Supermarkets and the race to the bottom

[dan125]

I'm now wondering what proportion of the cost of a commercial beer is actually the ingredient costs, and how much is vat, duty, packaging, energy, profit & other overheads - and how this differs from a macro lager, to a traditional ale, to a micro super-hoppy aipa

 

[GerritT]

You have and had exactly two grandmothers, same as everyone else. Whether you met them or not is a completely different matter.

I guess some states in the US and some countries in the Middle East make it possible for your grandmother to be just 1 person. Or you mother being your grandmother too.
Not that I concur.

 

[GerritT]

I'm now wondering what proportion of the cost of a commercial beer is actually the ingredient costs, and how much is vat, duty, packaging, energy, profit & other overheads - and how this differs from a macro lager, to a traditional ale, to a micro super-hoppy aipa

This.
Do you ever read in the news how potato harvests have been very bad, so the prices go up with like 20%, SO THE PRICE OF CHIPS GOES UP 20% TOO?!
Because that's not how it works. Potatoes are the least costing element in the whole chippy supply line.

 

[Clint]

Yeah..but they NEVER come down....

 

[simon12]

I'm now wondering what proportion of the cost of a commercial beer is actually the ingredient costs, and how much is vat, duty, packaging, energy, profit & other overheads - and how this differs from a macro lager, to a traditional ale, to a micro super-hoppy aipa

Some of thats easy to answer other bits not so much, Alcohol duty is £19.08 per 1% ABV per 100l theres up to 50% discount for small breweries, VAT is a 6th of the retail price and gets claimed back by anyone before the retail sale, ingredients grain costs £12-13 per Kg when buying by the ton no idea if you get much off buying more, hops range from £5 to £25 per KG, packing id minimal for kegs and casks small scale bottling or canning is about 50p per can or bottle if you pay a 3rd party to do it my guesstimate is about a third to a half that if you have an expensive bottling plant, energy not insignificant but lower than anything mentioned so far. As you can see you need to use a serious amount of expensive hops for the ingredients to get close to the duty cost. The main saving in larger scale is on labour.

 

[Clint]

...that grain price right?

 

[simon12]

...that grain price right?

No, I mean't per 25Kg around £500 a ton

 

[Dutto]

You have and had exactly two grandmothers, same as everyone else. ...........

Er ... sorry, but I've highlighted the bit that isn't strictly accurate!

Think "incest" and you will see why! aunsure....

 

[dan125]

Some of thats easy to answer other bits not so much, Alcohol duty is £19.08 per 1% ABV per 100l theres up to 50% discount for small breweries, VAT is a 6th of the retail price and gets claimed back by anyone before the retail sale, ingredients grain costs £12-13 per Kg when buying by the ton no idea if you get much off buying more, hops range from £5 to £25 per KG, packing id minimal for kegs and casks small scale bottling or canning is about 50p per can or bottle if you pay a 3rd party to do it my guesstimate is about a third to a half that if you have an expensive bottling plant, energy not insignificant but lower than anything mentioned so far. As you can see you need to use a serious amount of expensive hops for the ingredients to get close to the duty cost. The main saving in larger scale is on labour.

Thanks Simon
So in Hoddys example in the OP at £1.25 per can, there is approx;
£0.21 - VAT
£0.33 - duty on the aipa at 5.2%ABV (if they Bad Co are big enough pay full rate)

Which leaves £0.71 per can for cost of production, canning and profit for the brewer & the supermarket.

 

[simon12]

Thanks Simon
So in Hoddys example in the OP at £1.25 per can, there is approx;
£0.21 - VAT
£0.33 - duty on the aipa at 5.2%ABV (if they Bad Co are big enough pay full rate)

Which leaves £0.71 per can for cost of production, canning and profit for the brewer & the supermarket.

That sounds about right the government making much more than anyone who does anything. BTW cheers for the bottle of NEIPA you gave me its a great beer.

 

[dan125]

That sounds about right the government making much more than anyone who does anything. BTW cheers for the bottle of NEIPA you gave me its a great beer.

Thanks Simon - glad you liked it.

 

[Slid]

Er ... sorry, but I've highlighted the bit that isn't strictly accurate!

Think "incest" and you will see why! aunsure....

LOL - you're right, of course, and as Darwen is only just down the road from here, I should have thought of that!
Very strong taboo, is incest, in almost all human societies.

 

[Slid]

"

I guess some states in the US and some countries in the Middle East make it possible for your grandmother to be just 1 person. Or you mother being your grandmother too.
Not that I concur.

Sorry, GerritT, I saw Dutto's post first.

There is great episode of the X-Files in which the 3 sons keep their Mother upstairs and under the bed and have to bury the aborted children that come from the forbidden union of mother and son....

She describes the sons - "Thems good boyys...."

 

[GerritT]

"

Sorry, GerritT, I saw Dutto's post first.

There is great episode of the X-Files in which the 3 sons keep their Mother upstairs and under the bed and have to bury the aborted children that come from the forbidden union of mother and son....

She describes the sons - "Thems good boyys...."

I remember that episode, "Home". I was on nightshift that week, and during breaks we would normally discuss the X-files of that evening. It was quiet that night.

 

[Gunge]

Craft has become meaningless.
And consider for instance this: "Grandma's apple pie".
What if grandma couldn't cook?

Well one of my grandmas was an alcoholic and addicted to snuff. How many apple pies would an image of an incontinent, inebriated, Top Mill- snorting old woman sell? Hey I might be tempted lol.

 

[Applesnmore]

Then on the other side of the debate, £25 per pint!!!
https://metro.co.uk/2018/08/27/theres-a-pub-in-london-thats-now-charging-22-50-a-pint-7886660/amp/

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[Applesnmore]

Sorry £22.50 a pint, either way not £1.25 a tinny

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[Hoddy]

Thanks Simon
So in Hoddys example in the OP at £1.25 per can, there is approx;
£0.21 - VAT
£0.33 - duty on the aipa at 5.2%ABV (if they Bad Co are big enough pay full rate)

Which leaves £0.71 per can for cost of production, canning and profit for the brewer & the supermarket.

And that’s exactly it, and beautifully explained by Dan.

How can 0.71 be a good thing? I would suspect the super market is at least 50% of that. So that leaves 0.35p for production, including ingredients, plus brewers margin before tax.

How is that a good thing?

There is a really good blog article written by the founder and head brewery of cloud water Paul jones and how their prices reflect ingredients and a modest margin to pay their staff decent wages.

http://cloudwaterbrew.co/blog/on-the-values-of-beer

I’m all for spreading the craft word. I’m just not convinced this is type of word that should be spread.


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[Leon103]

In all fairness most of beers are brewed or owned by massive companies.i know my local supermarkets stock welsh beers but they are hardly ever included in the deals.
I have a bottle shop near work which is the only place I buy beer (which is rarely) prices are varied but tiny rebel for £2-3 a can is ok

 

[GerritT]

In all fairness most of beers are brewed or owned by massive companies.i know my local supermarkets stock welsh beers but they are hardly ever included in the deals.
I have a bottle shop near work which is the only place I buy beer (which is rarely) prices are varied but tiny rebel for £2-3 a can is ok

Yes, for the occasional treat. But for a night of kidney rinsing a tad expensive, if I may say so.
That's why I'm glad the Lidl had/has those 12-for-€15 offers.