What exactly is the mark up on beer? In my opinion beer is overpriced, seeing that it is 90-96% water. Consider what has to be done to gasoline here, and it is ounce for ounce much cheaper than beer, I find the price of beer to be pretty high. Not that I begrudge any company to make a good buck or charge whatever they see fit.
Yesterday I went into Garys Beer & Liquor in Oak Creek [Milwaukee] Wisconsin.
They were selling Sterling Light Beer. Which isn’t great, but (surprising for a light beer) is better than the regular Sterling Beer.
I don’t want to get into what beer you think sucks, that’s not what this is about.
What this is about is, they were selling Sterling Light for $2.99 a CASE!
Not a 6 pack or a 12 pack. $2.99 for a CASE of 24 twelve ounce cans. And it was $2.99 a case straight up. No rebates or anything like that. When I asked the manager why it was so cheap he just shrugged and said with mark up that was the price.
Yes, absolutely. Especially single serve bottles that run anywhere from 79 cents to $3.00. The 5 gallon jugs of spring water we get delivered to my office only cost $4.00, and tap water cost far less than that.
Lets clear one thing up: by “overpriced” I mean the price is much, much higher than the overall value of the product received. I do not mean that there should be some kind of price controls or anything like that. A company or store should be able to charge whatever they want.
I just want an idea of of what the real value of this particular product. Most breweries sell to a distributor, who then sell to a store, who then sell to the retail customer. In the case of the OP the brewery, the distributor, and the store can make a profit while selling an entire case of beer for only $2.99? And it’s not like this particular brand is a high volume item. A case of Bud runs anywhere beyond $16. Bud though has the shit marketed out of it. Subtract that expense and how much does it cost to produce a case of Bud as compared to this swill?
I’d guess that it depends on the beer. I’d say that the production cost on a bottle of Icehouse is probably lower overall than the production cost of a bottle of, let’s just pick Sierra Nevada. The volume turned out by a mega brewery brings the per unit cost down in a way that can’t be matched by smaller producers, so my guess would be that the mark up on a case of Miller products is in the 80-95% range, whereas craft beers would be closer to the 30-50% range.
I work part time in a liquor store, and from what I’ve seen, beer does not have a high markup at all. As far as I know, our wine is marked up the most, liquor is next, and beer is the least. I think we make a buck or two per case of Miller or Bud or whatever that probably retails for 14 dollars. Some wines on the other hand, may be marked up 100% or more. I don’t know when I work next, but I’ll come back with more specific info if this question isn’t answered before then.
Wow. Blunt’s message suggests a markup in the 15% neighborhood, rather less than I would have guessed. That would be less than 50 cents profit on that case of Sterling Light.
The manager’s comment, and the low price, suggest that the store uses a standard percentage markup for all beers. A savvier marketing strategy would be to use a markup matrix, a form of sliding scale. This would give a higher markup percentages on low-ticket items (making it at least worthwhile to ring up the sale) and a lower markup percentage on high-ticket items (minimizing “sticker shock”). I’m surprised that this store appears (my perception) not to do so.
Hmmmmmmmmm.
I suppose the GQ would be simpler to answer if we defined the question as to where the value add really is in this supply chain.
Are you asking about mark-up from brewer to consumer?
Brewer to distributor?
Distributor to retailer?
Retailer to consumer?
I could give you some sort of related info on packaging and the supply chain, etc. although it would be geared to wine, the same would probably extend to beer as well as many other products, or so I assume.
I’d guess the mark up is minimal on that particular brand, but they got a *really *good deal on a truckload or more of all of the beer brands coming from that brewery.
You should include in your ‘production cost’ for beer some extras that sellers have to pay. Like ‘dram shop’ liability insurance, which can be very expensive.
Nobody sues the gasoline station when their customer gets in an accident. Beer sellers can be sued, often are, and have to pay for the insurance even if they are never sued.
I’ve read that for most beers, the production cost of the containers is usually about as high as the production cost of the beer itself. I also read that for many brands, the cost of the advertising is as high as the cost of making the beer. And while the money spent on advertising might seem unnecessary, it’s actually as important as the money spent on the containers. Brewers have to convince customers to buy beer and then to buy their specific brand of beer.
I’ve heard of businesses that serve alcohol being sued, but have there been cases of stores that sell alcohol for outside consumption or brewers themselves ever bing sued for an alcohol-related accident?
Given Blunt’s response, I would wager that the $2.99 a case price for markup might be more reasonably explained as “They shipped us a metric buttload of this stuff and I have to get it out of my back room, so I’m selling it way below cost just to dump it.”
Well, until they’re no longer actually brewing the stuff and mass producing concentrated syrup to be diluted with carbonated water, I don’t see how making beer would be cheaper than making coke.
First and foremost, beer needs to be brewed, which is more complicated than the tightly controlled chemical chain of bottling Coke or making the syrup. Coke is essentially a pre-mixed non-alcoholic mass-produced cocktail Imagine a bartender mixing you up a Cola (by carbonating water, adding corn syrup, caramel, caffeine, plus whatever else is in it) vs. having the bartender brew you a glass in front of you, and I think the difference in process should become clear.
Second, beer is supposed to be made from at least starch, yeast, hops and water. I mean if you were taking the Coke approach, I suppose you could skip the hops part and use an artificial flavouring, and still call it ‘beer’, but I doubt you could get away with not actually mashing, cooking and fermenting your starch source.
The only bulk ingredient of Coke is really corn syrup. I don’t know what grain they make most mega-brewery beers out of, but I’ve always assumed it was not barley based on the taste, but even if it’s corn there’s simply no way your starting ingredients are going to be cheaper than those of Coke.
Imagine a bartender mixing you up a Cola (by carbonating water, adding corn syrup, caramel, caffeine, plus whatever else is in it) vs. having the bartender brew you a glass in front of you, and I think the difference in process should become clear.