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Tuesday, March 24, 2009

The Price of Beer

Stan Hieronymus noticed that the comment threads to a recent story in the Chicago Tribune were pretty hot:
[I]t’s interesting to “eavesdrop” on comments posted about beer at a non-beer site.

Yesterday the Chicago Tribune published a story about two new microbreweries in the city. What seemed to get the most attention is that 6 packs of Half Acre beers cost $9. We’re not talking a knee jerk reaction about how that’s ridiculous, but a discussion. Check out the comments.

This in turn provoked some unusual commentary on Stan's own site. Every product has an invisible cost line, and when prices creep over it, there's a backlash. People thought it would happen with $3/gallon gas, but it actually too four to trigger the response. Nine bucks seems to be at or around the invisible line. Perhaps ten is the biggie.

For what it's worth, I think the outrage is misplaced. Until recently, beer prices have been artificially low. The hop and barley price hikes surely forced breweries to raise prices a bit, and the forces of inflation have their effect, too. But nine bucks is probably about right by historical standards. If you convert the price of a $9 sixer in 2009 back to 1990 dollars, you get $5.54. In 2000 dollars, it works out to $7.30. My memory is that the price of beer was probably hovering around six bucks and change a decade ago, and we regularly hit the $7 threshold a few years back. So prices have been low for awhile and now they're headed back to historical norms.

Beer naturally lends itself to class commentary. Beer is a blue-collar drink. This has long put craft brewers at a slightly uncomfortable crossroads--trying to appeal broadly to blue-collar drinkers while charging enough to pay the bills. The association between craft brewing and patronage by yuppies hasn't helped (an association I think is particularly weak in Oregon). But in any case, it looks like this isn't a function of real price inflation but rather a reaction to economic instability more generally.

12 comments:

John said...

There are quite a few beers that I like that are $9+ a six-pack.

And I leave them on the shelf.

I'm getting paid exactly what I was in 2000 (and my wife's been out of work for some time). I can't justify paying that much for beer, so I wait until there are sales to bring a decent beer down to $6-$7.

With beer going up 50% in cost in the last decade or so, it's absurd that the brewers are fighting a 15cent/bottle increase in the beer tax.

Jeff Alworth said...

John, let's not re-fight the beer tax here. But it's flatly wrong to say it's a 15 cent per bottle tax. It's an excise tax on a barrel of beer. That's the tax. Speculation about what it will result at the retail level is just that: speculation. The tax isn't levied at the retail level.

Anonymous said...

Of course not, that would be a "sales tax" - ♫DUN DUN DUHHHHHN!

Like John, I too am being paid the same now as I was 9 years ago (actually, I'm paid less… *sighs wistfully for the dot-com bubble*), yet inflation keeps marching on… I find it helps to combat the sticker shock from $9 six packs by buying individual bottles instead. Yeah, it's entirely psychological, and I'm usually buying expensive bottles anyway, but… to hell with it, I can't live by Widmer Hef alone.

Now a dollar an ounce, that's where I draw the line… that actually a fair measure above where I draw the line, but several recent beers have shot straight to it, and I've sadly had to avoid them… because of the line, that I drew…

I'm both sleep-deprived and employed… forgive my rambling…

-anónimo

Anonymous said...

As a native Chicagoian, I'm happy to hear of the two new breweries but I was stunned to learn that they are the first new breweries to the city in ten years*. Too bad the new places beer sounds, well, boring. I'm all for traditional German beers, but is this what a city full of European immigrants is really missing?

As for the prices, (unless you buy Rogue), you tend to get what you pay for. Some days I'll happily buy a $12 six pack, other days I walk the aisle at the grocery store hunting for bargains. All depends on the mood, the budget, and the day.

* Of course that's a little misleading with Three Floyd's so close and decent breweries in the suburbs like Mickey Finn's and Flatlanders.

Anonymous said...

Pretty funny that a bunch of Chicagoians who pay $10 to park for less than an hour are all up in arms about a $9 six pack.

A sign of the times I guess, but as someone who has lived in Chicago for years, I can't believe people are so upset considering the very high cost of living in that city.

iggir said...

i say let the market decide. there will always be expensive and inexpensive beers.

Harth said...

Back in Michigan, six packs of Bell's hit 9 bucks over 10 years ago. The brewery has since expanded, so I would imagine pricing leveled off. Yeah, I flinched every time but it was still worth it. One big thing I noticed after moving here was the great beer prices overall - both in the bottle and by the pint. Now I keep prices down by buying kegs (but I drink more beer, so its not necessarily cheaper - sshhhhh, don't tell).
Harth

Mark said...

Pricing a product, craft brew or not, is never strictly about the raw ingredients. How about that airline seat you bought for $179 while the person next to you spent $775? (As for the tax comments, it makes little difference in this case. Illinois is exactly at the median of excise taxes for beer.)
I happily spend serious money for some wines while I flinch at the price of my "everyday" wine when it's more than $10/bottle. Same applies to beer. There is no reason that good beer cannot be brewed and sold for $5.00 and under a six pack. It's not gonna be some specialty, 9% ABV Belgian Triple Dipple whatever, but it's gonna be good beer.

The craft brewing business is facing serious challenges to product differentiation. How many Pale Ales can we be interested in? The answers seem to be create specialty products that will definitely come at higher prices. Lagers, good ones, anyway, fit this description because they are far more difficult to brew well and they require long storage. Storage costs more, certainly, but getting the product to market and in sufficient quantities is a tougher guessing game when that beer has to "lager" for four weeks or more.

Even in Oregon where we are spoiled for choice, the humblest craft product at a relatively low price is a fine thing to drink. I save my big coin for bigger beers when I can and put my money on the every day brew at reasonable prices.

Jeremy in SE PDX said...

I make it an absolute point never to look at the price of a beer before I buy it.

It's vulgar.

--JT

Anonymous said...

Hey Jeremy, how it's going being independantly wealthy? :P

-anónimo

Jeremy in SE PDX said...

Anonimo, I'm not sure, but Ican only imagine it's tremendously pleasant.

But no matter how much you make, you can always sacrifice something else in order to keep yourself in good beer.

It's a matter of having one's priorities set correctly!

:-)

--JT

Anonymous said...

"…no matter how much you make, you can always sacrifice something else in order to keep yourself in good beer…"

Some people can't sacrifice anything to keep themselves in cheap beer! But for those of us who can, it helps to know just how much we're sacrificing - and/or how much we have left to sacrifice - by being vulgar and price-conscious. $14 bottles of Matt may sting, but at least I know I can't afford it when I pick up a 6-pack… the better to prepare myself for the bounced rent check. ;-)

-anónimo

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