On an Atlanta beer listserv in early April, a conversation about the pros and cons of climate-controlled distribution and its effect on craft beer prices pivoted into a more general thread about whether or not said prices are rising at a rate that is incongruous with the rise of beer-production expenses. Like any great listserv, this one is a combination of invaluable niche-topic information and opinions of people who are incredibly passionate about said topic. As a result, threads often spin out of control, changing subjects altogether or sometimes they become devoid of a point entirely. So it wasn't entirely surprising when this thread, ostensibly about refrigerated units carrying beer all over the country, started examining the following question: Are craft beer prices out of control? Eric Ohnemus, a 50-year-old computer programmer/systems analyst and Atlanta resident of 17 years, got things started.
"My opinion is that the cost of beer is ridiculous already," Ohnemus wrote. "Paying $9-$20 for a six pack of beer is outrageous. Bomber prices are even worse."
I got in touch with Ohnemus to flesh out his thoughts. He first noticed the price escalation a few years ago, when grain and hop shortages started driving up the prices of those commodities. But Ohnemus points to the fact that craft beer was also gaining popularity and larger markets. He doesn't think the added expenses justified the end price, but then again, it's hard to say. "Terrapin Rye Pale was a staple beer for me," he says. "When I first started buying it, a six-pack cost $5.99. The price went up to $6.99 after the hop and grain shortage. The same beer now costs $8.99. That's a fairly substantial jump for what I consider a session beer. What's causing this type of price increase? I don't know. But I am not buying or drinking as much as I did in the past because of this."
"Making beer is an extremely expensive operation," says Crawford Moran. Moran should know, he was an avid homebrewer for years before founding Dogwood Brewing in 1996. Following that company's dissolution due to distribution issues, he co-opened 5 Seasons Brewing, for which he still serves as brewmaster. "It ain't cheap. We're also one of the most heavily taxed industries in the country. We pay an insane amount of taxes. That's just one part of the cost equation, but commodities have increased, steel has increased, insurance rates are skyrocketing, energy prices have increased, water in Atlanta has increased, etc. At a certain point, breweries — like any other business — have to pass higher costs on to consumers. So far, I think beer pricing has been kept in check for the most part."
As a relatively young person — with no children — who loves craft beer and writes about it regularly, I don't spend a lot of time worrying about the amount of money I spend on it. I don't wear fancy clothes and I don't spend extravagantly on gadgets or most other luxuries, so the money I spend on craft beer fits into that portion of my disposable income. Not to mention that writing stories like this one gives me an excuse ("It's research, maaaan ...") to spend a little more than maybe I should sometimes. As such, I've happily dropped down $20 or more for a single bottle of beer in a bar or a retail shop on more than one occasion. To me, it's about trying something new, expanding my palate, seeing if the latest limited release is worth the hype or not.
I'm not alone, either. In a Salon.com story even more hyperbolically titled than this one ("Can beer save America?"), David Sirota begins, "The grand unifying theory of the American consumer has been that we are, first and foremost, low price fetishists." After wading through various examples on both sides of the quality/price spectrum, such as Walmart, Apple, and Philips, he lands on the macrobrew versus microbrew battle, noting how craft brewers have seen big increases in overall year-to-year sales (15 percent in 2011 alone) while only owning a minuscule 5.7 percent share of the entire beer-market volume. His conclusion? "Contrary to previous trends, a growing share of consumers are willing to pay more for less, as long as the product is the comparatively higher-quality product that craft brewers provide."
"The fact that our country is in an economic downturn and the craft beer world is growing out of control surely has some traditional economists scratching their heads," says Nathan Berrong. Berrong, who writes his beer column, Berrong on Beer, for CNN's Eatocracy blog, thinks this should be a point of pride for craft beer enthusiasts. "It's exciting, and something every beer drinker, or even American, should feel really good about. It could be the catalyst of America getting back its reputation that we care about what we do and the products we make."[page]
Moreover, it's hard to quantify what, exactly, is "too much." Yes, a SweetWater 420 costs more than Bud Light at your favorite watering hole, but that price can easily be traced to the ingredients used in the former. Bob Townsend, the Atlanta Journal-Constitution's beer writer and editor of the bi-monthly Southern Brew News, says that craft beers are a deal in most situations. "I think there may be some rare, experimental beers that are hard to justify in terms of price," he admits. "But beer has always been a bargain compared to other beverages, and people have gotten used to that. It seems natural that as the demand for rare beer increases, prices would follow."
But perhaps it's precisely that demand for weirdness that's ruining the market. Adrian "Ding" Dingle, an outspoken beer advocate who teaches for a living but cellars, writes about, and generally obsesses over beer in his free time, thinks craft beer consumers, by and large, are getting what they deserve. "There is a lot of mediocre beer out there that is priced too high," he says. "But that is a reflection upon the incredible immaturity in the American craft beer market. There are a bunch of uneducated consumers that lack discernment, cannot make the necessary distinctions between good and bad beer, and as a result, it means they will pay for beer that is poor, and prices will be driven up."
Of course, Ding's measure of good beer is his own; everyone is entitled to his or her opinion, and so on. But he does make an interesting point about what people are clamoring for in the craft beer world. In a recent post on DingsBeerBlog.com, he argues that it's the lack of a true American beer middle class that is hindering true beer-culture growth and allowing price increases on unworthy brews. "In order to have a real beer culture, you need a groundswell of beer appreciation that rises above the mass-market, macro element, but at the same time, one that stops way short of a 15% barrel-aged, convoluted beer tasting 'event'..." he writes. "Currently, that doesn't exist in the USA."
While working on this story, I visited Ale Yeah! in Decatur to jot down some of the pricier items in the store. There's Founders' cherry-fermented ale, Cerise, which is sold in $10 four-packs. There are hoppy selections from Lagunitas (Little Sumpin' Sumpin') and Bell's (Two Hearted Ale) that run $11 per six-pack. Elsewhere, you can drop $15 on a four-pack of Oskar Blues' GUBNA Imperial IPA or a single 12-ounce bottle of Port's bourbon-barrel-aged strong ale, Older Viscosity.
"When did $10 for 72 ounces of world-class beer become outrageous and spiraling out of control?" asks Ale Yeah! owner Eddie Holley, referring to the average price-to-ounces ratio of a craft beer six-pack. "That's less than $2 a bottle! Yes, the days of the $5.99 six-pack are long gone, but can you really blame it? If you think how much it costs to make really good beer, ship it, store it, get it to a retailer and ultimately to the end user, the costs are still beyond competitive."
Holley does, unfortunately, see industry people who he thinks are taking advantage of a booming scene. A new-to-Atlanta brewery, for instance, that he thinks is leveraging a popular style in order to sell more to stores, or distributors "seizing the moment, as it were," of the craft beer sales that have continued to increase year after year. But ultimately, he points to cost of goods, fuel, shortage of ingredients, and, of course, good old demand. "Both distributors and breweries can be accused of taking advantage of the market," Holley says. "Since the market is price-conscious among its retailers, it's really the distributors that are setting prices."
In an attempt to get a distributor's viewpoint for this piece, I reached out to Savannah Distributing, and was pointed to General Sales Manager John Schorn. His responses to my emailed questions were terse, but perhaps enlightening in their own way. What are his general thoughts on rising craft beer prices? "Good beer is still a great value." What did he think of the Salon piece? "Not sure." How does Savannah justify price increases? "We try to limit all price increases. It is difficult when the suppliers and all the products associated with beer, especially fuel, keep rising." What does he think of distributors taking advantage of popular beers? "I doubt that anyone can competitively [do that]." How much of a hand in the price increase does he think retail stores have? "Very little." Does he feel that as more and more products enter the market that consumers will be forced to vote with their dollar? "Not sure the price will come down as long as the market has beers that are hard to find." As a consumer, are there beers he personally feels are overpriced? "Not really."
For Del Price, a 52-year-old nurse practitioner in Candler Park, homebrewing has been the answer for more than 20 years. "I was told, 'You can brew your own beer for about $2 a six-pack,'" he says of the moment, decades back, when he decided to start making his own product. He's since judged local and national beer competitions, organized events, and served as the president of the Atlanta homebrew club, Covert Hops Society. In recent years, he's been dismayed by rising prices, though he says that the buyer should beware and that the market will dictate the sales. For his part, he's mostly opting instead to focus on his own beer. "The allure is making your own product, fresher, without the mark up and middle man," says Price, "sharing with friends and receiving feedback on the beer."
Whether it's traditional supply-and-demand economics at work, a few folks taking advantage of a buzzy industry, or hoodwinked consumers chasing after the next great hype to brag about on Twitter, the fact remains that, even in its most expensive incarnations, supporting craft beer often feels good to its consumers in a way supporting big breweries doesn't. And maybe that fact alone is enough to justify an eyebrow-raising price tag now and then. People will buy organic, locally grown food instead of a chain restaurant because they believe they're supporting their community and getting a better product in the end. The same can be said about craft beer, rising prices or not.
"Macro beers are not truly beer," says Holley. "They're loaded with fillers, wrought with cut corners and billions of marketing dollars to tell us that the product doesn't really matter. Micro beers hold true to the art of what beer is. Granted, Americans have played the role of Frankenstein with beer, continuing to experiment with it, but micro beers are loaded with love, passion, and innovation. People will choose to spend their money how they want, but almost every instance where somebody is introduced to craft beer is another nail in the inevitable big-box coffin for macro breweries."
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