# Beer profit margin **URL:** \ **Category:** Factual Questions\ **Created:** [December 20, 2006, 3:04am UTC](https://boards.straightdope.com/t/beer-profit-margin/384873 "2006-12-20T03:04:03Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Throatwarbler\_Mangrove](https://avatars.discourse-cdn.com/v4/letter/t/8c91f0/32.png) [@Throatwarbler\_Mangrove](https://boards.straightdope.com/u/Throatwarbler_Mangrove)\ **Post date:** [December 20, 2006, 4:42pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/21 "2006-12-20T16:42:11Z")
Just a WAG on my part, but I’d wager that beer companies operate much like Nike or Coca-Cola, in the sense that most of the “value” added to the product is in the form of advertising and celebrity endorsements. Whatever the actual cost of production for beer is, it’s probably more or less the same across the market, no single maker having any kind of significant technological edge that could reduce costs. Therefore products are differentiated based on “image” and other non-tangibles. ---
**Author:** ![Throatwarbler\_Mangrove](https://avatars.discourse-cdn.com/v4/letter/t/8c91f0/32.png) [@Throatwarbler\_Mangrove](https://boards.straightdope.com/u/Throatwarbler_Mangrove)\ **Post date:** [December 20, 2006, 4:45pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/22 "2006-12-20T16:45:54Z")
I should add that given the above, the markup on beer can be whatever the retailer decides it should be based on the amount of marketing dollars spent, regardless of what the physical cost of production is. The premium one pays for Nike shoes goes towards the marketing machine and Micheal Jordan, not to any physical manufacturing costs, same with beer. ---
**Author:** ![Gary\_T](https://avatars.discourse-cdn.com/v4/letter/g/3ec8ea/32.png) [@Gary\_T](https://boards.straightdope.com/u/Gary_T)\ **Post date:** [December 20, 2006, 5:11pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/23 "2006-12-20T17:11:52Z")
Retailers don’t compute production costs, advertising costs, distribution costs, and such. Those are already accounted for in their wholesale cost. The retailers then mark that up to their retail price, considering their overhead, competition, what the market will bear, etc. Rather than laboriously calculating a mark-up for each individual item, they typically use a standard percentage for everything, or a few standard percentages (as **Blunt** mentioned) for a few broad classes of things. The comment “with mark up that was the price” implies that the retailer in the OP simply applied his standard beer markup to the product in question. ---
**Author:** ![August\_West](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/august_west/32/18069_2.png) [@August\_West](https://boards.straightdope.com/u/August_West)\ **Post date:** [December 20, 2006, 8:41pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/24 "2006-12-20T20:41:17Z")
You rang? The majority of the cost in producing beer is in the packaging. Bottles, cans, and labels, and the equipment and labor to put the beer in those bottles and cans and label them, is by far the most expensive part of making beer. I don’t know what the standard mark-up on beer is because I am on the production side, not sales, but I am pretty sure that it is different for diffferent sectors of the market. ---
**Author:** ![OneCentStamp](https://avatars.discourse-cdn.com/v4/letter/o/13edae/32.png) [@OneCentStamp](https://boards.straightdope.com/u/OneCentStamp)\ **Post date:** [December 20, 2006, 8:56pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/25 "2006-12-20T20:56:59Z")
[QUOTE=Uncommon Sense] Calling all **August Wests** , calling all **August Wests**!! He actually works in a Brewery (in Milwaukee) and may be able to shed some **lite** on the subject. [/QUOTE] (bolding mine) Eww. If it comes from Milwaukee, and it’s “lite,” he can keep it. 😉 ---
**Author:** ![ArmenE](https://avatars.discourse-cdn.com/v4/letter/a/e9bcb4/32.png) [@ArmenE](https://boards.straightdope.com/u/ArmenE)\ **Post date:** [December 20, 2006, 9:06pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/26 "2006-12-20T21:06:19Z")
[QUOTE=groman] 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. [/QUOTE] For Bud/Miller/Coors/etc, the grain bill is probably a bit more than half barley, with the rest of the fermentables coming mainly from rice. Maybe they use some corn sugar too. Budweiser even says right on the bottle that it’s made with the “finest rice, barley, and hops”,or something along those lines. ---
**Author:** ![Tim\_T-Bonham.net](https://avatars.discourse-cdn.com/v4/letter/t/46a35a/32.png) [@Tim\_T-Bonham.net](https://boards.straightdope.com/u/Tim_T-Bonham.net)\ **Post date:** [December 20, 2006, 9:53pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/27 "2006-12-20T21:53:01Z")
[QUOTE=Little Nemo] 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? [/QUOTE] The only ones I know of personally are when the store sold alcohol illegally (to a minor). But given the sue-happy culture in America, I’m sure there have been other lawsuits. I remember hearing about some class-action product liability suits against the alcohol industry. I think they were dismissed because alcohol is only dangerous when used to excess, unlike tobacco, which is a danger to every person who smokes and even those just breathing nearby. But the insurance policies are still an added cost to the stores, even if they are never sued at all. ---
**Author:** ![Musicat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/musicat/32/20189_2.png) [@Musicat](https://boards.straightdope.com/u/Musicat)\ **Post date:** [December 20, 2006, 10:50pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/28 "2006-12-20T22:50:03Z")
[QUOTE=August West] You rang? [/QUOTE] Sure did. Cheers! ---
**Author:** ![August\_West](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/august_west/32/18069_2.png) [@August\_West](https://boards.straightdope.com/u/August_West)\ **Post date:** [December 20, 2006, 11:32pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/29 "2006-12-20T23:32:00Z")
Howdy Musicat! Sorry to hijack the thread, but my wife and I are heading to Door County for New Year’s weekend. Any cool stuff going on that we shouldn’t miss? Feel free to email me a reply if you think of anything, address is in my profile. ---
**Author:** ![pkbites](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pkbites/32/204_2.png) [@pkbites](https://boards.straightdope.com/u/pkbites)\ **Post date:** [December 21, 2006, 12:07am UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/30 "2006-12-21T00:07:25Z")
[QUOTE=groman] 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. [/QUOTE] Actually many, many moons ago I started a thread on this idea. Search for it yourself, I’m too lazy.😃 What is to prevent a company from creating an artificially flavored beer flavored syrup, mixing it with carbonated water and a foaming agent and then adding grain alcohol to give it the small 5% content that the average beer has. Brewing time would be eliminated, brewing costs slashed, and considering the swill many beer drinkers guzzle without complaint (like this Sterling shit) I bet they’d get away with it! ---
**Author:** ![Cluricaun](https://avatars.discourse-cdn.com/v4/letter/c/bb73d2/32.png) [@Cluricaun](https://boards.straightdope.com/u/Cluricaun)\ **Post date:** [December 21, 2006, 12:25am UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/31 "2006-12-21T00:25:56Z")
[QUOTE=pkbites] Actually many, many moons ago I started a thread on this idea. Search for it yourself, I’m too lazy.😃 What is to prevent a company from creating an artificially flavored beer flavored syrup, mixing it with carbonated water and a foaming agent and then adding grain alcohol to give it the small 5% content that the average beer has. Brewing time would be eliminated, brewing costs slashed, and considering the swill many beer drinkers guzzle without complaint (like this Sterling shit) I bet they’d get away with it! [/QUOTE] It’s my understanding that this isn’t really too far off the mark for most American macro brews. There’s a lot more in there than hops, barley, water and yeast. Colorings, flavorings, etc. ---
**Author:** ![Cyn](https://avatars.discourse-cdn.com/v4/letter/c/a88e4f/32.png) [@Cyn](https://boards.straightdope.com/u/Cyn)\ **Post date:** [December 21, 2006, 1:34am UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/32 "2006-12-21T01:34:02Z")
[QUOTE=Mr. Slant] 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? [/QUOTE] Assuming 15% markup we can extrapolate. Consumer pays $2.99 retailer paid about $2.55 Retailer paid about $2.55 wholesaler paid about $2.18 Wholesaler paid $2.18 brewer paid about $1.88 in production costs. ---
**Author:** ![drachillix](https://avatars.discourse-cdn.com/v4/letter/d/48db29/32.png) [@drachillix](https://boards.straightdope.com/u/drachillix)\ **Post date:** [December 21, 2006, 1:36am UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/33 "2006-12-21T01:36:21Z")
[QUOTE=Cyn] Assuming 15% markup we can extrapolate. Consumer pays $2.99 retailer paid about $2.55 Retailer paid about $2.55 wholesaler paid about $2.18 Wholesaler paid $2.18 brewer paid about $1.88 in production costs. [/QUOTE] FTR this was drachillix not cyn damn cookies.. ---
**Author:** ![Kevbo](https://avatars.discourse-cdn.com/v4/letter/k/e47774/32.png) [@Kevbo](https://boards.straightdope.com/u/Kevbo)\ **Post date:** [December 21, 2006, 5:01pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/34 "2006-12-21T17:01:46Z")
[QUOTE=pkbites] What is to prevent a company from creating an artificially flavored beer flavored syrup, mixing it with carbonated water and a foaming agent and then adding grain alcohol to give it the small 5% content that the average beer has. [/QUOTE] The tax laws. For example, if heat distillation is part of the process, then the result is taxed as hard liquor rather than at the “malt beverage” rate. Thus the ice process is used to raise the alcohol content of of “ice” beers. I know a guy who is marketing some pre-mixed rum cocktails. They aren’t any stronger than beer, yet they fall under all the same rules and taxation as 100 proof whiskey would. ---
**Author:** ![Uncommon\_Sense](https://avatars.discourse-cdn.com/v4/letter/u/f9ae1b/32.png) [@Uncommon\_Sense](https://boards.straightdope.com/u/Uncommon_Sense)\ **Post date:** [December 21, 2006, 5:11pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/35 "2006-12-21T17:11:08Z")
[QUOTE=Kevbo] The tax laws. [/QUOTE] How would this be any different than making, say, a Jager Bomb? You’re adding alcohol to RedBull. ---
**Author:** ![DSYoungEsq](https://avatars.discourse-cdn.com/v4/letter/d/c6cbf5/32.png) [@DSYoungEsq](https://boards.straightdope.com/u/DSYoungEsq)\ **Post date:** [December 21, 2006, 5:19pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/36 "2006-12-21T17:19:34Z")
Ok, let’s get back to the OP. Beer is priced what it is because that’s what people will pay to buy it. Certain beers can be priced higher than others, reflecting the “value” customers put on the brand. If you want to know whether or not beer is “overpriced,” from the sense of markup resulting in profit, I’d suggest looking at the profit margins of breweries. That’s not so easy to do any more, given that most brewing companies also sell regular alchohol, wine, etc., but you can at least get some idea of the markup from production cost to wholesale. If you think beer is over-priced, stop buying it. I won’t buy soda pop in 2 litre bottles unless it is under $1.39 a bottle, which is perhaps unreasonable, but which allows me to buy the stuff that way almost all the time. ---
**Author:** ![Santo\_Rugger](https://avatars.discourse-cdn.com/v4/letter/s/e95f7d/32.png) [@Santo\_Rugger](https://boards.straightdope.com/u/Santo_Rugger)\ **Post date:** [December 21, 2006, 5:49pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/37 "2006-12-21T17:49:15Z")
[QUOTE=Uncommon Sense] How would this be any different than making, say, a Jager Bomb? You’re adding alcohol to RedBull. [/QUOTE] The Jager is already taxed. ---
**Author:** ![Uncommon\_Sense](https://avatars.discourse-cdn.com/v4/letter/u/f9ae1b/32.png) [@Uncommon\_Sense](https://boards.straightdope.com/u/Uncommon_Sense)\ **Post date:** [December 21, 2006, 7:41pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/38 "2006-12-21T19:41:11Z")
[QUOTE=Pygmy Rugger] The Jager is already taxed. [/QUOTE] Of course, and so would the alcohol added to the _mixed_ beer to get it to 5%. ---
**Author:** ![neofishboy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/neofishboy/32/444_2.png) [@neofishboy](https://boards.straightdope.com/u/neofishboy)\ **Post date:** [December 21, 2006, 8:03pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/39 "2006-12-21T20:03:26Z")
Current _mark-up \* I use…_ Kegs, 12-packs and domestic 6-packs: 25% Import 6-packs: 30% Singles: 35% This puts my profit _margin_ around 23% for the whole department. \*Mid-sized independent grocery store known for having fairly low beer prices. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [December 21, 2006, 8:46pm UTC](https://boards.straightdope.com/t/beer-profit-margin/384873/40 "2006-12-21T20:46:52Z")
I wonder how much more beer costs to produce (than bottled water)? Seems to me the rest of the costs (packaging, overhead, etc.) should be roughly the same. [Previous page](https://boards.straightdope.com/t/beer-profit-margin/384873.md?page=1) [Next page](https://boards.straightdope.com/t/beer-profit-margin/384873.md?page=3)