Pricing Kegs

[BackwardsBrews]

I am staring a production brewery in Missouri. I was wondering if there is a formula anyone uses to figure the price they charge for kegs wholesale and retail? I plan on using mostly 1/6 barrel kegs when starting, but I am in the dark about where my price should be to distributors and self-distribution to retailers. If anyone can offer any help it would be greatly appreciated.

Thanks and Prost!
Bryan

[bwalden234]

Break it down by cost per ounce...

ignore this post, nothing to see here, Move along....

[BeerBred]

Bill you are definitely misunderstanding something. The man is trying to figure out his wholesale and retail pricing and you are providing advice for figuring production costs. Then you go on to identify that your production costs are less than what your competitors are charging in the market. Do you not understand the difference between production costs, wholesale pricing and retail pricing? And, fuel is not a production cost, it's a delivery cost. Furthermore, wholesale and retail pricing is not computed by using a per ounce cost. Pricing your product essentially has nothing to do with costs.

To the poster, decide where you want to position yourself in the market; do you want to be cheaper than your competition, parity priced or do you want to be at a premium? How do you compare your brands to your competitors? Do you have something that justifies a retailer or customer to pay an extra $10 per keg ie higher gravity or some super special brew the market demands? One thing I personally advise against; don't charge less thinking you will sell more against a comparable beer. You only leave money on the table and cheapen your image.

Distributors generally work on 32% markup. Retailers 25-30% but figure 30 for a new craft brand. So figure out your six pack price on the shelf, multiply by 4 to make a case, and work the numbers backward to get a PTR and then a PTW.

Good luck.

[bwalden234]

Yup, your right

Damn, read the original post too quickly, and my answer was poorly worded and confusing.... Backwards please ignore my post, my synapses are obviously unaligned, that's what I get for answering before coffee....

[Bainbridge]

You can take the time to calculate it based on your costs, and the margins you want to make, given the margins that operate at each tier in your market.

Or you can do it the easy way.

The problem is that there are many players in the market and bars are quite familiar with the prices of your competitors, so you can't charge whatever you want: there's a range out there that people expect it to be in. So you could do it the first way, find out that your beer is going to be $100 a sixtel, and then go crap, people would normally expect it to be $75.

Get ahold of some distributor catalogs from your area. Find comparable beers to yours. Compare and contrast the prices of say five similar beers. That's the range you have to work in in your area. If you are small or the only game in town, aim for the higher end of the range. If you're big, you can make a lower margin and shoot for the lower end if you want to play the pricing game. My experience has been that (within a reasonable range) the bars that will regularly buy craft beer aren't too price conscious and the worst thing you can do is undersell yourself. Given that the distributor is probably running a 30% margin on a keg you can back calculate their price from the brewery, and , as mentioned, about 32% of that can get you the rough cost the brewery operates on. Compare your numbers to that. If your margin shrinks to nothing and you can't make money at the going market rate don't sell beer wholesale. Excel is your friend in this. Do this annually and you can see how your prices hold up in the current market.

Also: unless you are tiny tiny do not rely on 1/6bbl kegs. Many places don't like to take them and you'll drive yourself crazy with the extra keg washing.

[brm]

If (...) you can't make money at the going market rate don't sell beer wholesale.

Most important piece of advise that many tend to ignore!