Beer Pricing: A Little Less Hyperbole, Please

In my morning edition of The Globe and Mail newspaper yesterday, wine critic Beppi Crosariol wrote about the Sam Adams Utopias, Boston Beer’s high-end, high-alcohol, outrageously complex beer, the tenth anniversary edition of which has just come up for sale in Ontario at a price of $114.95 for the 710 ml bottle.

While he does a pretty good job at describing Utopias and placing it within the current state of beer and brewing culture, Crosariol does get a little hung up on the beer’s cost, variously employing such phrases as “nosebleed prices,” “exorbitant prices” and “stratospheric prices,” and comparing it to “Rolex watches and Prada purses.”

Really?

A Rolex goes for tens of thousands of dollars, and although I know nothing about the cost of Pradas, I’ve got to assume by dint of their reputation that they hit the same sort of price points. So how, pray, does that equate to a $115 bottle of beer, one which is intended to be consumed in small potions over days or weeks, rather than minutes or hours. Or, in other words, more like a single malt whisky or cognac than a Coors Light or Bud?

To answer that question, or at least further the debate, let’s take a look at what it all means. The last time Crosariol wrote about something to be sipped and savoured over a lengthy period of weeks or months, the Balvenie 17 Year Old Double Wood, he described the $167.95 bottle as “expensive.” Not stratospheric or exorbitant, just expensive. Before that we had the 15 year old Nikka Miyagikyo with nary a mention of the cost, despite the Japanese whisky’s $189.20 price. So, double standard?

Now, how about breaking down the cost of Utopias on a per drink basis? There are 24 ounces in a bottle and, at 29% alcohol, a generous pour would be about 2 of those ounces, making for a dozen total servings. Do the math and that comes out to less than $10 a serving, or about what one might pay for a glass of ho-hum wine in a restaurant. Still stratospheric? I think not.

By coincidence, on the same day that Crosariol was simultaneously adulating and excoriating Utopias, Clay Risen was over at the New York Times bemoaning the rise of big bottle beers, suggesting that, counter to every indicator imaginable – store sales, restaurant sales, brewery sell-throughs – there is some sort of backlash brewing against “expensive” 750 ml bottles of beer.

Jay Brooks does a thorough job of dismembering Risen’s story here, so I won’t go much into it myself, but in keeping with the tone of this post, I would like to take a moment to address the supposed price-based revolt.

At a high of $30 in stores, these beers are in the same price class as many wines, including a good number that lack complexity equivalent to the best of such brews. (And to be fare, many that provide equal or better value.) Yet it would be a brave writer indeed who took issue with $20 – $30 wines as a group, implying that drinkers are sick of such high prices and long for a return to jug wine. Which is not to say that I in any way agree with Risen’s characterization of the emergence of 750 ml bottlings of beer as being part of “what is being called the “wine-ification” of beer” – really? By whom, exactly? – but rather that I see no reason to discriminate against beer simply because you can still buy a twelve-pack of Bud Light for ten bucks.

And as for those individuals interviewed by Risen who suggest that they recoil at the notion of sharing their big bottle of beer with anyone else, I have but one piece of advice: Grow up!

Have You Heard About Terrapin?

That’s Terrapin Brewing of Athens, Georgia. They’re been in the news of late because the craft division of MillerCoors, a company called Tenth and Blake, have converted part of a loan they made to the brewery’s founders into a stake in the company, estimated to be something under 25% of the entity as a whole.

Whatever your thoughts on this might be, it’s likely neither as bleak nor as dire as you expect it to be. And neither will it be the last time you’re going to hear about something like this.

As I noted when Anheuser-Busch InBev bought Goose Island earlier this year, these types of deals are an inevitability in an industry where the only domestic growth is being shown by the breweries populating the 5% market share that is craft brewing. Big breweries like ABIB and SABMiller have, for the most part, essentially conceded that their brands can at best hold their own in a dwindling market and are content to buoy revenues through price hikes, like the 3% to 5% boost ABIB is currently effecting in the States.

How they can grow their presence in the market, then, becomes a question of either creating their own brands that play in the craft sphere, such as SABM’s Blue Moon and ABIB’s Shock top, or buying up their smaller competitors. Terrapin may not eventually fall to full MillerCoors control, or in a few years we might be more money pumped into the mix and a controlling share obtained. But whatever does happen, you can bet it won’t be Terrapin alone making those decisions.

The good news is that for every brewery that may fall to the goliaths, there are likely a few dozen about to open.

Mo’ Bud, Mo’ Money

This is getting to be as tedious as it is predictable. Yet again (and again), the makers of Budweiser have decided that the best way to counter shrinking sales and — ahem! — “higher commodity costs” is by raising prices. Three to five percent this time.

I wonder how long it will be before Bud drinkers realize that they’re being taken for a ride which has no evident stopping point?

Anheuser-Busch to raise US beer prices

Source: Reuters

Tue, Jul 19 2011

Anheuser-Busch InBev SA’s U.S. unit said on Tuesday that it plans to raise prices by 3 percent to 5 percent across its beer portfolio in October as it seeks to offset higher commodity costs.

The maker of Budweiser and Bud Light said the increases — which will vary by brand, package and market — will go through on October 3.

Update: I just heard that in the second quarter of 2011, shipments in North America for Anheuser-Busch InBev declined by 3.4%. Yeah, that price rise is because of “higher commodity costs,” I’m sure!

Stampede For Beer

From the website of the British publication, Off Licence News (emphasis my own):

Tesco stores in Scotland have been selling three cases of beer for as little as £10 following an EPoS error which has led to customer stampedes at some stores.

News of the glitch spread rapidly over the internet yesterday (June 1) as consumers realised they had been charged £9 or £10 less than the £20 Tesco had been advertising.

Police were called to the company’s Greenock store after motorists caused congestion in the car park as they raced to take advantage of the error. One Twitter user reported that “tempers are flying”.

A contributor to the HotUKDeals website said he had managed to buy 15 cases for £55. The error affected a number of brands, including Stella Artois and Strongbow, which saw prices crash to as little as £7 a case.

Tesco has now corrected the error.

Still too expensive for Stella, if you ask me.  Alan?

A-B InBev is STILL Screwing its Customers

Anheuser-Busch InBev reported its first quarter results recently, and guess what? Just like in their third quarter of last year, and likely a bunch of other quarters besides, volume sales are down in North America.

Volumes dropped throughout the Americas, but especially in North America, which is the source of nearly half of ABIB’s profits and where sales volumes dropped 3.4% overall, with the Bud family taking a particularly big hit.

Bad news, right? Wrong!

Because just as in quarters past, ABIB is offsetting plummeting sales with price hikes, thus earning not a loss in North America, but a profit. Globally, sales increased to US$9 billion, up from US$8.33 billion in last year’s first quarter, despite global volumes being down o.4%.

In other words, screw the people still buying your product by making them pay more for it. Nice.

Information compiled from reports in the Wall Street Journal and Financial Times.

Beer-Holes

As most San Francisco Bay area beer aficionados will know, last weekend was the always much-anticipated release of Russian River Brewing’s Pliny the Younger, a one-time-only beer that usually sells out the day it is released. Once it’s gone, that’s it for another year.

I was at said launch last year, and while I enjoyed the beer, I didn’t much care for the chaos, crowds, confusion and wait times for service. I wouldn’t do it again, but that’s just me. The beer, as I noted, is good, very good, even, but no beer is going to make me go through that kind of circus.

Others, however, obviously feel otherwise, as this year’s release was as crowded and boisterous as ever, according to those who attended. Which is perfectly fine and great for those who attended and for Russian River, the owners and operators of which go to great lengths to make things go as smoothly as possible.

Then this happens. Via the Burgundian Babble Belt, the Boggle About Beer blog and Nathalie Cilurzo herself, co-owner of Russian River with her husband Vinnie, I learn that some douche apparently smuggled some Younger out of the pub and put it up for sale on eBay. (The posting has since been removed, which suggests to me that either the beer was fake – which is where my money lies – or the seller was sufficiently humiliated by the reaction that he/she removed it from the site. Or maybe whoever it was took someone’s money and made a quick sale. Who knows!?)

This does happen, of course. There are those who want to try rare and virtually unobtainable Beer X at almost any price, as the legions of listings on eBay will attest, and if someone wants to buy a bomber bottle of some hot and talked-about ale or lager – ha-ha, just kidding about that lager part! Let’s face it, the geeks only want ales – and pay through the nose for it, well, more power to them.

But this one is different. Nathalie and Vinnie expressly served this beer as draught only this year, with no take out allowed, because they wanted to serve as wide-ranging a clientele as possible, and hopefully have some fun in so doing. Even so, according to Nathalie’s post on the subject, people were caught slopping beer into a canteen or bottle and trying to smuggle it out of the pub! Never mind that said beer will ultimately have all the integrity and appeal of the dregs of last night’s unfinished and unrefrigerated pint.

Collecting beer reviews, or “ticking,” as it is sometimes known, is always going to happen in our current culture of craft beer, and for those who enjoy it, I say go for it! But when the character of the beer is as compromised as would be a canteen of hastily and surreptitiously decanted ale, then the tickers have gone too far and become, as per the title of this post, beer-holes. It’s one thing to want to taste the beer, quite another to be willing to sample it after it has been subjected to all kinds of abuse. What’s next? Smuggling some out in your mouth and spitting into your friend’s eagerly awaiting gob?

One of the main beer review sites has as its motto “Respect Beer.” Exactly!

Take Me Back to FrangÓ!

Back when I ran my blog on That’s the Spirit, I had an occasional feature I called “Great Global Beer Bars.” In it, I featured a few of my favourites and explained precisely what it was about them I thought so laudable, places like the Oud Arsenaal in Antwerp – which I mention not just because Arsenal is playing their final group stage Champions League game today – and the One Pint Pub in Helsinki.

Were I still running this series, I would have one more to add today: FrangÓ!

I spent a large chunk of a day at FrangÓ during my recent visit to São Paulo, but in truth I have no idea how I got there. Sure, it was by taxi, but even with my better-than-average (I believe) sense of direction, the twists and turns we took en route had me completely discombobulated. I’m told that it’s somewhere in the outlying reaches of the city, but for more than that you’re going to have to ask Mr. Google.

Which, if you find yourself in São Paulo, you absolutely should do! Because despite its modest exterior and out of the way locale, FrangÓ is a serious beer bar, one which would stand out in any major beer city anywhere in the world. Walk in the front door and you’ll see a small room backed by a bar and a kitchen where, if you’re lucky, various chicken parts will be aromatically slow roasting on a spit over charcoal. In behind all that is another seating area, a little larger than the front, but still small, and a staircase that takes you to the “Choperia,” which is where FrangÓ really opens up.

The principle destination of the hoards of people who descend on FrangÓ every weekend, the basement Choperia veritably brims with beer, in fridges along one wall, in crawl spaces to one end of the room and in a large cage at the other. And what beers they are! Although imported ales and lagers are by North American standards prohibitively expensive in Brazil,

FrangÓ owner Cássio Piccolo with Cervejaria Colorado's Marcelo Rocha

FrangÓ owner Cássio Piccolo stocks literally hundreds of brews from around the globe, including some he says don’t sell particularly well, but number among his own personal favourites.

And that is what truly strikes at the heart of what makes FrangÓ great: it is a place of true and pure passion for beer, in all its forms and almost infinite flavours. Piccolo founded FrangÓ before it was possible to obtain a wide variety of beers in Brazil, but took that as his mandate anyway because he wanted to lead the way forward for São Paulo and Brazil as a whole. He’s still leading.

Guess What? The Big Breweries Are Trying to Screw You!

The third quarter results for the world’s big brewers are being reported this month in the financial press, and while you might think that declining sales – which almost all of them have experienced, at least in their traditional markets – might translate into decreased profits, or even losses, well, you’d be dead wrong!

• Denver-based Molson Coors overcame a decline in world-wide beer volume to post an 8.8% rise in earnings, as revenue increased for the fourth consecutive quarter from year-earlier levels. (Courtesy of the Wall Street Journal)
• Two years after its ill-timed takeover of Budweiser, the Brazilian-Belgian beer giant is taking on its own customers, gambling that U.S. beer drinkers will swallow above-inflation price increases despite the sluggish economic recovery. AB InBev’s expectation-beating third quarter results suggest that bet may be paying off. (Thanks again WSJ)
• Still, earnings for big beer look better than revenue, said the report. MillerCoors said Wednesday that net income for the third quarter, excluding special items, actually increased, 37%, to $334 million, thanks to cost cutting and price increases. (Credit this time to CSPNet.com)

Yes, you read that right. Demand is down, which if I remember my university economics is supposed to mean that prices are also supposed to drop in order to stimulate sales. But instead, the big brewers are raising prices to the point that rather than having merely a mitigating effect on their revenue stream, it is actually increasing profits.

Or in other words, AB InBev and SAB Miller and Molson Coors are gambling that their North American customers are dupes, and the bet is paying off. Suckers!

Wow! That’s Some Kind of Hate

Thanks to Mr. McC for alerting me after the fact of Josh Rubin’s column in the Toronto Star last week, announcing what has long been rumoured in Ontario beer circles, namely that the LCBO will soon be bringing in 40 bottles of the Boston Beer Company’s Utopias, priced at $115 per 26 ounce bottle.

That people would react strongly to a beer of 27% alcohol priced at over one hundred bucks a bottle is no surprise, but oh, the hatred that appears on the comments section of Josh’s story.

• $115 for a new beer is just dumb. Its (sic) almost as dumb as voting Liberal!!!!!!!
• It probably tastes like crap. All strong beers do and maple syrup probably doesn’t help. A beer should be smooth and light on alcohol, so you can drink lots of it should there be a good occasion for it.
• Boo!! LCBO bothers to import THIS craptastic, overpriced stuff, but can’t manage to get their hands on more beers from both regional/national & international craft breweries?

Now how many of these and the other erudite beer philosophers on the Star’s commentary page do you suppose have actually tasted Utopias, or are aware that this exact vintage of the beer retailed for $150 or more Stateside when it was released? Hands up for none!

For the record, here’s what I noted in the pages of Nation’s Restaurant News when the beer was first released:

For each of the last three editions of the 27% alcohol Utopias, I have advised readers to cellar this boisterous and youthful brew until it has managed to mature out its rough edges. For the 2009 issue, however, the sage minds at the Boston Beer Company have blended in several older brews, including some aged in used bourbon, Scotch whisky, port, sherry and muscatel barrels for up to sixteen years, which has served to create a far more complex and glass-ready brew.

Expect orange peel and fig, chocolate and cinnamon in the nose and caramel and vanilla alongside more fruit and spice in the body, all culminating in a warming, spirituous finish. I would recommend serving this pricy brew at room temperature in one to two ounce portions, since it may be kept on the bar without spoilage for weeks after opening.

The very same bottle I used to compose the above tasting notes, incidentally, still sits upon my desk with beer inside, awaiting an experimental one year anniversary sampling. It has been exposed to all the heat and temperature changes my condo can throw at it, not to mention almost a full twelve months worth of oxidization. Tune in next month to see if it survived.

Last Night’s Beer

Yesterday afternoon I purchased a case of beer. This in itself is unique, as I usually buy only multiple bottles or cans or six-packs of any single brand, but this particular beer was only available to me in quantities of a dozen 750ml bottles – due to Ontario sales restrictions; don’t ask! – and so I made room in my cellar space for half – to be enjoyed later on, not aged – and in my beer fridge for the rest.

And last night I popped open a cork-finished bottle to be enjoyed.

The identity of this beer is of no matter, but it is not a “rock star” beer nor is it a “stand in line and maybe you’ll be fortunate enough to buy a bottle or three” kind of beer. It is, however, more costly than what I typically pay for an IPA, at over $10 a bottle, and as such has a certain aura of “specialness” to it.

It is also magnificent.

I note all of this as a coda to yesterday’s post about the value of beer. Do I have other IPAs in my fridge? Of course I do. Did they cost less than the one I just purchased. Uniformly, yes. So why shell out over $125 for a dozen bottles? Because it is different than the rest and, in my measured and considered opinion, well worth every single penny.

To some of you reading this, it might also be worth what I spent, maybe even more, up to twice as much. Others would no doubt mock me for being suckered into such an expenditure. But for me, at this time, the purchase was one of the wisest I have made on the beer front in several weeks.

Which is at the heart of this whole value discussion we navel-gazing bloggers are having right now, the worth of any particular purchase to any one individual at any given time. I can say to you, or you to me, that Beer X is profoundly not worth standing in line and paying outrageous sums for, and you may listen to me, or me to you. Or maybe not. But neither of our actions is going to make or break the market – at best it might help out a struggling brewery, or free up some stock for a fellow beer aficionado who takes a different view of things. What it won`t do is shock the market one way or another, because these days craft beer buyers are very much like Nick Fury’s Marvel Comics nemesis, HYDRA, cut off one and two more shall take his or her place.

And that, my friends, is a profoundly good thing, of greater benefit to beer consumers as an entity than any resulting price creep is a detriment.