Price of Craft Beer – Are craft beer drinkers being taken advantage of?

Something has been troubling me for a while now. It is undoubtedly a great time in the Irish Craft Beer scene, many new entrants, and more to come. Obviously there are a lot of passionate people out there making great beers, but there is something that has been gnawing at me for a while. The price of the actual beer in the pubs we frequent. 

In these austere times people are looking for value, and craft beer has benefited from this change in consumer trends, where people will happily buy an artisan product for a little bit more for an undoubted step up in flavour from a macro beer. There is also an element of the green flag in supporting the Irish producers. However there seem to be more and more examples of pricing that can only be described as eye watering.

While it is a positive to see on the one hand publicans traditionally in neck deep with the Heineageo duopoly taking on Irish Craft Beer, and international craft beer. It is going to be more damaging in the long term in my opinion if a large premium above a macro beer on a craft beer. It seems to be a token effort.

Galway Hooker is a fine beer – but, €6.70 for a bottle? Granted a 500ml bottle but even so. 

Now in an ideal world we’d all be holding hands singing kumbaya, drinking loads of craft beer, but that is a bit much considering a pint of heineken in the same establishment is a good euro less. 

But let’s face it brewers don’t start brewing just for the hell of it. They are setting up a business where their aim is to make money. They sell their beer at a set price to the publican direct or through a distributor. They hold no control over the price it is sold at in the off license or pub. Who also need a margin to make their profit and cover their costs. That is how capitalism works.

However, in this fledgling industry, the common joe soap is not going to be swayed by a story of two people who gave up careers in x and y to brew beer. Oh btw its an extra €1.50 a go. The story alone is not enough to justify to these consumers to take the plunge and buy a proper Irish beer. The problem itself isn’t unique to Ireland, or even consumers here’s a tweet I came across the other day.

The facts remain, less than 3% of the Irish beverage market is craft beer, it is growing at a great rate, but the long term viability on the industry is contingent on more craft beer being sold, and it would be naive of any new entrants to solely aim at this 3% there is 97% of the market to aim at. Higher prices will not grow this industry. It could however potentially harm it.

Yes I know American craft brewers have a much lower cost per unit than the cost per unit than in an Irish set up. The Excise rebate helps with that – and I doubt there are a huge amount of brewers charging publicans a large amount more on a keg than macro producers. 

There is one example i’ve been made aware of recently that highlights this. The brewer in question distributes through a distributor, they have a nationwide set price per unit. Every pub gets the same cost per case. The variance on the price of a bottle was from €4.70 to €8.50. I can imagine the feelings of this brewer when they heard that top end price – who is going to pay that? I also understand publicans in major urban centres have large over heads but when this particular beer was also available on draft for between €5.40 – €5.70 a pint within 10 minutes of the €8.50 price in the same large urban area – as a consumer you have to ask, is that value for money? I would argue that price for a pint versus 8 quid for a bottle is supremely better value for money. Maybe Mary Harney had a point when she said “to shop around”

To quote Sarah Roarty 

“It’s really important to keep beer in the hands of the people, not to gentrify it and make it so expensive that only high earners can afford the exclusive beverage” 

I think that sums it all up for me. 

I’d be interested to hear / read your thoughts, you can contact me on the twitter, or by email or comment below.

Advertisements

6 Comments Add yours

  1. Ian Bergin says:

    The brewers aren't the problem, the 'craft beer bars' are. There's a certain cynicalness in the approach, the set-ups, the 2/3 pint glasses & it smacks of those snobby wine bars that popped up in the boom years, hiking the price of wines up & adding a needless gentrified layer to the whole experience.

    When I see idiotic statements like 'price it higher to make it exclusive', I just laugh. Unless a beer is over 7% in ABV, & using a shit-ton of expensive hops, it is not worth the premiums those are putting on 2/3 of a pint glasses of it.

    What I find even more amusing, is those defending it taking he 'I'll piss on your leg & you will accept it's raining because I'm a weatherman' approach. It's horsehit dressed up nonsense-above-the-station-premium wankography of the highest calibre

  2. eointastic says:

    I don't know if my first attempt worked, so here goes again…
    Small brewers margins are tiny. Malt cost alot more than the big boys pay for it. It's the same for hops. They also add alot of sugar to bump the gravity. Also if u want the intersting flavours of new world hops it costs more. 3-4 times the price of fuggles and the rest of the English stuff. Profit margins for small brewery's are tiny, wages minimal.
    At the end of the day you pay for what u get. If u want horse meat burgers by value burgers and don't be surprised when the big producers take short cuts.
    Yes some bars are taking the piss, but the answer is simple. Tell them that, then support a bar that doesn't!

  3. Wayne says:

    Believe me I have said it to places. Stock answer is that's the price like it or lump it.

    Fact is the brewer is getting the short straw here too. They don't sell into pubs at a huge premium to the macro stuff. A little extra but not enough to justify that kinda margin as seen on the examples above.
    As a consumer I have no problem paying a little more for quality produce whether its beer food or whatever.
    Its a vicious circle. People won't try it if they deem it too expensive. Publicans will stop stocking as its not moving. And on and on.

  4. Tube says:

    Wholesale craft prices are competitive with macro prices in a lot of instances but some quarters are encouraging publicans to price up craft, which is self defeating as it ends up only competing with other craft in the top 5% of the market, leaving the other 95% to the macros.

  5. Wayne says:

    Thank you for your comment Tube. This will stop the craft sector expanding in my opinion, and it is important to highlight that whole sale costs which as you say are competitive, it doesn't help when there are some people pushing that agenda.

    Some brewers i've spoken too are aghast at the prices at some outlets but ultimately they still get the same amount and have no control there on the end price to the customer. But on the other hand, it is a premium product which is manually crafted, which maybe there should be a small premium above a macro?

  6. One thing that I found interesting when I lived in the Czech Republic was that beer from small breweries like Kout na Sumave, Zlata Labut, and Kocour was usually cheaper than the mass produced stuff like Pilsner Urquell or Staropramen.

    Here in the US there is a huge markup on the price of a pint, partly as a result of the three tier system where breweries sell to distributors, who then sell to retailers. At a small regional brewery a barrel of the flagship IPA costs only $50 for ingredients, once you add in labour costs, overhead, etc, you're probably looking at about $100 a barrel. When sold through the brewery's own tap room at $5 a 'pint' (16oz – Yanks and their small servings!!) that $500 revenue from a half barrel keg, even assuming 20% wastage.

    This is perhaps one reason why I generally drink local beer, and I drink it in a brewery tap room whenever possible, so I know my money is going to the people who actually make the beer, not the hangers on and leeches in the distribution system.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s