If you’re coeliac, like me, and you like beer, like me, you’ve probably winced a little each time you stock up on your favourite brews. It’s the same when purchasing any craft brews. They’re generally anything from 50% more to twice the price of regular beer. But I don’t need to tell you what you already know. What is less known, is why this is the case. Is it simply some entrepreneurial types seeking to make their fortune in the next big fad, or is something else going on?
We surveyed a number of gluten free/craft brewers and found that it can essentially be boiled down to two main factors; 1) Economies of Scale, and 2) Purchasing Power. In other words, the big brewers brew and distribute substantially more beer than small craft brewers and therefore the cost of ingredients, production, packaging, warehousing and distribution, etc. are lower. The end result being small craft brewers have substantially higher costs than large brewers and this translates to the price you pay. Let's have a look at these in more detail.
The core ingredients of any beer is hops, malt, yeast and water. Craft brewers will generally add other ingredients to achieve certain flavours, but essentially, it’s these four ingredients. The core ingredient here, from a gluten free point of view, is malt. Malt is where the gluten in beer comes from when it’s made from barley or wheat. Most gluten free brewers will use malt made from rice, sorghum or millet, as well as other grains. There is less demand for these, therefore they are made in smaller quantities which increases price. They are also purchased in much smaller quantities which diminishes purchasing power and also contributes to costs. Also, because these malts need to be protected from cross-contamination, there is extra storage and other production processes further adding to costs.
Although hops and yeast are gluten free, they are ordered in relatively small quantities compared to big brewers and therefore craft brewers pay a premium. Gluten free/craft brewers are also chasing unique and interesting flavours which is the whole reason for craft brewing. The more unique the ingredients, and as with malts, the smaller the order, the higher the cost.
The Brew Process
Most gluten free/craft brewers will brew in much smaller batches compared to larger brewers, yet the man-power to make each batch is similar. This means fewer litres of beer to distribute your labour costs over, which further adds to costs. Further, it takes about twice the time for a beer made from gluten free ingredients to ferment and become the beer we know and love. This means you can only brew half as much as regular beer, which dramatically impacts production capacity and therefore adds to cost.
Also important is the way the beer is produced. All the big brewers will have a highly automated process to brew, pack and distribute beer using computers and machines. This makes them extremely efficient at producing beer and lowers costs considerably. Gluten free/craft brewers may have some of these automations, depending on their size, but usually the brewing process is highly manual and therefore costly.
Ohio State University estimates about 9% of a product’s price can be attributed to its packaging. As discussed in relation to beer ingredients above, the more you buy, the less you pay. So once again, smaller brewers will pay substantially more for the bottles, cans and boxes required to get your craft beer to you.
Warehousing and Distribution
Finally, storing the beer and getting it to wholesalers, retailers and consumers can add substantial cost to the final price of a package of gluten free/craft beer. Large brewers have considerable leverage with logistics companies which allows them to attract the lowest prices for these services. It’s much cheaper shipping a whole truck load of beer compared to a pallet or two that gluten free/craft brewers must often do. The relatively high cost of shipping plus small shipments means these costs must be absorbed by relatively few products which, you guessed it, means higher beer prices.
It’s also worth saying, most gluten free/craft brewers aren’t making their fortune brewing gluten free/craft beer. In fact, many are lucky to squeeze a modest salary for all their efforts. So why do they do it? From a gluten free point of view, many like you are coeliacs and have struggled to adapt to a gluten free diet and everything it can exclude. Their motivation is to help make the world just a little better for those of us on a gluten free diet, so we can have the food and beverages others take for granted. For gluten free/craft brewers more generally, it’s the passion for experimentation and creating something unique and delicious that, hopefully, people will enjoy.
So folks, we hope that explains why gluten free and craft beers are so expensive compared to regular beers and at least gives you comfort when you part with your hard earned cash for one of your favourite gluten free/craft beers. Cheers, Davo Chief Beer Officer, The Gluten Free Beer Shop.