Pints, prices, and punters

I wanted to get back to the "cost of beer" talk we've been skirting. By 'cost of beer,' I mean retail cost of a glass of draft beer, not cost of ingredients, or cost of bottled beer in stores. Those are sufficiently different topics that tackling all of them would take more time and room than I care to take here...maybe some other time.

I've been thinking about what it is we get in the U.S. when we order a "glass" of draft beer, because while a lot of this discussion (and that's a polite word for it) has centered on the price of the standard "shaker pint" pour, some of it focuses on just what is being poured: is it a pint? 14 ounces? Less? Seems like something that's on peoples' minds, so let's have a whack at it.

First, let me short-circuit any mistaken ideas: I do get a fair number of beer samples, but it's bottles, sent to my home. I pay for over 95% of my beers in bars and brewpubs, so I do have a good idea of what things are running out there, like the $6.50 I paid for a shaker pint of Molson Export at the Hard Rock Cafe in Montreal last summer (I only mention that because it was so lame, and so expensive, and so annoying).

That out of the way, here's my main thought. As I've mentioned all too often, I have a diesel Volkswagen. I love it. But when I go to fill up, the price of diesel is all over the map. Gasoline prices rarely vary by much; the competition is too intense. If the price is high, there's a reason: better service, the station doesn't sell that much and makes most of their money off their garage, local suckers, whatever. Auto diesel, on the other hand, is not something you find at every station, or even half of them; competition is lower. I've seen prices vary by 30 cents a gallon or more at stations within half a mile of each other.

Beer prices follow a similar profile. When it's the price of Bud Light, or Heineken, beers that are commonly available, you'll find a pretty close level price. It's not price-fixing; people are just aware of what the 'other guy' is charging. But when it's the price of a rare Belgian import, or a craft that's new to the market area, bars charge what they believe the market will bear. Their ideas of what that is may vary as much as $3 a glass.

Up until recently, they could do so with little push-back from drinkers; folks just ponied up the bucks. Now, however, the economy's in the dumper, money's tight, and more and more customers are starting to balk, and ask why, particularly why is one bar charging $4 and another charging $7 for the same beer.

What exacerbates this is that there is no tradition in the U.S. of stating what amount you're getting in a "glass of beer." We've only started saying "pint" fairly recently, and I'd guess it's because we're aping the Brits in an attempt to appear more worldly than we are, kind of like that annoying affectation of referring to the Atlantic Ocean as "the Pond." We ask for a "pint" of this and a "pint" of that, only we're really asking for a glass of inderminate measure.

What we seem to mean is the "regular" 14 oz. "shaker pint," right? How do you want a bar to advertise those glasses of beer? "14 oz. glass"? "Shaker 'pint'"? "Glass o' beer"? "Medium beer"? All are wrong or suspect. You don't get 14 oz. of beer in those glasses unless you've got no head, the reason for fill-lines on Euro glasses. There are several different volumes these glasses come in, and none of them are exact. Besides, a shaker glass is not a pint, so even if you put quotes around it, calling it a 'pint' is incorrect and misleading. A "glass" or a "medium" beer can be any amount the bar wants to pour.

What is it we want? "Fair" measures and prices, standard glassware? Is the standard going to be some kind of calibrated shaker pint? Because I know some beer geeks who will hate that, hell, I don't mind the shaker pint and I don't like the idea: let a million glasses bloom! We just don't know how much draft beer we're getting unless we go to a standard, and I don't see that happening.

What I can see happening is bars being held up to the same scrutiny that Don Russell forced on the concessions at the Vet back in 1998: tell the customer what you're going to pour -- 7 ounces, 12, 16, 18, 22, whatever -- and then pour that much. And if an inspector comes in and orders a beer, and it comes up significantly short (I'd say an ounce is significant), that gets reported somewhere that people will actually see it, and the bar is fined.

Tell me what you're selling me, then deliver that. I don't think that's such a big deal. Then when I have to decide whether I like your place enough to pay $7 for 12 oz. of beer...at least I'll know it's 12 ounces I'm talking about. It's a place to start. Because until you know what it is you're comparing, you're just making meaningless noise.

Boston Beer Takes a Hit

From an AP story posted last night:

Shares of Boston Beer Co. fell Wednesday, a day after the brewer slashed its full-year outlook and posted worse-than-expected third-quarter results. The stock fell $2.87, or 7.9 percent, to $33.69. The stock has ranged from $31 to $54.15 over the past year.
Goldman Sachs analyst Lindsay Mann told investors in a research note that the maker of Samuel Adams beer faces a "much tougher" cost outlook in 2009. Late Tuesday, the company said the cost of a product recall and expenses relating to the opening of a new brewery would drag down full-year profit. The company now expects to earn between 60 cents and 80 cents per share for the year, down sharply from the $1.70 to $2 per share it previously predicted.
Mann cut his full-year estimates on Boston Beer for 2008, 2009 and 2010.

BBC's been all over the chart, but given the product recall (which, while most everyone agreed was well-handled, still cost them a lot (and no word on whether any costs would be recovered from glass supplier Owens-Illinois)) and the costs of renovating the Lehigh Valley brewery, there was bound to be some backlash. Coming when it did, in the middle of an incredibly volatile market, probably amplified the downward pressure.

Not sure where Mann's "much tougher cost outlook" is coming from, though: energy's down (which means glass should at least stay steady) and the German hops crop is apparently coming through really big (just talked to a brewer friend yesterday who was in Bavaria for the hop harvest). Guess we'll see.

I still think BBC and Sam Adams are sitting pretty. Sammy A is the fall-back, the go-to base beer for many craft drinkers, and as prices go up -- and Sammy A stays relatively steady -- I still see more folks going to them. I know, many beer geeks see it as one tiny step up from Budweiser...lieber Gott...but "many beer geeks" are less than a bump in the road.

Beaumont Makes Predictions

Seems like I'm seeing a lot of Stephen Beaumont this year. We were in Miami at the Cheers Conference together, we're going to be touring Germany and Belgium in about a month, and he's coming to town for Philly Beer Week. I'm looking forward to it; Steve's a good friend and he's got an uncanny knack for finding good places to drink.

So you should see more of him, too. Specifically, check out his blog over at That's the Spirit.com, where he's just posted the last of five predictions about beer in 2008. The predictions are:

1. Wood-aging increases
2. More malty beers in response to the hops shortage
3. "Chicks Dig Beer" (nice note of my Portfolio column on that, thanks)
4. Premiumization: the trend to trade-ups will continue
5. Higher prices from a variety of pressures

As always, these are nicely reasoned and thoughtful, and make sense. Take a look.

A Mating of Giants in the offing?

Rumors continue to circulate about a true merger of giant brewers Anheuser-Busch and InBev. I've heard them for a while, but the pace is accelerating, and today an industry analyst said that the SABMiller purchase of Grolsch would give such a merger more urgency.

Madness. Take a look at Stan's exegesis of Melisa "Girl's Guide to Beer" Cole's post about the "tumbling" pub beer sales in the UK. It's not beer sales that are down, it's lowest common denominator beer sales that are down. Specialty beers are up 7.5%, and it looks like they'll be up in double digits again this year in the U.S., too. The big guys are so busy merging and consolidating and making the market safe for their one kind of beer, that they apparently haven't noticed that the thing people seem to want less and less of is ... one kind of beer.

Anyone know where these guys can buy a clue? A-B is making some good beers, but it sure looks like they're afraid to go all-in on them. Miller sees that variety means good business, but then executes with Chill, essentially High Life with lime flavoring, which completely misses the point. And Coors has Blue Moon zooming, and seems to have no idea how to handle it, they're scared to death that if they come right out and publicly admit it's theirs, people will stop drinking it.

The hell of it is, Coors may well be right. No one really knows for certain why craft beers are doing so well, and the scary thought is that it may have nothing to do with how they taste. I see it a lot. People are buying this stuff, they have no idea what it is, or what it tastes like, but it's different and it looks different, and it costs more, so...they drink it. Kinda mindless. Kinda scary.