Maximizing Profit: The Most Profitable Craft Beers in Detail
As the craft beer industry continues to grow, figuring out which styles are most profitable can help ensure your brewery's success. This article delves into the factors that influence profitability and identifies the styles that maximize profits.
Understanding Profitability in Craft Beer
Profitability in the craft beer industry is not just about the cost of ingredients and selling price but also about the volume sold. A lighter beer, such as a light ale, typically uses fewer ingredients, costs less to produce, and can be sold in larger quantities. In contrast, a double dry-hopped IPA, albeit more expensive to produce due to the use of high-quality hops, often fetches a higher price but is consumed in smaller quantities.
For example, a light ale might cost around $0.65 in ingredients to produce and be sold for $5 to $6 per 16oz pour, yielding approximately $0.32 per ounce. A double dry-hopped IPA could cost twice as much in ingredients but is typically sold for $7 to $8 in a 12oz glass, yielding about $0.46 per ounce. However, the consumption habits of consumers play a significant role, as most people find it difficult to consume more than 1-2 9% ABV IPAs, whereas lighter beers are consumed in greater volumes.
Market Dynamics and Financial Information
Financial information for craft breweries is not widely released due to the majority of brewers being privately-held. However, many craft brewers believe that early in the trend, craft beer was more profitable. Today, the number of craft breweries in the U.S. is as numerous as the number of counties, indicating that the market is saturated. As a result, profit margins are slim, and the local audience is often limited to the county line.
Brewing Costs and Brewing Styles
Despite the higher cost of ingredients in craft beer, the larger craft breweries are more profitable due to economies of scale. Companies like New Belgium, Sierra Nevada, and Stone are well-known for their profitability due to their bulk buying power, securing high-quality ingredients at a lower cost. However, not all styles are equally profitable.
A kettle-soured Berliner Weisse, for instance, is one of the cheapest to produce. This beer has a low ABV and is usually sessionable, requiring less malt and hops. In addition, the fermentation process is quick, requiring little extra time. Brewers can produce more of these beers in less time and for less cost, making them a highly profitable style.
Another factor to consider is fermentation time. Ales brewed with ale yeast can go from brewing to bottling or kegging in about half the time it takes for lagers brewed with lager yeast. Thus, ales offer more utilization of fermenters, increasing efficiency and profitability.
Conclusion
The profitability of a craft beer style depends on a combination of factors, including the cost of ingredients, brewing time, and market demand. By choosing a style that is both cost-effective to produce and in high demand, craft breweries can maximize their profitability. Berliner Weisses and ales, in particular, stand out as some of the most profitable styles due to their lower ingredient costs and higher consumption rates.