A long-standing hallmark of craft beer has been its focus on producing premium small-batch product utilizing high quality ingredients and less than efficient process. Unfortunately, this makes craft beer more expensive than its large commercial rivals. Often much more so.
Before an ongoing global pandemic became the new normal, the craft versus commercial pricing was a strong selling point. Margins are much better for a comparable volume of craft. More important for the consumer, given two comparable products, they should be correct in assuming (more often than not) that the higher priced object is of higher quality.
Perceived value or not, people are spending less now. A trend unlikely to reverse anytime soon. So how do you offer consumers better value for their money?
Take a few tips from the big guys.
First up, let’s butcher some recipes. I would recommend replacing at least half of all your grain bills with rice and eliminating the majority of hop additions. This should bring your material costs down significantly. New England IPA recipes in particular could see cost savings of 60% plus.
Too drastic? Most definitely, but it helps to illustrate the possible savings.
Let’s try tempering our approach a bit.
Base malt can account for up to 100% of your grain bill, a significant portion of your material cost. Typically it is a pilsner or pale ale malt. Some signature or heritage types of these malts are priced similar to speciality grains.
While things are slow to completely locked down, use your free time to do what got you into craft in the first place and perform some experiments. Can you substitute some cheaper malts in part or in whole without a significant flavor change? What about a similar priced malt with greater extract potential?
It is quite possible that your 100% floor-malted Maris Otter Pale Ale does not need to be 100% of the grain bill. Try swapping out 50% of your grain bill for a standard pale ale malt. If the flavor is still acceptable, push to 75% and test again. Not acceptable? Cut to 25%.
Want to save some real money? Join Citra and Mosaic Anonymous. A rehabilitation group meant to wean brewers from their addiction to sexy hops. In all seriousness though, depending on the recipe, hops can account for the majority of your cost of goods sold (COGS).
Consequently, hops can also account for the majority of cost savings if substituted properly.
Do you use Citra as your main bittering charge and then for every other addition? For penance, slap yourself in the head with a mash paddle and recite 10 Hymns to Ninkasi.
When your penance is complete, get some Columbus and substitute it for Citra in those early additions. Columbus, the “C” in CTZ, typically has higher alpha acids at nearly a third of the cost.
Start with a partial substitution and work your way up.
Need some more dankness? Use some Chinook instead. Cleaner? Pop in some US Magnum. Too much trub loss? Borrow from the big boys and get some CO2 extract if your batches are large enough to justify its use.
Chances are that your customers will not be able to discern the difference. Guaranteed that your accountants will. Don’t believe it? I don’t expect you to. Experiment and prove it. Naturally, your mileage (kilometerage?) may vary.
Yeast is trickier one. Cost saving substitutions are not as apparent, or in some cases, appropriate.
Conservation is the name of the game when it comes to our favorite single-celled organisms.
As sales volumes decrease, so too should batch sizes and/or brew frequency. The easiest way to make yeast more cost effective is to keep reusing it. Unfortunately, less brewing makes it increasingly more difficult to feed your yeast and keep them happy and healthy.
One option would be to consolidate strain use if you have similar enough products that can accommodate it. This could allow for better batch staggering and consequent repitching.
Another avenue for savings is to buy smaller pitches and propagate them up to pitchable size yourself. This is only possible if you have the skill, equipment, and (crucially) the sanitation necessary.
It is also worth investigating yeasts that can complete fermentation quicker and/or at higher temperatures such as Kveik and high-pressure lager strains. These energy savings will still translate to your bottom line.
If you have not reviewed what is currently available from your distributors, now is a good time.
Get those malt and hops analysis sheets. If your are hurting, it is all but guaranteed that your distributors are also hurting. Talk to your suppliers about their import plans and what they have excess stock of currently. Many people are defaulting on contracts or failing to meet forecasts. See what is out there to work with that you could substitute in at a lower cost.
Efficiency is the name of the game.
Alpha Acid percentage difference between different lots of the same hops can be significant, particularly year over year. Variance in malt extract between suppliers can vary substantially as well. Get samples and let your experiments guide you.
It is easy to throw out a 5L test batch. A 5000L drain pour would hurt more than just your soul.
A word of caution. Do not make massive changes to your commercial brews until you have confirmed proof of concept. Even then, scale gradually (10% at a time) to transition your customers smoothly to the new variant.
At the end of the day, there are many paths to market and even more ways to save money getting there. The crucial thing to keep in mind is your responsibility to your customer. Keep experimenting, but always deliver on the quality you promise.