Tuesday, September 04, 2007

Will work for beer

Merchant du Vin is the United States' leading importer of fine beers. Indeed, MdV distributes my all-time favorite beers: Samuel Smith's Old Brewery Pale Ale, Samuel Smith's India Ale, and Rochefort Trappist 6 (red cap).

The most recent MdV newsletter has an interesting article comparing how many minutes it takes for a nation’s average worker to earn enough money to buy a beer. The range was from 9 minutes (Italy and South Africa) all the way up to several hours. In the United States, it took the average worker 10 minutes to earn enough money to buy a beer.

For those who want to know how the cost of a beer is divided up, MdV can tell you (this is a pretty good little tutorial on how prices are determined):

"Let’s take a look at the money you paid for that bottle of beer you bought at a store, or the draft beer the bartender just handed you.

"First, your beer went through the hands of a retailer, someone working a lot of evenings & weekends so they can serve you beer during your time off. All beer retailers must be licensed to sell alcohol, and all must train their staff to follow state and federal laws. Some states require that bartenders and servers attend a class and pass a test before they can sell beer. For many years, off-premise (that is, beer you buy to take home) US beer prices and margins have been kept low by extreme competition, by huge economies of scale from vast breweries, and by marketing via price promotions. (Next time you are looking at floor stacks of beer, note how almost every display is at a discounted price.) Retailers have leases, utilities, supplies, heavy staffing, and insurance to cover out of the cost of their beer – all these costs come out of the difference between their buying and selling price.

"Most beer arrives at a retail location on a beer wholesaler’s truck. In many states beer arrives on the same truck as wine; sometimes it arrives with spirits as well. But beer never arrives on the same truck as other groceries – which means that dollar-for-dollar, beer wholesalers have among the heaviest loads in the food business. The wholesaler’s fairly small margin pays the hardworking truck driver who wheels all the heavy beer into the tavern or store, the warehouse and operations workers, and the salespeople who are presenting new beers and asking for sales.

"Importers & brewers do more than just buy grain, hops, labels and bottles. They invest a lot of time in reporting and registration, because beer is a heavily-regulated industry: labels get approved at federal and many state levels; employees must be registered with states; warehouses are registered and bonded; there are myriad reports filled out for barrelage produced, beer shipped, beer on hand, etc. For a brewery or importer of medium size or larger, 'legal compliance' is a full-time job. Breweries have other expenses that are proportionally higher than other industries, too: utilities, marketing, and shipping.

"Importers have to pay for ocean and inland freight, a major cost, as well as customs clearance and other federal requirements. If an American importer is buying beer with currency other than US dollars, they are subject to changes in the US dollar’s value to other countries. (It currently takes about $1.30 to buy one Euro.)

"When breweries buy grain, they don’t get it direct from a farmer – they buy it from a specialist, a malting company, which germinates, dries, and kilns barley and wheat. Grain and hops are often sold by co-operative agencies that allow farmers some economies of scale and a sales office that can negotiate with a malting company or brewery.

"After breweries have their malt and hops, they must make a number of labor-intensive steps and decisions when they brew and package. These steps and these decisions all come the hard way: by deep thought and planning, by trial and error, and by inspired creativity.

"Bartender – wholesaler truck driver – distributor sales rep – inland freight driver – sometimes an importer – brewery – malting company – hop co-operative – glass bottle provider . . . that beer you bought supports a multitude of hard-working folks that are frequently in the beer business because they really like beer, not because of the many dollars that can be squeezed out of each case or keg.

"One more note about the price of beer: the most expensive beer you can find might be $20 for a two-person bottle. Think of other high-end items, like cars, wines, Scotch, jewelry, shoes, clothing ... if you can’t afford a Ferrari or Manolo Blahnik shoes, might as well go out and buy the finest beer you can find."

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