Beer Economics & Scale Tipper
Let’s just cut to the chase: we’re happy to announce that we are now able to offer Scale Tipper at a lower price and in more sizes (starting tomorrow). $10 for 22 oz bombers, and $6 for a pint! First, we’d really like to thank everyone who has supported us in so many ways over the last couple of years and that includes your willingness to purchase the last few releases of Scale Tipper at a fairly high price point. We are now able to sell Scale Tipper at a new, lower price. In some ways, the reasons are simple, and in some ways, they are a web of complexity. The short answer is “supply and demand.” Although demand has increased, we now have a larger supply, which is due mostly to our access to specific hops. If that satisfies your curiosity, then don’t feel obligated to delve any further. However, if you’re overly curious or want to geek out with me on business and economics, then I’m happy to oblige.
We’ve all heard about the supply and demand curve. That’s macroeconomics 101. In reality the curve has way more than two lines that must converge to set a price. To explore those multiple lines I’d like to retell the history of Scale Tipper IPA. Scale Tipper has seen several iterations, the first iteration was actually the result of a faulty scale and a couple of brewers with very little experience. The most recent iterations were the result of one of New Mexico’s finest brewers, John Bullard. The first time we made a batch of beer that we called Scale Tipper, it was 8.5% ABV and off the charts in IBUs (not exactly sure the exact number due to that broken scale I just mentioned). It was a pretty decent beer, for what it was. It wasn’t, however, the two-time New Mexico Brewers Guild IPA Challenge Champion, nor was it the Brewing News National IPA Challenge Champion. No, that special beer was created by our very special brewer. It was a competition beer and we gave no thoughts to cost.
We also decided to do away with the notion that only high ABV beer could be sold for a premium. Plain and simple, malt, and other sugars, which drive ABV, are relatively cheap. Hops, on the other hand, are not. We could have thrown a little more malt at this beer to increase the ABV and no one would think twice about paying the prices we needed to charge in order to justify making this beer more than twice a year. However, we’ve always had the philosophy that making quality beer will always trump the economics behind it. If we can’t make quality beer a sustainable business model, then we might as well go do something else. An increased ABV does not necessarily equate to higher quality and we did not set out to make another big beer. This beer was meant to be a hop experience like no other. To kick up the ABV just for sake of justifying a price tag, well that didn’t seem right.
Winning some awards and gaining notoriety increased the demand for this beer, so if we were going to make it more often, we actually had to crunch the numbers Holy crap! it was expensive to make. With continued increases in demand for Scale Tipper, the supply was just not there to do many runs, so we continued to hold off until competition season. We knew the demand for Scale Tipper in package was there as well; we knew we should make it. What we didn’t know is how a select few (the vast minority) would react to the price tag we were about to put on it. Given the cost of hops, the labor of bottling, the cost of labels and the cost of bottles when you are doing such low quantities, we had to charge a pretty hefty price tag of $12 for a 22 oz bomber. We were honestly quite hesitant to do that. To be completely blunt, I had no doubt in my mind we’d be able to sell it at that price, but feared the backlash. While there were some grumblings on social media about the price of the beer, for the most part, our customers welcomed the product with open arms. We made the decision to sell it in 13 oz glasses and bombers only (no growlers) so that the beer could be experienced by more than just the diehard fans that would devour it in short order. Let’s face it, this beer is an experience and that’s what you’re paying for. The pricing and sizing succeeded in reaching our three main goals of:
Stretch out the availability of Scale Tipper;
Have the needed quantities for the competitions;
Make sure we it was available after the competitions (it doesn’t go over well when someone from out-of-town comes in the day after you win an award for a beer and you don’t even have it on tap!);
Increase the length of time Scale Tipper was available so that a broader spectrum of beer enthusiasts could experience it, and;
Have enough to package.
We always emphasized the fact (especially in social media exchanges with vocal detractors of the price) that if we could find a way to decrease our cost that we would decrease the price. So what’s changed? Well, now we get back to supply and demand. A couple of weeks ago, we were able to secure more hops for this year. One of our biggest worries was using up our hops that we needed for our other beers (especially Riverwalker, which is our best selling beer). Our brokers no longer look at us as the little guy and have been more willing to help us fill the gaps we have, as well as reach out to us when unexpected supply becomes available. So when additional supply became available, we snatched it up. That was the number one reason we are able to drop the price. The next biggest influencer in our ability to drop the price has been a tremendous innovation that John has come up with that, in short, has given him nearly 50% increased utilization of the dry hop. We don’t want to reveal too much on the technical side; however, this innovative strategy has brought you Little Tipper and will bring more fun beers in the near future.
We’re excited to be able to offer more Scale Tipper, at a lower price point, ON SHELVES, and hope that this helps our goal of broadening the spectrum of beer enthusiasts that are able to experience this wonderful beer.