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Why is craft beer so expensive?
Most alcoholic beverages, with few exceptions, are considered more expensive than their alternatives.
Why is craft beer so expensive?
Why is craft beer so expensive?
Most alcoholic beverages, with few exceptions, are considered more expensive than their alternatives. This happens for a number of reasons, not the least of which is that the manufacturing process is very expensive. There are many aspects involved in the manufacture of beer. From the raw materials to the preparation process, the manufacture of beer is not an easy task.
1. No “Economies of Scale”
If there's one thing that's familiar to every student of economics, or anyone who understands markets, it's that the more you produce, the cheaper it should be. A corollary of this is that the less stuff you produce, the more it costs. Demand and supply economics. In short, the average craft brewery tends to produce beer in small batches, which drives up prices. To a large extent, high prices are the result of necessity, not choice.
2. The recipe has something unique
Many craft breweries tend to operate as family businesses or small companies. If there's one thing that many of them have in common, it's a certain taste for "funny" and "strange". Often, this difference in taste is the result of recipes passed down through generations or recently invented. This "premium" taste that beer offers is often one of the reasons for the high price.
3. Taxation
This is not the case for all breweries. Taxes are something all companies have to deal with. This is true in the beer industry, as it is in other industries. When it comes to taxes, large companies often through government subsidies to ease their tax burdenor with the help of a good chartered accountant. Small companies, by nature, have fewer resources to enjoy and access government subsidies and other such policies. Ultimately the tax will be passed on to consumers.
4. Import duties
In addition to taxes, import duties are also levied whenever a product is imported into a country. If craft beer is imported into the country, rather than produced domestically, the customs agency will impose a percentage fee on the import.
Another thing to add here is that craft beer tends to have a higher percentage of ABV (alcohol content) compared to regular beer, which in turn affects the tariffs imposed on it.
5. Brand promotion
Many companies tend to charge a premium based on their brand name. This has nothing to do with the actual scarcity of the product or anything else. This is just an example of capitalism, nothing more. This is very understandable if you look at the situation from a capitalist perspective. Companies are just doing what anyone would do, the premise is that they have a good reputation to back it up.
6. Raw material costs rise
This is not unique to craft beer, but applies to the entire beer industry. Global prices for raw materials such as barley and hops have risen in recent times. In turn, rising prices are caused by various reasons such as crop failure, increasing global demand, changing land use patterns, urbanization, etc.
7. Distribution Cost
Another big factor that makes craft beer expensive compared to regular beer is the cost of distribution. Larger companies often have their own distribution channels, or at least strike deals that work in terms of affordability. However, that's not the case for small brewers who struggle to get their product to consumers.
Collectively, the above reasons are some of the most important reasons why craft beer is generally expensive. There are indeed other reasons, but these are by far the most important reasons why craft beer is more expensive than regular beer.
Collectively, the above reasons are some of the most important reasons why craft beer is generally expensive. There are indeed other reasons, but these are by far the most important reasons why craft beer is more expensive than regular beer.
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