The Price of Craft Beer – More than meets the Eye.

Those of you that follow me on twitter, firstly, Thank you! And secondly will have noticed in my feed last week I was taken aback at the price of a certain beer in a certain pub. Not only was I perplexed and shocked at this, MrsBeerSnob too was aghast.

Usually, I would talk to the business owners privately on this issue or any other issues I’ve come across during my travels. This time however I went public. Now, I’m not necessarily proud of becoming the ranting twitter maniac for a few hours. However, I do believe things happen for a reason.

//, the pub was Brewdock, and the company Galway Bay. Brewdock is a regular stomping ground for myself and MrsBeerSnob when we fancy a cheeky pint after work. It’s even in my best beer pubs in Dublin list. Now I’d not been in for a pint for a while and circumstances dictated this particular Wednesday that we had missed our bus and had an hour to kill for the next one.

In we walked and perused the taps, then the board above them. My eyes were instantly drawn to the price of the Camden IHL at €10.50 a pint. Now, I like IHL as much as the next man, but that price was shocking to me. Had we reached a nadir in the Craft Beer Scene in Ireland? I perused the wall board further. Out of 24 Taps, there was 7 Pints listed above €7.00 – this shocked me further. I suppose I’d been conditioned to accept more expensive beers in particular in GBB bars being priced and served at 2/3rds of a pint. 

Now I admit – this turn of events shocked us a lot – and off I went. Social Media and a few beers were not a good combo. The next morning Jason from Galway Bay reached out to me. So to add balance to this discussion here are some of the points that have seen prices creep up in all bars that serve craft beer not just the Galway Bay ones.

Firstly – since the beginning of the year, our currency the Euro has fallen very heavily in the last 12 months vs The Dollar and Sterling. Please see the table below to see how much 1 euro bought on these dates. Rates taken from XE.Com 

           01/01/15 17/07/15      13/09/2015 

€ buys £ 0.79      0.69 (-14%)  0.73 (-8%) 

€ buys $ 1.21      1.08 (-12%)  1.13 (-7%) 

Clearly currency and its fall in value affects the cost of bringing in US & UK beers a lot more – you also have to factor in that these beers come in one way kegs such as Key Kegs, which will add appx €15 to each keg.

Now let’s talk about hops. Yes those wonderful plants that give our favourite beers their amazing flavours. With the increasing number of craft breweries, and infact macro’s too buying up more hops, this is making the supply slightly lower than normal and this in turn is pushing the prices of hops up themselves. Beers made in Ireland in the main use hops sourced via some of the large hop merchants in the UK who in turn source worldwide. As brewers are buying these ingredients in general in Dollar or Sterling, this is also a factor in the increases lately in beer prices. 

So there’re some of the factors that have increased the cost of beer – this starts at the brewers who have to pay more for their ingredients, then wholesalers who get charged slightly more by the brewer to buy the beer, then the pubs who are subject to the wholesalers margin reflecting the increased costs. 

Now, getting back to this infamous tenner pint – after speaking to Jason, I can understand what’s gone on. Galway Bay have a number of bars in Dublin and one of their most recent additions The Beer Market was opened with specials and rarities in mind, and no pints! Now being keen business men they guys listened to the feedback they were getting – why no pints!!? So pints were introduced in The Beer Market, and more pint options were rolled out into their other bars. This went against what they had previously done – sell the more expensive & rare beers in a maximum measure of 2/3rd of a Pint.

However the ten euro pint to me was so shocking. I was thinking, why would you want to be getting a reputation for selling ten euro pints? Or how a person new to craft beer would react to seeing this price on a board? Having worked in sales for years myself, I just felt optically it was the wrong message. I also understand we operate in a free market. The Galway Bay bars aren’t a charity, and they need to make money to be able to pay staff, suppliers, and ultimately invest in the business. So when Jason reached out it was great to get that side of the story. 

As a result of all this, Jason has confirmed to me that they will still sell pints of the beer to whoever wants to buy it – the prices won’t be on the chalk boards if the pint price works out above €6.75, only the price for 2/3rds will be on the board. But punters will be given the pint price before they purchase a pint. This is the best outcome in my opinion. So anyone who wants a pint and is happy to pay it – which is after all free market economics – can.

So in summary, the free market will dictate prices at every level of the chain. It’s fair to say that we appreciate craft beer costs more both to produce and buy as a consumer but hopefully this post will give you a little insight to the side we don’t often see when we are quaffing some great beers! And the decision on whether to buy or not falls to you. The Consumer.

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.