The Latest Outrage From DC: $7 Pints of Beer

Before I get into the substance of today's post, a brief program note. In a little less than two weeks, I'll be headed off to Europe for nearly a month, visiting something on the order of two dozen breweries. As a consequence, I'm not doing any of the normal blogging about Oregon and Portland I'd like. Brewpublic just celebrated three years with a typical Angelonian bacchanalia, breweries are busy releasing new seasonals, and events stack like cord wood in the ol' Google calendar. I apologize for this breach and assure you that I'll be back on track with the Holiday Ale Fest--which starts the day after I return.


I'm not totally sure what to make of Tammy Tuck's 3700 word inquiry into a simple question at the Washington (DC) City Paper. She describes the joy of buying beer for $4-5 a pint in San Francisco (also typical for Oregon and Washington) and then describes what it's like in the District:
Yet, in Washington, where drinkers can now sample D.C.-brewed beers for the first time in 50 years, even the local brews aren’t particularly cheap. DC Brau Public Ale costs $6 on draft at The Big Hunt. At Tonic in Mt. Pleasant, the price is $7. The local brewery’s second effort, DC Brau Corruption, runs $6.50 on draft at both Meridian Pint and ChurchKey. All this for a brew that doesn’t even have to cross the District line!
The subject of the piece is captured in the slug: "Why is craft beer so expensive in Washington?" What follows is a strange journey through an alternate craft brewing world where Tuck's informants lead her to passages like this:
One of the biggest factors in how much you pay for locally made beer is the scale of production. Each of the District’s breweries is technically operating at a “nano” level, meaning the amount of beer they make is minute, even compared to others defined as microbreweries.

“We have a 15-barrel system while a much larger brewery like Flying Dog makes 50-barrel batches,” DC Brau’s Brandon Skall says. “We have to brew three times to accomplish what they do in one brew.”

Chocolate City’s seven-barrel system is even smaller, producing just 30 or 40 kegs a week. “As small as we are, we can’t afford to drop the prices of our kegs right now,” Irizarry says. “If our volume were to grow significantly, if we were to jump up to 100-barrel fermenters, I could more easily guarantee that the price will come down.”

(Good reporting can sometimes result in bad information. It's preposterous to call a 15-barrel brewhouse a "nano," as anyone passingly familiar with craft brewing knows, or to suggest that such a system is so inefficient as to cause prices to spike 50%. But that's what the local brewers apparently told Tuck. The article includes a series of similarly bogus justifications for customer-gouging.) Ultimately, she arrives here:
It’s outrageous to have to pay more per pint than suds-sippers in super-pricey San Francisco. No matter what the excuse—the kegs are too damn heavy, the rent is too damn high—there’s no justification for the significant price discrepancy between such comparably expensive and sophisticated cities.
A magnum opus on beer pricing, and we come up with no real explanation. My guess is this: craft beer is in its novel, exotic phase in DC and there isn't a huge amount of competition. As a consequence, the small group of consumers who are supporting the local breweries are willing to shell out a huge premium on a price of beer. If the market were healthier, bigger, and more competitive, those prices would drop like a stone.

Take, for example, Portland, Oregon's. Thanks to the work of Bill Night, we have excellent data over the past two years to see how prices have changed. Every three months, Bill assembles the Portland Beer Price Index to see how prices have changed for various packages of beer. He began in the fall of 2009, giving us two full years of data. In that first tabulation, Bill found that the average price of a pint of beer in Portland was $4.27. In last month's report, the price was up to $4.33. Two years, 1.4% increase--that's stability. The reason, of course, is that if a pub hits you up for five bucks a pint, you're going to consider very carefully the prospect of wandering two blocks to the next pub, where a pint's $4.25. No doubt every pub would love to make seven bucks a pint, but you would be out of business in a month if you tried.

At a certain point, the DC market will mature to the point where there's enough supply that pubs will compete on price. Pints will dip to five, five and a half bucks. DC is an expensive city where a lot of people have expense accounts, so probably it's never going to get as cheap as it is on the West Coast. In other words, it's basic market dynamics. The solution, as with all things, is to make and drink more beer.