Higher Prices, Brighter Futures? The Changing Landscape of Beer Retail

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After years of struggling to gain acceptance, beers that have more ingredients, better ingredients, longer aging periods, and a surplus of creativity are beginning to impact the marketplace. According to data from Chicago-based market research firm IRI and analysis by Bump Williams Consulting (BWC), revenue from higher-priced beers is increasing faster than any other segment.

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Does this upward trend also mean that the $8 and $9 six-pack of craft in the longstanding affordable middle segment is becoming a thing of the past?

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“As beer drinkers move up to more expensive beer—they very rarely turn back down,” says Williams. “As they migrate up they tend to stay in Super Premium and Apex-type craft beers. But it doesn’t mean they walk away from the basic introductory brands. They don’t.”

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According to BWC’s price chart, which is derived from IRI scan data (point of sale information), this jump by consumers is happening more often. One of the best examples is the demand for Ballast Point’s Sculpin line of IPAs, which fall into the $12.50 to $15 category. The pricing of Sculpin six-packs, usually around $14, has been a major talking point in internet forums over the past two years, and it ultimately became a successful selling point during a rapid expansion in distribution. Soon thereafter, the margins produced at this higher price point attracted Constellation Brands, which snapped up the San Diego brewery for $1 billion not long after the founders first announced an Initial Public Offering.

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Henry Monsees, president of Savannah Distributing in Georgia, thinks the pricing creep began with the arrival of beers from companies like Ballast Point and Dogfish Head. “Over time, the Dogfish 90 Minute IPA and Ballast Point Sculpin, they kind of busted that $9.99 pricing and then the retailers are trying to do those [higher-priced], pick sixes, all the time,” he says. “Everything moved off the $8.99 price point and went up. […] The distributor margin to my knowledge is not driving the $9.99 prices. The distributor has not increased his markup. It’s just life in general, the cost of glass, box cost, insurance, hops.”

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he shifting price patterns are taking place within a system where distribution ownership is consolidating or changing and where the battle continues for shelf space. For now, it appears the consumer is in a relative sweet spot when it comes to packaged beer: accessible pricing for local craft, 12-packs and volume-priced nationally distributed brands, plus a growing number of choices in more expensive, higher quality beers. But $9.99 is becoming the norm for six-packs.

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