The Price of Craft?
What’s the most expensive beer in the pubs of Britain? The other day, for example, I saw one advertised in the city for £6.40 – the priciest pint I think I’ve yet witnessed in Edinburgh. Fair enough, it was an imported beer in an establishment that usually runs to a high retail price – but one look and I went for something else. As prices rise across the bar, are the increasing costs of these new, ‘craft’ beers becoming prohibitive to growth?
At the weekend I managed to scrape the other BeerCasters together and visit BrewDog Edinburgh (which was not where the above example occurred, incidentally). On offer, amongst other things, Tempest’s A Face With No Name – at £4 for a two-thirds measure. So, £6 a pint. Fair enough it wasn’t advertised at that price, the suggested serving was the lesser volume – but the very same beer is currently on (cask) elsewhere for under £4 a pint.
Again, we passed on paying that much – even for an excellent beer. BrewDog have said in the past that producing a kegged beer costs more than a cask, which would explain part of the higher sum in their bar than the other pub. But are these new wave of craft beer bars shooting themselves in the foot by charging large amounts for small amounts? Or, are the fans of these kinds of beers willing to stump up the cash?
The obvious answer is that they are – otherwise BrewDog wouldn’t sell their latest Abstrakt AB:10 for an eye-watering £5.45 a third. I’m sure they equate it to drinking a marvellous glass of wine, or splashing out on a rare whisky – in short, a top-end product bought as a treat. The reality is (from my observation) that the majority of people shy away, and the beery crowd buy collective thirds so they can have a sip each.
Is this craft? Sharing communal beers? The whole thing has become a parody of itself – surely beer isn’t meant to be drunk like that. You can create demand for a niche product, but when even the target market can’t (or won’t) pay for it, how sustainable is that? Part of me wonders if BrewDog are disproportionately passing on the unfairly monstrous cost of alcohol duty in these kinds of beers, knowing the ‘geeks’ are the group least affected by price.
As much as I hate writing that (and not only because it contains the hated G-word), it’s probably true. We are the people that go in these modern beer bars – from the new Craft in Brighton to BrewDog Aberdeen. We have the disposable beer income, regularly placing online beer orders that add up to an awful lot. All beer is expensive these days – but if there’s one sector of the pub-going community that can absorb the hit, it’s us.
This isn’t exploitation – craft beer fans are like any other branch of collectors that splash out large sums on their hobby. Sooner or later, however, there’ll come a time when the price point is pushed just that little bit too high. Customers will back away, and look to the offerings of another brewery, or visit another boozer. As beer becomes artisan, the price increases are going through the roof – and it isn’t just because of the duty.
27 Comments
Steve
July 4, 20125.45 a third is equivalent to 10.81 per 375ml bottle, making it a relative bargain in comparison to the price of a single bottle in the brewdog online shop (without shareholder discount). Given the cost of red wine barrels I’d say that price is not unreasonable, but of course there is the inevitable “rarity tax”.
Richard Morrice
July 4, 2012I hope that the greed of certain brewers is not going to ‘spoil’ the resurgence of craft beers.
5DTK
Richard Morrice
July 4, 2012Steve
You are right because in the end no-one is obliged to buy a specific beer.
But they do have to pay the duty and tax on all their beer..
Nate
July 4, 2012Great post mate, something I actually didn’t mention on my post entitled Nate Dawg vs Craft beer (Link at bottom) mainly because I do this all of the time. Whenever I’m London I go to the Cask Pub & Kitchen or The Craft Beer Co and sit in there for a few hours drinking half pints of weird imported beers. I don’t mind, to be honest. My issue is paying absurd amounts for bottled beers at retail price, especially from a British brewer. I get that they have to make a profit but there’s a point where we have to think whether they really think that a specific beer is worth that much or whether they are just being greedy.
Post: http://www.boozebeatsbites.com/2012/06/booze-nate-dawg-vs-craft-beer.html (Hope you don’t mind me sharing)
Nate
http://www.boozebeatsbites.com
http://www.twitter.com/NateDawg27
Sustainable Alcoholic
July 4, 2012There is an Android / iPhone app which lets you put a beer volume and cost and it gives you an equivalent price for a US 6 pack (6 x 355ml). That’s fine for the Americans but I think we should petition for one that gives an Imperial Pint output as it would put a lot of beer prices in perspective.
The thing that saddens me the most is that the new wave of UK craft brewers are selling at the same prices as imported US and EU beers. I know it’s a harsh climate and they need to make profits, but when the pint price of a bomber of Bear Republic Racer 5 from California is cheaper than the pint price of keg BrewDog Hardcore IPA in a BrewDog owned bar, you know something is going wrong somewhere.
steve
July 4, 2012we have to bear in mind that whilst using similar ingredients (and there’s the cost of shipping to bear in mind) smaller UK breweries do not benefit from the same economies of scale that most USA craft brewers do. Massive size difference! Remains to be seen whether new brewdog brewery passes on cost savings….don’t hold your breath!
Richard Morrice
July 4, 2012As Brewdog have other people brew for them I can’t see that their new brewery will make a massive difference to their costs
Dan
July 4, 2012Brewdogs own keg beer was £3.20 a pint when I left Edinburgh last year – has it gone up since I left? Here in Stockholm about £8 for 30-40cl of Punk IPA isn’t out of the ordinary, unfortunately. I sincerely hope Scotland doesn’t ever come anywhere near those prices.
The most I’ve seen here is £1000 (yes, that’s the correct amount of zeros) for a 75cl bottle of De Molen Tsarina Esra Reserve. Eye-watering…
Richard
July 4, 2012Thanks for the comments everybody – deciding how high you’re willing to go on a beer is obviously a personal choice. Whereas sometimes it can be justified, I’ve noticed that the overall prices in the craft bars I go in are increasing rapidly. A lot of this is down to the duty increase, and other factors associated with making the beer – but I can’t help thinking that some breweries are charging more to distributors, and some bars are putting up their prices as a result. I guess until we see the cost price and selling price of these pubs, it’s all conjecture.
In the meantime, it’s a third of your special and four glasses thanks, barkeep!
An Anonymous Boozer
July 4, 2012The thing about the price of the third of Abstrakt is that I seem to remember not too long ago the Abstrakt series on draft being quite a fair bit cheaper. Just before Brewdog Edinburgh opened, I remember they launched a previous Abstrakt beer at the Holyrood 9A, and I’m sure it was £3 a third then…
And the price of draft is nothing compared to some of their own bottles. £25 a pop for a 330ml bottle of Dog A (over double the price of when it was previously released in the Abstrakt series). I don’t know if any bottles of Tokyo Rising Sun made it to the Brewdog bars, but I’d wager they’d be even more expensive.
Gary Paterson
July 4, 2012Agreed, as a student my money doesn’t grow that far but I think we should be catching younger drinkers and getting them in to the craft for longevity. I am pretty much comfotable paying £3.50 to £4.00 for, say, a pint of Hoegaarden or Paulaner… When it comes to places like Brew Dog I tend to stick to halfs but I am only likely to pay over £3 in rare circumstances… Nogne for example. I recently had a night out in Edinburgh and I really struggled to pay £5.20 for a pint of Blue Moon… but it was that or Tenants.
Hairy Monster
July 4, 2012Being in the trade, I know the wholesale price of the bottled beers they sell in BrewDog, and the mark-up they are making on them is obscene. They’re total crooks in my not-so-humble opinion and there’s no need for those sort of prices but if people are mug enough to pay them then why would they stop?
Oh, and I’m sure they’ll get their stock at a bigger discount than I can negotiate.
An Anonymous Boozer
July 4, 2012In fairness to Brewdog, the markup on bottled beers is insane in pretty much all of the new wave of craft beer bars. If you go to the likes of the Euston Tap/Cask/Craft etc., the prices of the bottled beers are always eye-wateringly expensive.
While I do think that some brewers may be starting to increase prices because they know people will pay them, I do also think at the other end of the spectrum that there are some brewers in the UK who really need to look into trying to make their beers more efficiently somehow to reduce the price at point of sale. One example, I quite often see the Moor beer range knocking around the various off licenses in Edinburgh, and they’re all at least £4. Now I know in absolute terms that isn’t much compared to what you can pay for bottled beer these days, but £4.25 for a season strength best better? No chance. Particularly when you can get quality imports for less than that.
An Anonymous Boozer
July 4, 2012Obviously that ‘best better’ should be bitter…
sallamander
July 5, 2012Craft Beer?
Artisan Beer?
What a load of absolute tosh.
Nate
July 5, 2012It’s alright guys, meet me in Wetherspoons for £2.70 pints of Carling!
😉
Richard
July 5, 2012Absolutely Nate – there’s always a quality alternative at a cheaper price!
sallamander – I’m no fan of the term craft beer, as it doesn’t have any real meaning here other than ‘American-ish style beer that I like’ – as I wrote here, but it is a neat pigeonhole for this kind of beer that we’re seeing more of these days. Similarly, ‘artisan’ may be another buzz-word of the moment, but if cheese and bread can be, so can beer?
Gary – £5.20 for a pint of Blue Moon? Jesus. Not on my watch!
Anonymous Boozer – I certainly think the Abstrakt’s are going up in price, although that may be due to the relative strength of each of them – but I wouldn’t be surprised if that was the case
Nate
July 5, 2012I don’t get why we are expected to be able to define craft beer… beer’s beer.
I like beer. I don’t care. People judge me for drinking macrolager which is absurd. I’ll drink what I like as detailed below:
http://www.boozebeatsbites.com/2012/04/booze-crap-lager.html
Richard Morrice
July 5, 2012I think there is something else to consider. Certain multiple retailers are selling quality beers are a price that does not allow the brewer to make much of a profit.
This needs to change.
Nate
July 5, 2012Sorry but that makes no sense as the brewer sets the wholesale prices at whatever they like…
Richard Morrice
July 5, 2012The brewer does set the wholesale price at whatever they like – and retailers decide if they are prepared to pay it – or not. It’s a competitive environment.
Nate
July 5, 2012The hilarious thing I think is that Sainsbury’s sell Brewdog’s beers cheaper than Brewdog sell their own beers…
That could be the whole supermarket loss leader thing but I dunno.
Richard
July 5, 2012Not to rag on BrewDog continually – as they aren’t the only brewery to be doing this – but one of my all-time favourite beer quotes was written about them by Cornelius Beer & Wines’ James Wroebel.
POW!
Stuart
July 5, 2012The brewer receives a small fraction of that £4 pint. If a brewery can sell their own beer, they can pocket the loose change plus the big bucks.
Beer drinkers need to trust their own judgement because there’s a lot of expensive, pretentious stuff on sale. If it costs a lot it can’t be that bad? The last beers I tried were £5, £4-50, £3 (330ml bottles) and £2-60 (500ml). The £3 bottle was great. I poured the others down the sink. The guy in the bottle shop couldn’t believe my lack of good taste (it wasn’t James at Cornelius).
Richard
July 6, 2012Absolutely Stuart, that’s why BrewDog are pushing their bars all over the show – it’s a great way for them to build their business and make money, so you’ve got to hand it to them.
If you opened a brewery tap, I’d be there every week 😉
David M
July 8, 2012interesting piece; had a similar thought in the White Horse in Parsons Green recently, which is not to single them out, but there is a danger that all the froth (sorry) and excitement in the craft genre is inevitably going to cause some margin creep, throughout the distribution chain.
but as others have said, they will charge what people will pay, and when the enthusiasts start questioning it….
Dave R
January 17, 2013I do agree in principle to parts of this article, however there are lots of financial factors that come into play when working out a price for your beers! We are in the process of setting up another crowd funded brewery in Scotland, Forth Bridge Brewery! The costs that we have excluding the brewery equipment are rent, rates, wages (UK Living Wage – £7.45 ph), cost of materials eg: hops, yeast, malted barley & bottles. Then you have energy prices although we hope that with the burn that flows near to the brewery we can install a micro hydro generator.
Plus the dreaded duty escalator, which the formula is at present £19.51 x BBL x ABV, so for us to produce our founders lager @4.9% ABV – the formula looks like this £19.51 x 10 x 4.9 which is £955.99 per brew & this needs to be paid every 30 days to HMRC without fail.
Now we are planning on brewing five days a week & generally bottling at the weekends, so if were to make this brew every day for the first month (20 days) that figure above will be £19’119.80 in duty alone per month! On top of that you have your other associated costs mentioned above – like wages, distribution, energy costs, rent, rates & and so forth!
Yes in theory some of these prices are high, however brewdog has the additional costs of its pubs to run, which again include rent, rates, wages & energy costs. I personally would want to keep the costs to a minimum: average unit price = higher turnover – although it depends on what market the brewer is wanting to target! Generally brewers should have one type of beer for most markets.