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If an entirely unscientific survey by Ale Street News of a few random beer wholesalers and retailers around the county is to be believed, all those initial fears about the impact of higher beer prices due to hops and malt shortages were probably not warranted.
If anything, the news from our sources is both encouraging and enlightening. In the early going at least — and we are still early in this sales cycle, that needs to be made clear — transparency and quality appear to have won the day.
To a man, the people we questioned noted that the advent of rising prices was made totally transparent to consumers well in advance through the efforts of both brewers and those who sell their products. That is the single factor which appears to have defused the situation before it happened. Most also see the fact that there was no across the board resistance to higher prices by an educated customer base as strong evidence supporting the argument that craft beers sell on flavor and desirability much more than they do on price. While everybody would like to pay as little as possible for great beer, in other words, those who have come to appreciate craft beer appear not to be adverse to paying a fair market price for what they perceive as good value.
Anthony Norkus, a brand manager at Louis Glunz Beer Inc. in Lincolnwood, IL, says that “people are talking about the increases, but knowing about the grain shortage beforehand really prepared them for this to happen. With gas prices and everything else going up right now, they’re apparently taking it all in stride. Most brands didn’t actually go up that much in any case, and the few that did take a significant jump? People are still asking for them and buying them at the same rate as before. I mean, our customers have already traded up and, while they’re watching their money, they’ve always been willing to spend a little more for something of better quality. I think most would prefer to drink just a little less if need be rather than give up the flavors they come to appreciate.”
Norman Yow of Norm’s Beer and Wine in Vienna, VA, echoes Norkus’ opinion that the rise in beer prices just seems to most people to be part of an overall pattern within the current economy. Further, he suggests that even if consumers do tighten their belts, that does not mean abandoning the craft beer segment, merely readjusting their sights a bit. “If people do take a step back, I doubt they will go to a mainstream lager but rather to the older, less expensive craft beers that got them started…Sierra Nevada, Redhook, Sam Adams. Those are good basic beers which didn’t increase all that much in price. Under that scenario, the $10.99 six-pack of the latest West Coast IPA becomes a special occasion beer rather than an everyday one.”
Dick Gordon, general manager at Freedom Beverage in Greensboro, NC, agrees that keeping the customer informed ahead of time basically won the day but also suggests there should be a little love for the way the industry has dealt with the issue as well. “Yes, because our customers were educated about the issues, there was no panic and doom and gloom just didn’t happen. But within the business itself, there was also the fact that almost everybody took a little hit to try and alleviate the impact. Wholesalers are not raising prices as much as they were expected to and thus retail prices have not gone up as much as expected.”
Indeed, George Bradley, general manager of Westy’s Beer Distributors in Camp Hill, PA, says that his company “ate some of the margin points and then actually gave our retailers an extra point to make them aware that we are on their side. Our business has grown to where we could afford to do that and we see this as a move which helps us continue to grow.” He also feels that all the talk about higher prices misses the point. “It’s time we accept once and for all that we are not selling price. For years, this business was all about the big guys getting their prices down as low as they could because that’s what made the beer sell. The idea that the value of our products on the craft side amounts to something more than just a number is still a relatively new school of thought for a lot of people. In that sense, this whole situation might turn out to have been a very positive thing if it gets across the fact that consumers are generally willing to pay the price when they know that what they are getting is a really good value.
“The way I see it, the craft business has always been a ‘beer first’ idea and the money always seems to take care of itself.”
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