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Thread: keg prices to distributors/out the door

  1. #1
    Join Date
    Aug 2006
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    28

    keg prices to distributors/out the door

    Ok, so can anyone give me some numbers on what they charge for kegs to distributors vs. out the door for a production microbrewery?

    I am looking for prices on both 1/2 and 1/4 bbls.

    I have some ideas, but I want to get input from you folks so I can get an average.

    Of course, I intend to start my pricing a little lower than market average in order to "build the brand" and then increase slightly from there to reach a good average price for microbrewed kegs in my market.

    Any and all help is greatly appreciated, Thanks

  2. #2
    Join Date
    Oct 2002
    Location
    East Syracuse, NY
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    297
    From brewer to wholesaler for an average beer, ie nothing big gravity or special ingredients anywhere from $70-80 a 1/2bbl

  3. #3
    Join Date
    Jan 2004
    Location
    Redmond (Seattle), Wa
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    362
    Why cheapen yourself? I would charge the average price. Price can be seen as an indicator of quality and I would assume you will be creating a quality product.

    My opinion, not a fan of discounting myself or products (unless running a promotion that makes sense), but I am weird...

    -Beaux

  4. #4
    Join Date
    Aug 2006
    Posts
    28
    Well, in a sense, it is a promotion since it will be the new product (from the new brewery) on the market.

    I want to encourage retailers/bars/restaurants to offer specials to customers in order to get them to try it.

    Not that I don't believe in the product, I just want to give an incentive to customers to try something new (and get them hooked, I hope)

  5. #5
    Join Date
    Mar 2006
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    Ex-Germany / California
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    584

    My recommondation

    I, too, am not a big fan of price-off promotions, but I understand where you're going with this one. My recommondation would be to do an on-top promo, where you offer you customers buy 5 (or 10) and get one free. With this type of offer, you establish your healthy prices from the beginning and still give an incentive to try your delicious beer.

    It is easy to go down in price, but increasing always causes irritation with customers. Get it right from the beginning.

    Prosit!

  6. #6
    Join Date
    Jun 2005
    Posts
    87
    I agree, discounting is a bad Idea, I see it all the time from other bars that have no imagination
    Trouble with discounting is that you have trouble building a loyal customer base, discounts or cheap booze usually only attracts the type of customer whose primary buying decision is based on pice and they usually have no brand loyalty, so the next smuck who is a little cheaper then you will determine their next purchase – everyone looses
    Let the merits of your products speak for its self, choose the establishments that cater to the type of beer drinkers that appreciate the efforts of your craft, not the ones who are known for selling cheap drinks
    Make it a win/win situation for the bar owner, offer to buy back your product if it does not sell within a certain time frame, when you get your foot in the door, spend some time with the customers and offer to buy the first one for customers who seem interested, you’ll be building a personal relationship with your final customer. Something that goes a long way to building loyalty to your brand.
    Meet the brewer nights are great ways of creating buzz about your brand, and guess what all these happy beer drinkers will do.., spread the word about the great new beer they discovered to all their friends and start asking other establishments why they don’t have your beer on tap too.
    Far cheaper and more effective than traditional advertising
    Get some pint glasses with your logo, offer them to the bar for free or low cost (Depending on your local laws) We always need pint glasses, and your logo will cause awareness and questions about your brand, sure some will be stolen, but guess what, your pint glass is often a prize trophy on someone’s shelf to show to all his friends, who ask the question, what was that beer like…
    As bar owners, we don’t care what the cost of a product is, we only care that there is a demand it and that it sells reasonably well, frankly the higher the price the more my profit and yours too.
    If it was only about price why carry anything but rock gut liquor?
    Bar patrons tend to drink less than in the past, but they tend to gravitate to better quality products when they do, one way the perceive better quality is by price
    I have 21 taps in my bar, and I will take a local micro over the big three any day of the week, to keep that tap you need to turn at taps one keg a month to keep me happy
    When we run promotions they are promotions based on “fun” never discounted drink prices, people will pay anything to have “fun”
    You success is solely about making good beer, creating demand for it, and having enough money left to pay the bills and yourself, and fund the never ending expansion of your brewery, so don’t start out by shooting yourself in the foot with sub market prices from the start

  7. #7
    Join Date
    Aug 2006
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    28
    Wow, very intersting stuff guys.
    bbrodka-you make some very good points

    So far though, only one person has mentioned what price they charge, thanks frigatebay. By the way, I assume you self-distribute, is that the case? In my state I cannot, so I must go through distributors.

    I was thinking $60-65 per 1/2bbl (to distributors)to get started and then raising to the $70-80 range, so I'm not talking about huge discounts or anything, but I can see where any discounting is percieved as negative.
    Last edited by practicalpants; 09-10-2007 at 11:35 AM.

  8. #8
    Join Date
    Sep 2002
    Location
    San Francisco, CA
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    1,706
    1) It’s a lot harder to raise prices than to lower prices. Discounting lowers the “perceived value” of a brand. It is a bad strategy to start low and then go high.
    2) Know what the “margin stream” is through the distribution channel. What margin does the distributor(s) in your market(s) add to draft beer when selling to the retailer? If you are selling kegs direct to retailers, you should mirror the pricing that a retailer would buy the same keg from a distributor for. Same for consumers.

    Know the pricing specifics of your distribution network and local/regional market. It can vary from market to market, distributor to distributor.

    Good luck!

  9. #9
    Join Date
    Aug 2005
    Location
    Eugene Oregon
    Posts
    124
    I see your point to get in the door, but 60-65 is really screwing you. Are you making only 4% golden ale? When I can buy a keg of Miller Lite(yes we sell it at our pub-sorry-see a previous thread about this discussion) for about $55, my first thought is either your beer is "close to the water content of Miller" or you make beer in volume like Miller. I wouldn't bet on the latter.
    Anyway, we are on the high side of sales, but our accounts pay$125 per keg. I end up getting about 105 bucks and the distributor gets the balance.
    I know I am not thinking like a distributor or retailer when I say this, but remember that the retailer may sell that keg for 3-5 dollars per pint (depending where you live. So that's gross profit of 360-600 per keg. If a retailer is worried about that ten dollars savings for buying your keg, I don't think it's theplace for your beer. Now I realize that a distributor might jump on that 10 dollar savings, but I would just set the price near the same as YOUR AREA's going rate. Each city and state may be different.
    FWIW, I'm south of Chicago by 30 miles-suburbia
    Good Luck

  10. #10
    Join Date
    Jul 2006
    Location
    Papillion, NE
    Posts
    11

    % Margin to the Distributor?

    With ingredient costs escalating, our base production costs for draft beer is following suit. (I know this goes without saying) This looked like the right thread to toss out the question - does anyone have a base % target for profit above costs? (related to draft beer and on a 1/2 barrel basis)

    I'm not looking for pricing information - I suppose we could calculate prices if we all knew each other's input costs but we don't. So, I was hoping that either through PM or post I could get some input that isn't sensitive information.

    Any help?

  11. #11
    Join Date
    Oct 2002
    Location
    Richmond, VA
    Posts
    226
    First of all, I have to agree with everything that Mr. Brodka had to say. Along the same lines of his pint glass idea, try running a few promotions using pint glasses. For the past Mardi Gras celebration here, we gave pint glasses to four bars/restaurants participating in Mardi Gras (who also carried our beer on tap) to give away with a purchase of a pint of our beer. It worked the balls! All the bars/restaurants ran out of glasses within an hour of the first night. So there were at least two hundred people who were either trying our beer for the first time or coming back for more within the first hour of a Friday night Mardi Gras weekend.

    Now, as far as wholesale prices we charge $125/half barrel for accounts where we self-distribute. To our distributors, we charge $85. Each wholesale price was determined after a consideration for our COGS, acceptable profit margin and a comparison to wholesale prices of other comparable beers. Our wholesale prices are a bit above the prices of other comparable beers, but the bar people understand that we are a start-up brewery and they're willing to pay a bit of a higher price in order to support a local business.
    Mike Hiller, Head Brewer
    Strangeways Brewing
    2277-A Dabney Road
    Richmond, VA 23230
    804-303-4336
    www.strangewaysbrewing.com

  12. #12
    Join Date
    Mar 2003
    Location
    Nashville
    Posts
    854
    BMOOR, I sure wish we sold beer in your state. In TN, with our distributor's margin and a 17% wholesale tax, a $125 wholesale price per 1/2 bbl nets us around $78.
    Linus Hall
    Yazoo Brewing
    Nashville, TN
    [url]www.yazoobrew.com[/url]

  13. #13
    Join Date
    Oct 2014
    Location
    Miami, FL U.S.
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    11
    Quote Originally Posted by practicalpants View Post
    Wow, very intersting stuff guys.
    bbrodka-you make some very good points

    So far though, only one person has mentioned what price they charge, thanks frigatebay. By the way, I assume you self-distribute, is that the case? In my state I cannot, so I must go through distributors.

    I was thinking $60-65 per 1/2bbl (to distributors)to get started and then raising to the $70-80 range, so I'm not talking about huge discounts or anything, but I can see where any discounting is percieved as negative.

    Is this before or after paying all the taxes?

  14. #14
    Join Date
    Mar 2014
    Location
    United States
    Posts
    46
    A key question would be: What market are you in? Virginia/DC metro, we see contracts as a split of the agreed wholesale price. Wholesale to the retailer of a 1/2 bbl of generally standard styles of local craft beer is averaging $155-170. I see contracts with a 35/65 split, brewery receiving 65%. So that's about $100-110 per 1/2 bbl to brewery.


    Sent from my iPhone using Tapatalk

  15. #15
    Join Date
    May 2009
    Location
    Huntsville, AL
    Posts
    268
    Where is this brewery? Get a price list from the distributor. Price in t at similar competition, just like everyone is saying. Consider my services for sales and marketing. Sounds like you need them. I have an ad in the help available forum. I visit for a week and sell more beer than anyone else would. I also provide direction for managing wholesalers.

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