Beer Price Comparisons: Quick trip around BC
Prices for good craft beers are way higher than the mainstream beer made by big breweries like Labatt Anheuser-Busch and Molson Coors.
It’s typical for a consumer to pay $14-$17 retail for a pack of 4x473ml craft beer in BC. A few super-premium 4 packs will set you back almost $20 bucks. To give you more context about pricing, you could easily get a pack of 15x355ml Molson Canadian for less than $25. [1]
Comparing prices could become confusing fast!
How do you compare multi-item packs with different container sizes like 4x473ml can vs 12x330ml bottle pack?
I've created a price comparison calculator in excel to convert prices in all packs and volume configurations into the same unit price. That’s what I call Price Per Liter.
For brewery owners and operators, take a moment and download the price conversion calculator, it’s a new way of looking at and doing pricing.
A few real-life examples:
Let’s take a quick trip around BC and find a few beers to compare their retail prices. Just for fun, I also include an import beer to make the theoretical price comparisons a bit more entertaining.
According to the BC Liquor distribution branch’s Top Selling Products [2]
The best-selling craft beer in BC is Driftwood Brewery Fat Tug IPA (4x473ml). BC liquor store retail price is $14.49.
Stella Artois 12x330ml bottle, the best-selling imported beer from Belgium, selling for $29.49.
Kokanee 6x355ml can, brewed in the lovely town of Creston BC, retails for $12.29.
Red Truck 8x355ml can, brewed in Vancouver, selling for $14.49.
Backcountry 4x473ml can, brewed in Squamish. The retail price is $17.29.
Using Driftwood Fat Tug IPA as a benchmark, its price per liter is 3% higher than Stella Artois, 33% higher than Kokanee, and 50% more than Red Truck!
The results are really interesting. Red Truck is using the penetration pricing strategy. This means using a low price point to buy market share. The business objective is to sell as many lager 8-packs as possible to maximize the number of units sold. Is this pricing strategy working? The lager 8 pack was ranked 70 out of 200 best-selling SKUs in BC, ahead of Phillips Blue Buck and Yellow Dog IPA/Hazy IPA [2]
Looking at the other end of the pricing scale, Backcountry Widowmaker IPA is charging a super premium price for its high-value, high-quality beer. In terms of the number of units sold, it’s not surprising to see Backcountry ranked 168 out of 200 best-selling SKUs.
Now, this theoretical pricing comparison is unconventional because I intentionally cherry-picked beer from different price categories - BC craft, import premium, and domestic popular.
The fact that some craft beers made in BC have their price per liter higher than Stella Artois imported from Belgium is incredible. This is to show you that the BC craft brewery industry is going through the most exciting growth and the explosion in innovation and competition comes at a premium price.
Together, we discover 2 things from this fun price comparison -
Craft beer lovers place a high value on unique, high-quality ingredients, and interesting flavours and they are willing to pay more, in some cases, a lot more for the beer they love.
It’s very clear that there’s a trade-off between price and volume. You can choose to reduce price to maximize the number of units you want to sell or you can choose to maximize price, but you can’t choose both.
Final Thoughts:
Pricing is one of the most critical business decisions as it directly determines the amount of margin you capture.
At Beer Number, we’ve developed a revenue management framework using sound data and pricing tools designed to help owners and operators make effective pricing decisions to optimize revenue and prevent profit dilution.
By Sean Wang CPA, CMA - Founder | Margin Master | Mountain Biker
References:
[1] BC liquor store retail price as of Jan 2023 before 10% provincial liquor tax, container deposit, and 5% GST.
[2] source: https://wholesale.bcldb.com/resources/product-information. BCLDB publishes the top 200 selling SKUs at the end of each financial quarter. Report date range: July 3, 2022 - October 1, 2022