Brewery income -> retail value
I was playing around with some numbers today just to see what would happen. Anyone wanna take a look and see if there's anything whatsoever to this?
I wanted to come up with a rough estimate of how brewery income (sales) compares to retail value of the beer sold. Here's my haphazard methodology:
- Brewers Assn announced the 2011 figures for total bbl of craft sold and total dollar sales.
- This yields an average "retail value per bbl" figure of $758.62.
- Then, I took the production projections from my own plan and computed an estimated retail value per year.
- I took the corresponding income projections from the plan and compared to the figures from (3).
This yielded a brewery -> retail markup of about 219%. Put another way, this means that for every dollar the consumer spends on beer, about 31 cents makes its way back to the brewery (just talking gross income here). Now, my own financial projections are still quite preliminary and based on mere estimates of what I expect the beer should/would sell for to the wholesaler.
Has anyone bothered to think of the figures in these terms, and if so, how does that compare to my back-of-the-napkin 219% markup?
Crazy? Pointless? Wildly off the mark? Lay it on me...
From what I've been told by brewers your math is accurate. My understanding is that gross margins run about 30 cents on the dollar, maybe a little less depending on the region, beer and whether or not its self distributed.
This is why brewpub and on-premise sales options are popular for small brewers. You get to internalize all of those margins, and (depending on market) you may really need to keep your prices high to communicate quality to the consumers.
Depending on the model, you need to look at the costs of on-premise sales. Those margins are in place for a reason, so keep that in mind as well.
Bill: Unfortunately, in my state on-premise sales are very limited and there's no self-distribution, so I'm basically stuck with the lower margins of selling just about everything through a wholesaler.
Brewtopian: That's good to hear, thanks. This is fairly important for my planning since I'm using estimated retail value of the beer to compare against market stats (which, of course, tend to be presented in terms of retail dollars).