Originally posted by ClarkVV
Are you kidding me? Are you people communists? Of course you push your price to the most you can.
A successful brewery should have a good idea how much of their beer they can sell at various prices. Vineyards are often locked into whatever acreage they own. Most breweries can simply build an addition, buy an adjacent lot or a 2nd location. Unlike growing grapes, it doesn’t matter so much where they brew beer. So unlike wine, beer is more easily scalable. That helps keep prices for high-end beers much lower relatively to high-end wines. When a brewery has a hot beer, they often produce more, which further increases sales volume and often lowers cost, thereby increasing profit margin too. Of course, Rogue’s Dead Guy Ale responds differently than DFH’s Worldwide Stout. In any case the brewery will likely find a sweet spot and all their beers’ sweet spots should add up to their production capacity. Now that’s capitalism! |
Originally posted by ClarkVV
Lukin, I think we are in agreement, I guess I just misread what you were saying. I thought you were arguing that we are already at a point where craft brew is overpriced. But you are just saying, "Brewers beware, you could get to a point where you push the price to high." And I, of course, agree.
Interestingly, DFH 90 minute has gone through fairly large price increases over the years. I don’t have the numbers in front of me, but suffice to say, that their increase in price was able to generate more revenue than it lost due to loss of consumers who felt that the product had become too expensive and switched back to Harpoon IPA. Else they wouldnt have continued raising prices. Frankly, their prices drove me away, but they do have a very loyal consumer base.
I think your comment about micro brews potentially pricing themselves too far out of the picture to convert macro drinkers, is a great observation.
If one local brewer is able to push his prices high and still keep up good business for himself, then he wins, while the industry as a whole loses?
In theory, the macro drinker now sees his local micro as "too expensive" and decides against switching to craft beer. The local brewer dosent care, because he has still increased his market share in the craft beer segment. So there’s no tangible economic loss for him.
However, through quasi-economics, he is doing a disservice to the whole industry (craft beer) because through pricing out the macro drinkers, you limit your new customer base and thus limit the potential growth of the industry.
This all makes ALOT of assumptions, however, and is just more my thoughts on paper.
I do think there is ALOT of truth and value to craft brewers brewing AND PROMOTING their cheap, macro-replacement beers. Probably much more important, overall, than any other marketing from the craft industry.
God bless Oberon Ale.
Glad we’re in agreement now. 
Interesting information about the 90-Minute... I just picked that as a random example.
I suppose I’m simply reading "brewers should charge as much as they can get" differently than most. "Charging what you can get" in my mind lends itself to very little ability to grow. If you mean "charge as much as you can while continuing to bring in customers from other brands/markets" then of course I agree (I am not, in fact, a communist  ).
The biggest point I’m trying to make is that charging an (apparently) controversial price for a very limited release will not present problems cause you’ll always have enough people willing to pay it. If that attitude is applied to everything (like your Bell’s Oberon) by saying "nothing is overpriced" then it becomes dangerous. Dangerous to both the individual brewer and the craft movement as a whole. |
Originally posted by lukin013
Originally posted by ClarkVV
Lukin, I think we are in agreement, I guess I just misread what you were saying. I thought you were arguing that we are already at a point where craft brew is overpriced. But you are just saying, "Brewers beware, you could get to a point where you push the price to high." And I, of course, agree.
Interestingly, DFH 90 minute has gone through fairly large price increases over the years. I don’t have the numbers in front of me, but suffice to say, that their increase in price was able to generate more revenue than it lost due to loss of consumers who felt that the product had become too expensive and switched back to Harpoon IPA. Else they wouldnt have continued raising prices. Frankly, their prices drove me away, but they do have a very loyal consumer base.
I think your comment about micro brews potentially pricing themselves too far out of the picture to convert macro drinkers, is a great observation.
If one local brewer is able to push his prices high and still keep up good business for himself, then he wins, while the industry as a whole loses?
In theory, the macro drinker now sees his local micro as "too expensive" and decides against switching to craft beer. The local brewer dosent care, because he has still increased his market share in the craft beer segment. So there’s no tangible economic loss for him.
However, through quasi-economics, he is doing a disservice to the whole industry (craft beer) because through pricing out the macro drinkers, you limit your new customer base and thus limit the potential growth of the industry.
This all makes ALOT of assumptions, however, and is just more my thoughts on paper.
I do think there is ALOT of truth and value to craft brewers brewing AND PROMOTING their cheap, macro-replacement beers. Probably much more important, overall, than any other marketing from the craft industry.
God bless Oberon Ale.
Glad we’re in agreement now.
Interesting information about the 90-Minute... I just picked that as a random example.
I suppose I’m simply reading "brewers should charge as much as they can get" differently than most. "Charging what you can get" in my mind lends itself to very little ability to grow. If you mean "charge as much as you can while continuing to bring in customers from other brands/markets" then of course I agree (I am not, in fact, a communist).
The biggest point I’m trying to make is that charging an (apparently) controversial price for a very limited release will not present problems cause you’ll always have enough people willing to pay it. If that attitude is applied to everything (like your Bell’s Oberon) by saying "nothing is overpriced" then it becomes dangerous. Dangerous to both the individual brewer and the craft movement as a whole.
Well, I’m actually saying the same thing you and Clark are (with admittedly just a touch more "asshole"). You charge whatever you can in such a way that your business continues to succeed. It’s not "screw everybody and drive yourself out of business in the process". It’s "find the perfect price point that maximizes your profits and still allows your business to grow".
Nobody seems upset that a Porsche costs so much, but people get pissed off that Three Floyd’s raised their prices. They’re both luxury items, right? People would like to drive a Porsche, right? So why aren’t people going to dealerships and screaming that they should be able to buy a Boxter for $10K? |
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Funny you mention the 90 minute IPA, because I think the price has gone down on that. I remember paying around $6 for a 750ml of it when it came in that bottle. Now I can get 4 packs for around $8-9. This says nothing about the quality though.
I acknowledge that we live in a capitalistic society and I applaud all the brewers who have kept their prices relatively constant despite growing demand. Most breweries expand production to supply the demand and at the same time, make a little more money that way. As long as quality is maintained, I’m all for it. Although, I suppose I’d rather pay $20 for a good, small batch size bottle of Cuvee de Tomme than $10 for a lesser quality, larger batch bottle. Although if there’s any brewer that I trust in maintaining quality through expansion, it would be Tomme Arthur. |
Some really interesting discussion going on here. So without repeating what’s been said before I’ll take a new direction:
I am curious about the risk involved in producing limited edition, special, high cost beer. There is a certain degree of "trust" for Tomme and the brewery, that a consumer will pay the higher cost of the product without really being able to try before buying, if you will. I think many of us on RB would be willing to pay high prices the first time for most of Tomme’s beers - although there has to be an upper limit somewhere. I wonder how important novelty is in the equation - do the beers need to always bring something new to the table? How about when one turns out bad? Is the image alone (limited edition, one-off, hand-labeled, sprinkle whatever marketing terms you prefer on there) enough to sell the beer regardless of quality, or is there increased pressure on the brewer to produce a singularly fine product every time? I’m trying to remember the economics term for that type of good that hits the "luxury" status (maybe it’s luxury good?) |
I don’t think there’s an expectation that every limited-release beer is going to be good. DFH still sells their specialty beers, and lord knows they’ve had a few that haven’t . . . lived up to expectations. Consumers balance the risk of spending extra $$$ with the potential reward of getting something uniquely delicious and special, and go from there. If you’re a brewer with an established track record, people are more likely to take that shot. Tomme Arthur (wait, I’m sorry, I mean "THE" Tomme Arthur) releases a higher-priced specialty beer, and people line up to buy it. If Big Sky releases some kind of Imperial Barrel Aged Limited-Edition Moose Drool Brown Ale . . . OK, bad example, it’s an "imperial barrel-aged" so people will buy it regardless.
Um, anyways . . .
The reputation of the brewer will drive potential sales. This is a specialty market, and a $30 bottle of beer is likely to only appeal to an educated consumer. I’m not going to even think about buying an expensive beer from Pyramid or Big Sky or even Summit, not because I can’t get decent beer from them (OK, in Big Sky’s case, I probably can’t), but because I don’t see them as breweries likely to make very specialized beers that are very good. If they work at it over time, maybe I’ll get a comfort level from them and pony up the money, but I need to see some proof of it first. |
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Originally posted by ClarkVV
Are you kidding me? Are you people communists? Of course you push your price to the most you can....
..."Overpriced" is a stupid term. As was said, if it’s overpriced, a cheaper, comparable product will spring up, or sales will dry up, and the product will be foreced out or forced to a lower price.
What I said earlier about useful ’shame’ is an old cultural concept - it still really works well in many parts of Western Europe for example. There is a cultural expectation for quality & fair value that must be met because of the ’social pressure’ for good quality clothing, food, drinks, services etc.
So this ’communism’ thing isn’t even necessary for a society to keep prices in check. It’s just that over on this side of the Atlantic there remains a bit of a Wild West mentality, and certainly not everyone has a healthy sense of shame.
That said - I think good brewers here have a BETTER sense of old-school quality and fair value than 90% of businesses. There are plenty of half-assed businesses and a lower societal ethic - people here can be defiantly shameless about bad products and services. That doesn’t set the bar real high for the near future but let’s hope long-term people come around to realize that cheaper and crappier is not better - pride in quality and ’fair’ value is what people will really want because it represents decency of life.
IMO. |
Some outstanding debates going on here! Great points being addressed that the original thread on the other site never even mentioned.
Based on the last two pages, what about the idea of brewers offering a two tiered system of pricing? One geared at converting, or appeasing, the BMC segment (low cost/affordable and nothing radically divergent to what a newly developing palate could handle). The other, focused on the beer geek segment (radical, pushing the envelop of style, but a high price point to reflect the time/R&D/extra barrel-time/conditioning/etc).
I say this because there seem to be a few breweries out there that already tap into this. One example would be Miller/Coors with their sibling company Lenie’s. With targeted marketing aimed at the BMC crew, those looking to convert, and just recently the beer geek segment (as in the case of the Big Eddy series).
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Originally posted by Ofortuna
Some outstanding debates going on here! Great points being addressed that the original thread on the other site never even mentioned.
Based on the last two pages, what about the idea of brewers offering a two tiered system of pricing? One geared at converting, or appeasing, the BMC segment (low cost/affordable and nothing radically divergent to what a newly developing palate could handle). The other, focused on the beer geek segment (radical, pushing the envelop of style, but a high price point to reflect the time/R&D/extra barrel-time/conditioning/etc).
I say this because there seem to be a few breweries out there that already tap into this. One example would be Miller/Coors with their sibling company Lenie’s. With targeted marketing aimed at the BMC crew, those looking to convert, and just recently the beer geek segment (as in the case of the Big Eddy series).
You have to be careful with these types of strategies though. In cases where a producer has a high end product with high price point, they may attract a certain type of consumer who is turned off by finding out they also have a lower end brand. It can be done right (Mercedes seems to be aiming at a lower price point with some newer models for example) but do you think if Harley introduced a cheapy model that their high end bikes would have the same allure to their existing customers? That said, they may end up with an entirely new (and potentially larger) group of customers while the old faithfuls move on to other things. |
