The Business of Beer - Brewery Releases
The business of beer is a 100 Billion dollar business. That is a lot of money! And with over 4,000 breweries in the United States there is a lot of competition for your dollar. There is also the three tier system, where the breweries who make the beer (tier 1) send their beers to a distributor (tier 2) who then sends it to the retailer/restaurant/bar (tier 3). The intent of this blog post isn't going to be to teach you the business of beer but rather look at different aspects of the business itself. This blog will be about brewery releases in general.
Depending on where you are in your beer journey, you may have been to a brewery release at some point. In Wisconsin a few annual ones come to mine:
Being in Wisconsin I tend to get to the New Glarus R&D releases whenever I can. During one event I was able to chat with Deb Carey about the release itself and how successful they always seem to be. If you haven't been to one I can tell you that once they open their doors, the wait time to get bottles is really short and the line that once help hundreds of people all but disappears within 20 to 30 minutes. We discussed their process to try and deter people from getting back in line to buy more than their allotment. Now, I will admit I am not a fan of their 2 bottle per person per day allotment because I have to drive 4 hours round trip to get it but that is neither here nor there. The brewery places a permanent marker X on your hand after you buy your bottles. They are looking into doing driver's license scans because people are still finding ways to get back in line. After we discussed this I inquired on whether or not this was a major concern for the brewery and she stated, While we still make our money at the brewery, it's the beer fans that are screwing other beer fans out of being able to try these beers. She makes a very valid point because she knows the beers will sell but she is concerned with more people having the opportunity to try it rather than making a quick buck but selling out as soon as possible.
We have all heard of the horror stories that present themselves at these types of event, from fake tickets to having your grandmother mule for you. These are things that will never change. You know someone who has done this type of thing before. I know of people who bring their significant other (who doesn't like beer) with them to buy double the allotment or bring their parents/grand parents with them to buy more beers. While it may be frowned upon and seen as gaming the system there is nothing illegal about it and for a lot of people its a matter of ethics.
Let's bring this back to the business of beer. Every time you have a demand that surpasses the supply, you get higher prices and secondary markets. People will capitalize all they can to make money. I have seen Craigslist postings for Central Waters latest anniversary beers going for $50 a bottle, up from the $15 you paid at the brewery. And someone will pay that price for beer because they wanted to try it and had no other way of getting it. Breweries have to be aware that this is going on and any brewery owner who says otherwise is either lying or has their head in the sand and truly don't understand their business. As long as we have this secondary market we will have people who will try to take advantage of it for their own benefit. So what is a brewery to do? Do they raise their bottle price knowing that there are people who will pay that kind of money while alienating people who don't? Do they try to bring more checks and balances to brewery releases in hopes to reach a larger audience or simply stop doing brewery releases and send everything out into distribution and let people fight over it at the retailers? Or do they celebrate the people that will buy $5,000 worth of beer in one shot with no regard to anyone else in line or the fact that most of those bottles will be sold at inflated prices? There is no right or wrong answer here but rather the breweries doing what is right for them based on their ethics. What are your thoughts? Comment below and let me know!!
(stats fromThe Brewers Association).
Depending on where you are in your beer journey, you may have been to a brewery release at some point. In Wisconsin a few annual ones come to mine:
- New Glarus R&D Releases
- Lakefront Black Friday
- O'so Sours / Funk Factory Sours
- Central Waters Anniversary Party
I am sure there are more that are periodic in nature. This wasn't meant to be an all inclusive list but an example of what I am talking about when it comes to brewery releases. So now that you have the picture, let's talk about how they are run.
Brewery releases can be hard to project, especially if you are a brewery who is new or hasn't done them often. But one thing is for sure, breweries tend to make a nice chunk of change from it because they can bypass one of the tiers in the 3 tiers system while still charging full retail for their beer. The good part of these types of releases is that you can get your beer into the hands of your fans if its a limited release that won't get mass distribution. The bad part is you couldn't make enough to hit distribution so if your fans are out of state they won't get a chance to grab your beers. It's a struggle I am sure all breweries face and how they deal with it make all the difference in the perception. I am going to go on a slight tangent here but is relevant to what we discuss in a bit. One of the ways people can get brewery only releases is by trading or having someone mule for them. This can produce a whole new set of concerns that we will address soon.
Let's examine the different types of brewery releases I have seen. For the most part they are similar in the respect that you have one day to get their beers before they sell out. Now some breweries don't sell out the first day or purposely limit the amounts they release per day so they can take the release event over a few days. Founders Brewery KBS Release is one brewery that limits how many bottle they sell each day and they make a week event out of it. New Glarus Brewery R&D Release typically limits their daily bottle allotment and have the release over three days (it will be changing to two in 2016). Cigar City's Huanphu Day and 3 Floyd's Dark Lord Day have morphed into one day, high ticket price events that include all your allocated beers, guest beers on tap and food items. Dark Horse Brewery 4 Elf Day and Surly's Darkness Day typically have people camping out the night before where patrons begin hosting impromptu bottle shares and party type environments. Central Waters and O'so bottle releases typically involve a party at the brewery along with the bottle release. The most typical brewery release we see has people lining up hours before the brewery opens, grab their beers and be on their way. On the surface this all sounds like good fun with the chance to get a great beer but it's not without its issues.
I would be remiss if I didn't confess that this post is inspired by the most recent release at Perrin Brewery for their No Rules beer. I was not there so what I am going to state is second hand information. It seemed to have started out like your typical release with people getting there early to line up to get the beers. Perrin Pub Club members were able to start purchasing bottles at 10am with sales to the public starting at 11am. Bottles seem to have been gone by 1pm. Not unheard of but what seemed interesting to me was the fact that they did not impose a bottle limit even though they had a limited amount of bottles available. They are also releasing the bottles into distribution so if you missed the release you can still get bottles at retailers. This was a polarizing decisions as people who waited in line for hours and were denied bottles because they ran out while a group of people from Detroit bought 24 cases of bombers. That's right... 24 cases or roughly $5,000 worth of the beer. Perrin celebrated this achievement by this group by posting a picture of them on their Facebook page and even using this picture to combat some negative comments about people not being happy with the release. Below is said picture from their page...
While I personally have no true opinion on what happened here, it does start to create questions around motives. Ultimately these breweries need to sell beers to keep the lights on and people employed. But people are fanatical about beer and Perrin no doubt lost quite a few loyal customers because of this, so is it worth it in the end? I guess only time will tell but I know for a fact that there will always be people lined up to buy their beers as long as they keep making great beers.
Being in Wisconsin I tend to get to the New Glarus R&D releases whenever I can. During one event I was able to chat with Deb Carey about the release itself and how successful they always seem to be. If you haven't been to one I can tell you that once they open their doors, the wait time to get bottles is really short and the line that once help hundreds of people all but disappears within 20 to 30 minutes. We discussed their process to try and deter people from getting back in line to buy more than their allotment. Now, I will admit I am not a fan of their 2 bottle per person per day allotment because I have to drive 4 hours round trip to get it but that is neither here nor there. The brewery places a permanent marker X on your hand after you buy your bottles. They are looking into doing driver's license scans because people are still finding ways to get back in line. After we discussed this I inquired on whether or not this was a major concern for the brewery and she stated, While we still make our money at the brewery, it's the beer fans that are screwing other beer fans out of being able to try these beers. She makes a very valid point because she knows the beers will sell but she is concerned with more people having the opportunity to try it rather than making a quick buck but selling out as soon as possible.
We have all heard of the horror stories that present themselves at these types of event, from fake tickets to having your grandmother mule for you. These are things that will never change. You know someone who has done this type of thing before. I know of people who bring their significant other (who doesn't like beer) with them to buy double the allotment or bring their parents/grand parents with them to buy more beers. While it may be frowned upon and seen as gaming the system there is nothing illegal about it and for a lot of people its a matter of ethics.
Let's bring this back to the business of beer. Every time you have a demand that surpasses the supply, you get higher prices and secondary markets. People will capitalize all they can to make money. I have seen Craigslist postings for Central Waters latest anniversary beers going for $50 a bottle, up from the $15 you paid at the brewery. And someone will pay that price for beer because they wanted to try it and had no other way of getting it. Breweries have to be aware that this is going on and any brewery owner who says otherwise is either lying or has their head in the sand and truly don't understand their business. As long as we have this secondary market we will have people who will try to take advantage of it for their own benefit. So what is a brewery to do? Do they raise their bottle price knowing that there are people who will pay that kind of money while alienating people who don't? Do they try to bring more checks and balances to brewery releases in hopes to reach a larger audience or simply stop doing brewery releases and send everything out into distribution and let people fight over it at the retailers? Or do they celebrate the people that will buy $5,000 worth of beer in one shot with no regard to anyone else in line or the fact that most of those bottles will be sold at inflated prices? There is no right or wrong answer here but rather the breweries doing what is right for them based on their ethics. What are your thoughts? Comment below and let me know!!
(stats fromThe Brewers Association).
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