Prices

[Steve]

Hi all,

Just wondering...what sort of margins do the big breweries / bottle stores / supermarkets get on beer? I see alot of 500ml bottles for $6 and up...Emersons up there at $9 or so. What are they paying for these beers? How many people are paying these amounts for single bottles?

Thanks!

[Greig McGill]

I'm on the "it's not too expensive, you're too cheap" side of this debate, but to play devil's advocate for one second...

I don't know about you guys, but I tend to "quaff" most beer. I'm a quantity drinker. It goes down a lot faster than wine. There are exceptions, but in general, even a pint of Hop Zombie doesn't last long in my glass. So, if we're talking about value in terms of time spent enjoying something, I'm not sure the wine versus beer model of value holds for me. I don't necessarily think they should be compared on the same scale.

That said, from the production side as a brewer, there's not much we can do about what you get charged. Your beef is with the government, and the ridiculous tax known as "excise" so you don't think about what it really is, or the complete lack of moral principle behind the levying of it. Start yelling at your MPs. I'll join you.

[Kelly Milligan]

That's a fair call Greig, would you say you quaff at home too? I suppose for me when I buy these beers to drink at home it's as a nice little experience in between quaffing beer from the Keggerator ;P

[Stu McKinlay]

Nicely played Mr McGill...

 

But hey, Greig, your quaff/sip argument doesn't wash with me. From what I hear, a bungy jump and a private dancer are about the same price.... one of them only lasts about three seconds.

[Stu McKinlay]

However... the word quaff does remind me of how I've always wanted to do Kid Chocolate and Punkadiddle in 500ml cans.

[Raffe]

^^ Like!

[Tilt]

Yep, I'm in on this line of argument. Fast and furious, long and slow....both equal in the enjoyment stakes - just different.  Overall perceived value is where its at.

[Greig McGill]

"From what you hear" eh? Nicely played yourself! ;)

It's about individual value. I don't value wine and beer using the same metric. I also don't value Bungy Jumping and Lap Dancing the same!

[Stu McKinlay]

I've never paid for, or partaken in, a bungy jump. I've also never partaken in a private dance that has been paid for...

 

I may well have inhaled... but that was a long time ago.

[Hillman]

I'd be interested to know from the brewers here how much of that cost is in the packaging. The cost of a pint on draft at a bar doesn't seem much higher than the cost of a 500ml bottle at an off-licence, and places that fill riggers like Regional Wine and Spirits and Hopscotch have much better prices than either. As does Parrot Dog, which fills for about half the price of off-licence bottles (my preferred model, if I were ever to open a brewery). How is the bottling process being dealt with by the breweries, and would moving to canning be feasible/useful? Could a cooperative investment in a mobile canning line help lower costs? 

Personally, I pay for the expensive bottles, because I'd rather drink less beer of higher quality, and have learned that quaffing an 8.5% D.IPA is a risky business. Hell, I've bought more than one bottle of 8 Wired's oaked porters for nearly $20, because damn I love an oaked porter. But I'd rather pay less, and more to the point would like to see the market for craft beer in NZ expand, and think that price is a major factor (that, and the fact that Aucklanders in general still think that Stella Artois is the height of sophistication).  

That said, I can't agree that there shouldn't be sin tax on alcohol. NZ has a major problem with binge drinking, and there is plenty of evidence of a strong correlation between problem drinking and price. I do think that there might be an argument for lowering that tax on craft beer in order to get it into a price range that is attractive to older drinkers who want to drink it but can't bring themselves to pass the cost threshold, which would generally help in developing that sophisticated drinking culture we've been hearing about since Jenny Shipley lowered the drinking age. But then you get into the "what is craft beer" arguments and will start hearing from that great producer of craft beer, Dominion Breweries, about their exciting range of Monteiths (different colours, same bland flavour!) 

[Stu McKinlay]

It's pretty simple, in my opinion... make the excise tax so that a (physical) brewery gets a rebate on its first 5,000L of alcohol (or something similar). Even 2,000L would be good.  That's nothing for big breweries but it's the difference between being broke and paying yourself a decent wage, and/or dropping your costs, in a little brewery. 

 

Little breweries are paying a lot more (per litre brewed) in other taxes anyway.

 

 

ps. Packaging varies greatly depending on whether the beer is a regular or seasonal, economies of scale and all that. You're probably looking at about 5-10% of the final cost to the consumer. Could be less than 1% for big breweries, I imagine. 

[Hugh Grierson]

The other cost of packaging is the moving the boxes, glass and caps around the country/world.

I worked out that a 50L keg of beer would require 33kgs of bottles to hold it, plus boxes and caps.

That's twice as much (just the glass) as a 15 kg keg, that is of course reusable.

So since I opened Hopscotch, that's about 3500Kg of glass out of the waste stream, if my customers were to drink 330ml bottles.

On the tax side, Aussie give the small brewers a tax break, how does that work?

[Stu McKinlay]

But you're shipping kegs both ways... I'm not an environmental scientist, by any stretch, but I'm guessing that goes some way towards evening things up.

 

On the tax front, Australia charges about 50% extra excise tax for any vessel under 48L (and that include growlers/flagons/riggers) so the rebate is chump change. if small brewers there are anything like here, and I guess they are, they're probably doing about 2/3 of their volume (give or take) in bottles.  I can see why they love their brewpubs!