Today, I want to talk about the economic impact of pricing on craft beer. Before you scroll on to the next article, I promise this is more interesting than it might seem at first glance!
Our brewery, Model A Brewing, opened its doors in December of 2020 — right in the middle of Covid. We had already invested significantly to build out the brewery and really had only one direction to go: forward. We followed all South Carolina Department of Health guidelines and opened our doors in whatever limited fashion we were allowed. If memory serves, we placed tables at least six feet apart, which cut our taproom capacity in half. Thankfully, from day one, we had enough support to pay our bills and stay out of the red. The craft beer landscape has continued to evolve month over month ever since.
In 2020, we made a commitment to provide exceptional quality craft beer and outstanding customer service at the most affordable price possible. We’ve kept that promise, and the growth of our business shows that it resonates with our patrons. I still believe we’re the only craft brewery in the surrounding area offering a $5 pint. We’ve worked hard to provide cost-effective options, and we’ve been able to absorb continued price increases by growing our sales volume.
Most of you know that beer is made with malted barley. Since 2020, the cost of our barley has risen by roughly 50%. It’s incredibly challenging to offer consistent pricing and value when our cost of goods increases that dramatically. We’re a frugal organization, and I believe we run a tight financial ship. To offset these rising costs, we continue negotiating with our food vendors to find savings wherever we can. Thankfully, having a restaurant helps support our overall bottom line.
Breweries without a restaurant have fewer options to stay profitable. They often have to raise prices (which most have), source cheaper ingredients (which can impact quality), or cut labor (another trend you’re seeing across the industry). Sadly, many breweries that were just hanging on have been forced to close their doors due to rising costs.
Now, another challenge is looming. With the introduction of new tariffs, we’re hearing about aluminum costs increasing by over 25%. Breweries that rely heavily on distribution will likely have to raise prices again. Unfortunately, it’s starting to feel like Groundhog Day with another round of struggling breweries facing economic hardships.
All I can say is this: support your local establishments with your discretionary income. It’s tough out here to continue providing quality food and beer in today’s economic climate. We’ll continue doing everything we can to keep our prices where they are for as long as possible.
Until next time, cheers to $5 beers!
