Is Beer Getting Too Expensive?

There have been an interesting series of debates and discussions on social media recently involving the price of beer, especially in the Boston area. Some of this debate surrounded specific beers (like the Beer Camp 12 pack that is selling for ~$30), while other threads covered prices in bars or comparisons of local beers to national or international staples. I think it is an interesting debate, is beer getting too expensive and is there a limit to what people will pay? Are we going to eventually see price wars with some national brands undercutting others to attract customers?

I chimed in that I don’t really pay much attention to the price of the beers I buy, I just grab whatever looks good. I realize in retrospect that this sounds a little elitist/snobby on my part, but I have a good explanation. First, I don’t actually buy that much beer. I try to only drink on weekends, and even then typically I have 2-4 beers in a night. I usually start with a beer or two to review for the blog and then go back to my house beers or homebrews. Now that I’m a parent I rarely go to bars, and buying beer at a bottle shop is much less expensive. Secondly, beer (and writing this blog) is my hobby, so I use a portion of my discretionary income to fund it. I have friends who have much more expensive hobbies, one collects and restores antique lamps and his wife had to give him a $300/month maximum budget because he was spending so much on ebay and at antique shops. I spend much, much less than that on beer. So while I understand that many beer drinkers are on a budget (I was a poor graduate student for far too many years), right now I can afford the occasional $25 bomber or $10 tallboy and don’t mind paying that price to try something great. With that out of the way, onto the question at hand.

Devil's Purse SkywaveIs beer getting too expensive? Here is the biggest cop-out answer of all time: in some cases yes, in others no. It is expensive for small brewers to make their product, ingredients are a small cost compared to equipment, personnel, utilities, space, packaging, distribution, legal and permit stuff, and a bunch of other things I am forgetting. These costs are defrayed with scale, but most of the 4000+ breweries now operating in the US need to charge more to make a profit. A wise man once told me that something is worth what someone is willing to pay for it, and in the case of beer the price doesn’t seem to be slowing sales. There are many crazy-expensive beers that fly off shelves. It is all about quality. When you go to a higher end restaurant and order an artisanal flatbread you expect that it’s going to be more expensive than take-out at Dominos, but if the higher priced pizza doesn’t taste substantially better you probably aren’t going back to the restaurant. The same is true with beer, you need a consistently high quality product to justify the price.

How much is too much? Again, it depends on the beer. I’ve seen some complaints about $20 bombers, but many of these beers are barrel aged, a process that requires a significant investment of time and space. Even at the highest end (outside of a couple of extreme outliers), beer prices are nowhere close to the sticker shock you can get buying wine. The average $20 bottle of wine is considered middle of the road or worse by wine snobs, and beer has nothing that compares to the truly high end bottles in a wine shop. So while you beer tasting habit can get a little expensive it is nothing compared to starting a high end wine cellar.

Will there be a price war? I think it’s already started. The next time you are in a bottle shop check the difference in price between Goose Island IPA and comparable nationally distributed beers. I think the price war is a major part of InBev’s acquisition strategy, they can put their production and distribution might behind these brands and try to undercut the larger independent and semi-independent brewers. It will be interesting to see how this strategy works

Treehouse JuliusWill this effect small brewers? Probably not. I’ve endured the mob scenes at Treehouse and similar breweries and I don’t think I’ve ever heard someone ask how much the beer costs until they’ve already commited to buy it. on the other hand, I have frequently overheard people inquire about the maximum amount they’re allowed to buy. The people who buy beer from small breweries have proven time and again that they are willing to pay a premium price for a quality product, and I don’t see that changing anytime soon.

So I throw it back to my readers, is beer getting too expensive? How much are you willing to pay for a quality beer? How much does price effect which beers you buy

 

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One thought on “Is Beer Getting Too Expensive?

  1. mrhopsbeertalk

    Lots of great points. I think the one that sticks out most is that some beer is worth more… and some isn’t. In many cases, small craft breweries are taking advantage of customers by implying they have Tree House quality offerings. Flying Dreams is a perfect example. Their bombers are nearly twice the price of Single Cut who’s beer comletely kicks their respective aroma and flavor behinds. My two cents…

    Reply

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