Specialty beer prices

Like Jeff, I recently followed a thread at the OBC about the price of beer. It was surprisingly heated, considering that nobody was forcing people to drink specialty beers, and these are people who spend a lot of time making beers of their own and promoting the craft. Jeff’s article is very thoughtful and reasonable (as usual) , and we both draw similar conclusions.

But I wanted to toss in a few more pieces. Beer is experiencing an evolution. Craft brewing is growing beyond the classics. New styles are popping up. Brewers are experimenting. And frankly, beer is getting better.

To produce specialty beers, there are often unique processes involved. These can increase expense in several ways. First, the process itself can be expensive. Equipment of the quality and magnitude required by a brewery can cost a lot, education to apply the techniques can be costly. Second, the experiments leading to the process can be expensive. Third, the time involved is expensive. Additional steps take time. With specialty beers, that can be a lot of time. Barrel aging requires that the beer stay in a location for an extended period of time. This not only takes up space with stock not rotating, but can be a financial burden by extending beyond net-30 by definition.

Then there is the risk. Brewing is a combination of art and science, of chemistry, biology, and physics. In those realms, things get complicated fast as more variables are introduced. Putting beer into a barrel greatly increases the risk of spoilage. Roasting/smoking/whatever grains can introduce off flavors. If a batch goes bad, that can be extremely costly to a brewery. This risk needs to be accounted for in the cost of the beers unless you’d see the producer of your favorites disappear suddenly after a batch goes wrong.

So those are some of the more tangibles contributors to higher cost. Jeff makes an interesting observation regarding scarcity as well. By pricing these beers higher, it makes it possible for a greater number of consumers to enjoy the products, rather than a smaller number of entities rapidly depleting the market. Seems like a supply and demand curve for people who like beer.

In addition, there is the perception of beer. The far more established wine market is a good one to consider. The economics tends to work itself out. Cheap wines are typically mass produced and lack character. There are occasional gems, but those typically climb the scale or are a bit more lucky catches. There are plateaus as you move up the price scale, to inexpensive wines, moderate, expensive, and so on, with each level improving in quality. Typically you’ll find diminishing returns as you climb up in price, so the goal is to find the right wine for you at the time. Now, the same can be applied to beer. The mountain doesn’t climb as high, but the plateaus are there. Keystone, Natural Light, and others form the foundation, supporting Budweiser, Coors, Miller, Corona, Heineken, Fosters, and many others sit here at the sweet spot of the American pallet. On top of that we go to the Bridgeport IPAs, Hefeweizen, Mirror Ponds, Terminal Gravity, and other distributed microbrews. Some of these breweries make craft beers as well, and those being to fill the next tiers, along with Rogue, Dogfish Head, Stone, and many others.

The great thing about the larger microbreweries pushing up the plateaus is that it really opens the door for smaller breweries to do the same. At those price points, breweries like Upright Brewing and Captured by Porches can release their specialty runs without needing to compete at the 6-pack level. So even if Abyss is overpriced, it is a great thing for beer in general. Buy a bottle and share it with some friends. Or just drink it yourself.