gains aren’t a barometer of anything. “I guess it shows you that a brand can get so small that it can finally find its base,” said Eric Shepherd, editor of Beer Marketer’s Insights.
– As the story about the effects of higher prices for beer ingredients continues to gain momentum (here and here) the Cascade hop has turned out to be a poster child for the sudden change.
As recently as July the industry was still working through years of oversupply and you could buy a pound of Cascade for $3. Now we’re hearing about prices 1000% higher. That’s the spot market and not what the average brewer will pay in 2008, but it make you realize . . .
Once again, Stone Brewing is a step ahead. The brewer of Arrogant Bastard Ale and other hop-infused beers has been Cascade free since opening in 1996. OK, that doesn’t mean its hops cost any less, but it makes a good story.
– Bill Brand begins a story about “extreme beers” with a discussion of price, in this case asking ” Would you pay $30 for a bottle of beer?”
John Alderete is betting that some of us will. Having persuaded a group of investors to back him, he is now fermenting an experimental trio of beers in wine barrels at Devil’s Canyon Brewing in Belmont, pending licensing for his own Mayfield Brewing Co. in Palo Alto.
Mr. Alderete may make terrific beer, and $30 for a 750ml bottle might turn out to be a great price, but one reason that high prices for a few special releases seem reasonable is that the breweries selling them have established a history of excellence.
If we start paying $30 for beer just because of the price tag looks impressive then Alan has a right to complain.
[I protect my right to complain with vigor! Doesn’t mean I am usually right…]
But I am really posting about the other aspect of your post. Why would Stone shift away from Cascade before the price hike? I likely never told you but before my current gig in the black gown, I was a wholesale florist and trained in Holland. I used to be able to tell 50 red rose varieties from each other but it was only of short term use as they were mainly hybrids that would not hold their characteristics from generation to generation. Are hops like that, needing constant horticultural renewal?
And, just to be clear, when I can buy a 12 bottle case at Jolly Pumpkin’s store for around 6 bucks USD per 750 ml I need to know why John Alderete’s beers are five times better than Ron’s beautiful brews according to market forces. Even if JPs are under priced (a contention I would not argue with) are John Alderete’s, say, even twice as good? Or are John Alderete’s “investors” just twice as avaricious?
Alan, Stone has always been Cascade free. It’s one of many ways they’ve set themselves apart.
Ha! You know what happened there? I slipped a decade thinking 1996 was not that long ago. I am now off to take those cold medications and nap. I expect I will be 44 and not 34 when I wake up!
Interesting that the Journal Sentinel article says nothing about discounting and so we are left with no idea as to the degree that price may or may not have affected the Coors sales surge. You’ll recall, of course, another brand that rode a retro image to sales growth — PBR. Then we learned that the brand’s popularity had more to do with $2 tall boy nights and convenience store specials than it did image or taste. Wonder if that’s the same for Coors?
Alan,
The costs are higher for a craft brewer.
Labor: Small systems are usually worked by hand. There is a correlation in number of people per barrel before an automation package goes in. That cost cannot go down too far. The more artisan you are, the higher your cost is. (Filling oak or bourbon barrels takes time)
Raw Materials: Specialty malts, bigger beers, extra hops (dry hopping especially), add on a certain percentage compared to big brewers because there is a “premium” when you’re not buying a truckload per brew.
Packaging: Also at the small quantity premium, it’s how the glass companies make their percentage profit every year. If you want to try and differentiate yourself you need a proprietary bottle, even more money.
Growth: 10-15% growth a year is expensive, especially with the price of stainless up.
Personally I find the prospect of starting a craft brewery to be insane considering the small margins you get to be competitive in a retail market.
Thanks SB but you entirely missed the point. Jolly Pumpkin is a tiny craft brewer of the most esoteric sort. Look here: http://beerblog.genx40.com/archives/2007/november/photosfrommy
Why can they do what they do with only 4 years under their belt? Why is their beer 20% of what the other now proposes. Why is their beer in line with other brewers who are not taking on the “artist” branding?
Alan,
Sorry. Been busy at other stuff and meant to comment at your first JP post.
$6 is not the “real” price most pay, only what you pay by driving to the brewery. Those bottle are $8-$9 in the marketplace. A small difference in dollars but 33%-50%.
More important, JP cannot be used for comparison purposes unless you provide a second similar example. It is an anomaly. Every time any of us buys a JP beer and it is dialed in we should then mail a check for several dollars to Ron Jefferies.
That said, you can’t always put “Jolly Pumpkin bottles” and “consistent” in the same sentence. When the brewery is small and its fan base is small and knowledgeable then forgiveness comes more easily.
Swordboarder’s points are totally relevant to every quality beer we drink, and why most should cost at least a little more.
I’m not talking about the $30 stuff but the $7.99 six-packs that should have been $8.99 before ingredient prices went up.
It starts with the beer. “Wow, this should cost more.” Not with the price tag. “Wow, this cost $30, it must be good.”
Quick question: Why does there seem to be a debate going on here about the price, and therefore value, of a beer that hasn’t even been released yet?
Good point. Time to move on to who to drink with and what to drink. No more posts about prices the rest of the week ;>)
I do not agree, Stan. I am part of the team that buys an entire gambit of things in my job from pencils to roads. If someone plays the Jolly Pumkin role and undercuts while providing top quality, the rest get asked why their price is different. And yes, Jolly Pumpkin is $7.99 at Bello Vino in Ann Arbor but the question still remains and that question is “is this worth the price asked compared to similar products.” Every vendor would love to remove the comparison but no buyer is well served by skipping that step in analysis.
An article in the Oregonian over the weekend (front page, evidence of how seriously we take hops and beer) pointed out that it’s not just Cascade. In fact, while they’re going for $12.35 a pound, Liberty are at $10 and Columbus are going for $20 a pound. And therein lies a hidden truth: the real squeeze is on high-alpha hops, which industrial brewers use to bitter–but not flavor–their tin-can brew. Cascades are a niche hop that only microbreweries use. (Of course, since that’s all many of us drink, and since Cascade hops are ubiquitous, at least on the West Coast, these facts may be of cold comfort.)
Also in the article: BridgePort uses 55 tons of hops a year (!). Holy crap, that’s a whole lotta bitter.
Jeff – One of the “here” links is to the Oregonian story. Quite obviously, just as we should be paying (a little) more for beer we probably should be paying the farmers who grow the ingredients more. And we will.
But I’m not writing about price related things this week (see the 10th comment). Maybe next week.
So, Alan, I’ll address your point next week.
You’ve gone back to my point. Due to the high labor cost of Jolly Pumpkin to be an artisan beer they must charge a higher price. When someone else comes along and can make the same product for less, they will be in trouble.
But nobody is willing to make said product, then they can charge whatever price demand will give them. Ultimately the demand is high enough for even more than that. Firestone 10 was sold in Vegas for $150 per bottle.
That is fine Stan. I will think about what you have written some more. But when you do write can you confirm with Swordboarder that Jolly Pumpkin is a 6 to 9 dollar beer for 750 ml despite its excellence and not another thirty dollar one?
Definitely. Great beers, and in part because some of the barrels come from a very good home – they are retired from the Firestone Walker Union.
It starts with the beer. “Wow, this should cost more.” Not with the price tag. “Wow, this cost $30, it must be good.”
Well-put, Stan. But…we’re not supposed to be talking about prices. Sorry.
That’s OK, Lew. It would also have been alright to point to your Porfolio article on the subject. The conversation obviously is going on lots of place, including today in the Wall Street Journal.
And any moratorium ends tomorrow, since I’ll have to mention the price of Firestone 11 when I write about the drinking experience.