September, 2003
Get Out Your Wallet
This is not going to be a popular Buzz. It’s going to sound
like I’ve been paid off by the brewers I write about, and I’ll
probably get mail about the supposed tons of ‘free beer’ I get (I wish!). But
like it or not, it’s got to be said:
You’re not paying enough for beer.
I don't mean you, personally. I mean all of us,
including me. We're getting away with increasingly good beer at pretty
cheap prices. "Cheap" is relative, I realize. But look at the
price differential between mass-produced beer like Bud and Yuengling --
$4 to $5 a six-pack -- and craft-brewed beers -- $7 to $8 a sixer. Now
look at the price differential between Sutter Home and Chateau Ste.
Michelle, the difference between the sashimi 'krab legs' and hand-picked
lump crab meat,
the difference between 80% ground beef and porterhouse, the difference
between Maxwell House and your local micro-roaster's whole bean Sumatra.
Isn't the difference between Red Seal Ale and, say, Genny Cream worth
that kind of difference in price? I say yes, and I say craft-brewed beers should start at about $10 a six. I
know most craft brewers would agree.
So why isn't it? Because almost every craft brewer out there right now is scared
to raise prices.
Listen to what Alan Pugsley up at Shipyard in Portland, ME said when I
talked to him back in May. Alan's been involved with New England brewing
since 1986. "It was $5.99 a sixpack then, it’s about $6.99
now," he said. "A big place like us or Harpoon can probably
get away with an increase. Even $7.49 regularly would offset some of the
cost increases (There have been big increases in the costs of health
benefits, glass, and energy for firing the kettles, not to mention the
record-setting bad barley harvest last year). But the market’s going to have to determine that. If
Shipyard decides to raise prices, what does that do to our cash flow
when the sixpack next to it is $2 less?"
Keep in mind that the New England market is one that went
crazy with discounting in the mid-1990s, when craft brews went as low as
$4.50 a sixer. It killed Catamount, stunted the growth of Otter Creek,
and killed some Massachusetts breweries. But Pugsley's right: if
Shipyard and Harpoon went to $7.50, someone else would be crazy enough to try
to grab some of their volume by lowering their price, and discount themselves
right out of existence. But they'd do damage to other micros on
their way out by convincing people that craft brewed beer should be cheaper.
It's not just New England, either. You know that. How many
markets have Sierra Nevada or Sam Adams for under $7 a sixer? Lots of
them. How many of you look at an $8 sixer or a $28 case of beer, and
think, "I dunno, that's kind of high."
I gotta ask you, pal: High for what? High for
sop-'em-up suds, yes. High for excellent beer? You cheap booger. What do
you pay for a decent entree in a restaurant: $10, $15, $20? And you
won't pay that for a good six-pack of beer? How can you figure that the
same six-pack of Sierra Nevada you paid $6 for in 1990 should be $6
today? Remember what gas was in 1990? Remember what you earned in
1990?
But really: why should you pay more? There
are some excellent reasons. How about a really human one to start with: most brewers
don't make squat. Except for the lucky ones (who are not always the
really good ones), brewers are scraping along on wages that would make a
parochial school teacher laugh. They say the passionate brewers are the
greatest ones; it's because if you don't have passion, you'd have to be
insane to work for those wages when you have a degree in biochemistry
and a family to support. More money for the beer you love to drink
means more money to keep the better brewers in the business.
Here's another: survival and growth. For the craft brewers to
get big enough to spend the kind of money they need to survive in their own
markets, let alone expand, they need bigger profit margins, more cash to
spend on advertising and promotions. "If you brew it, they will
come" makes a nice mantra for starry-eyed start-ups, but even
idealists realize by now that it takes more. You need attractive
packaging, you need a real website, you need point-of-sale, you need
cool taphandles, you need T-shirts and pint glasses and stuff to
give away at promotional nights, and you need money to pay the smart,
creative people who come up with that stuff.
That may sound like marketing garbage, but it's real. It's not just how
the megabrewers do it, it's how the imports and regionals do it.
Yuengling is okay by me, I'm a big fan of them and the way they came
back from the brink, but they are killing the craft brewers in
the markets outside of PA, where the craft brewers aren't used to
dealing with their kind of market assault. Some more money would
give them a fighting chance...just like it did for Yuengling, whose
prices have definitely gone up.
Here's another reason: because it's better. How many bad beers
have you had lately? A lot fewer than you used to get
five years ago. Brewers are better, wholesalers and retailers are
better, the whole process is better. Brewers have got the process down,
they know how important consistent, fresh beer is, and they're working
hard on it. Wine drinkers pay more than we do for their tipple, and they
know that 5% of what they buy is going to be corked! We're
closing in on that kind of consistency, and there's no reason why beer
can't surpass that 5%.
Do I want to pay more for beer? Of course not. I can't
just go out and buy anything I want now; higher prices
would mean more decisions to make.
Do I like the alternative? Not at all. If the price of craft
brewed beer doesn't go up soon, you're looking at brewers cutting
corners, pulling out of markets, closing. More ominous is the
sure rise of a few bigger brewers that
will push others out of the market: Sierra Nevada, Sam Adams, Widmer,
New Belgium, Mass Bay, Alaskan, Redhook, Great Lakes, Deschutes, Goose Island. Good
brewers all, good people, but this whole thing was supposed to be about variety.
If your local brewers can't pay themselves a decent wage, they're going
to go into some other business. If costs rise, something may have to be
cut, and you can bet some places will cut something stupid, like the
lab, or they'll discount prices further.
What to do? I know I always try to come up with a take-home
assignment for you in these editorials, but there's not really anything
you can do in cases like these. Except to open up your wallet and
keep buying. If you like the beer, it's only fair.
I'll fight tooth and nail against another dime of beer
taxes. But when the money's actually going to the brewers (and the
wholesalers and the retailers), the people who are doing the real
work, brewing, shipping, storing, selling, keeping, and displaying
the beer...I'm willing to go a couple bucks more.
How about you?
