eBay, Price Gouging, and the Future of Craft Beer
The issue of selling beer on eBay, collectible or otherwise, tends to bring out strong (often, impressively strong) opinions in the craft beer community. Brewers feel cheated, beer veterans express outrage, and yet somehow the rest of the world still manages to mostly go about its business quietly and unaffected.
Struise Yeast Shop
Within the past week, Struise has vowed to eliminate black-market Westvleteren sales by occasionally offering bottles up for sale (near retail) at their online Yeast Shop, Joe McPhee posted an article about the increasing prices of limited-release brews, and Beernews.org (in response to the Struise / Westvleteren situation) highlighted a recent poll they had done regarding eBay sales, in which 57% of the 300+ respondents indicated that they couldn’t care less. My vote was included in the majority vote.
The question surrounding the “morality” of reselling beer on eBay (in quotes because of the generally ridiculous way that most discussions on the topic tend to soon devolve into either hair-pulling umbrage or shoulder-shrugging ambivalence, neither usually terribly clearly expressed) doesn’t really interest me. Or, at least, not very often.
Most of the arguments I’ve heard tend to presume that the reseller is a particular kind of person – this can take the form of an opportunistic fiend (recruiting people to stand in line for them at rare releases, only to turn a quick profit at the expense of locals left empty-handed), the free-market renegade (it is, I guess, one way around the three-tiered distribution system in the U.S.…), traders going rogue, and beer collectors who really are auctioning aged bottles that really are far more valuable unopened. Personally, I like to imagine that it’s a bunch of old ladies utilizing craft beer to support their spiraling bingo habits.
My point is this: the fact that eBay auctions elicit such strong reactions from the craft beer community is symptomatic of something else. And what that is, for me, really only starts to become clear by looking at the current state of craft brewing alongside the (comparatively settled) state of the high-end wine industry.
(They make it with their feet.)
What are three of the biggest complaints amongst beer geeks these days? (1) Things are changing, rare beer releases are getting more ridiculous, and beer is gradually becoming treated as a commodity. (2) Auctions and less-than-noble practices are becoming more prevalent. And (3) craft beer is getting more pricey.
Guess what? (1) and (2) exist mostly because craft beer isn’t pricey enough.
I absolutely don’t mean to suggest that we’re going to be seeing $50 six-packs of Sierra Nevada anytime soon, because that isn’t the market we’re talking about. Session beers, six-packs, regular releases – no brewers in their right mind should start ballooning their pale lager prices after reading this article.
Most of the craft beer industry revolves around being an affordable, available, almost-everyday product. There are still countless affordable bottles of wine.
But when’s the last time you heard someone complain about the price point of first-growth Bordeaux by saying, “There’s no way it cost them this much money to make that wine.” And yet, we still hear it regarding the increasing prices of Lost Abbey’s special offerings all the time. Better yet: people complaining about how something costs $20 a bottle – but (because the brewer’s a smooth talker and had a gun held to their head in the checkout line) they still bought two.
Deep down, we want these underpriced, limited-release beers without any consequences. And this says a lot about the current state of craft beer.
(Made with love, not feet.)
I haven’t broached the notion of entitlement yet in any of my previous articles, partly because I hadn’t really nailed down the sources of it. But you see this constantly: beer geeks calling for wider distribution, larger production numbers, the bottling of volatile beers (Pliny the Younger, anyone?), and an affordable pricing structure to boot. We carry around a lot of hidden expectations.
Rare beer releases can serve as useful publicity, under the (correct) assumption that the attention will help sell more of their regular lineup. Honestly, I wouldn’t be surprised if costs were purposefully kept lower than they reasonably could be, just to continue this perception of unmeetable demand. It’s good press. It shows commitment from the fan base. It makes for a good story. It ultimately sells more craft beer. And we would be offended (!) if they priced beer like top-tier wine.
But these limited releases and their comparatively low pricing play a key role in letting these grey-market activities exist in the first place. Both the prices and the production numbers are maintained low relative to the current market, and this artificial gap is what, to me, seems to create many of these strange happenings, which are comparatively unknown in the wine world. We’ve got it too good.
Am I saying brewers should skyrocket their prices to eliminate eBay resellers and alleviate some of the tension surrounding limited releases? No. Craft beer continues to succeed and expand its market by serving the interests of the craft beer community, and overt profiteering tends to negatively affect the community as a whole. It’s a precarious balancing act, and it will continue to be.
Ultimately, we’re at a funny stage right now. We want craft breweries (especially good craft breweries) to succeed, to rise up against various monolithic BMC corporations while continuing to innovate, yet we’re quick to react with outrage every time their prices increase. We want craft beer to continue expanding its market share and pulling in new “converts” (I always feel weird using that term), and yet we’re still never quite sure how to handle all these energetic n00bs.
We’re not always sure what we want.
There are a number of disjointed elements in the craft beer community – and the current pricing of limited-release beer seems like just the tip of the iceberg. Craft beer still seems to be in a developmental stage, and maybe rare beer will never approach the same price points as Petrus or Lafite. Maybe this is something we should fight tooth and nail to avoid as long as we can. I honestly don’t know.
But we need to start talking about it on clearer terms. How the industry manages to negotiate many of these internal contradictions will determine its future. And, personally, I can imagine things both wonderful and terrible about craft brewers someday making beers so good I can’t afford them.
15 Comments to “eBay, Price Gouging, and the Future of Craft Beer”
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TheBeerNut touched on some of these points a couple of days ago.
@ Barry. Thanks for the link!
It is an interesting position that the brewers are in, and there are a number of influences here: fueling rare releases to make bank (I certainly don’t think all of them do it purposefully), not knowing ahead of time how these one-off beers are going to sell, consumer pressure that effectively limits how much they can raise their prices, irritation from someone else cashing in on their hard work…
It’s sort of tough to find a see an obvious course of action from all that. I can only imagine some of the conversations leading up to these releases.
“designer beer” – that the term I’m trying to start.
@mj
I’m still waiting for “boutique hop” to catch on. We’ll be so fancy some day!
The only problem I have with all this is as follows: My (admittedly very limited) experience with wine tells me that price and quality are at least somewhat matched. In comparative tastings that I have participated in the higher priced wines have generally been more complex and flavorful in nearly every way. While I am certain this isn’t universally true, that has been my experience.
The same cannot be said of beer. New releases and high-priced one-offs are seldom so much better than what is available on store shelves every day, to warrant the higher prices and the hype. Will they one day really be making beers so good you can’t afford them? Or will they just be making beers that are so hyped you can’t afford them?
@Michael
A couple of comments:
While there is, generally, a correlation between price and the likelihood of picking a good bottle of wine, there are just so many other things at play. You see $15 bottles scoring 95+ points, you see expensive bottles that suck. A lot of pricing is built, of course, on reputation, hype, etc., even (especially?) in the wine world.
The same will ultimately be true (and is already true) in the beer world, and I honestly can’t imagine any market in which price actually does accurately reflect quality. I was being a little tongue-in-cheek with that closing line.
There’s really so much going on and changing right now in craft beer that it’s hard to see how things will eventually equilibrate. I agree that many of the expensive bottles of hyped beers coming out are lackluster (or at least not worth the price bump), and eventually (hopefully) consumers will figure that out.
But the same gradient in wine absolutely exists in the beer world. The main difference is that we, unlike wine drinkers, can still buy most of the awesome stuff cheaply. Which means that there’s a long road ahead until limited-release beer prices stabilize. The craft beer market is still evolving and trying to figure out what it wants, there are so many young people getting into craft beer, and the whole thing is leaving a lot of brewers and marketers scratching their heads.
As Steven Beaumont stated recently “beer is not the next wine”, although it is exciting and popular amongst a small component of the population, 95% of beer drinkers are Bud drinkers. We are talking about a small minority of geeks selling bottles on e-bay that are “collectible” so maybe the brewers whose bottles appear frequently on e-bay need to sit down and figure out a solution to stop this practice.
My understanding with shipments of booze across the US, is that it’s illegal without relevant licenses. One cannot buy pirated microsoft products on ebay, nor fake rolex’s, as legal got involved to stop this.
It appears that e-bay is the new dollar store, or pawn store. As a Publicly traded company they need to sell anything and everything, so morals and legal issues are not raised anymore, in exchange for listing fees. Nobody i know ever goes there anymore.
For Americans (or even westeners in general) to complain about the market dynamics that dictate the price of Westvleteren on eBay is irony of the most delicious kind.
Awesome line, Ken. “Personally, I like to imagine that it’s a bunch of old ladies utilizing craft beer to support their spiraling bingo habits.”
You didn’t mention the factor that led Tomme Arthur to pen his famous “*&^% Ebay” essay: all these beer auctions are required to claim that they are only auctioning the bottle, and that the liquids inside have no value.
So you can make at least one judgment about the kind of people who sell rare beer on Ebay: they are liars. If they’re willing to lie to the entire world to make a few bucks, how do you know they aren’t lying to you about what’s in the bottle to make a little more?
I’m working on a piece to analyze beer pricing trends through the lens of behavioral economics and pricing theory.
Would hop press have an interest in running this when its finished?
@Bill
One could use that same argument to peg all beer traders who claim to be shipping “yeast samples” or “balsamic vinegar” as liars as well. I just don’t find it to be a convincing argument.
I’m familiar with Tomme’s article, and totally appreciate his use of the eBay disclaimer to make that article work narratively. But it’s just legalistic boilerplate, we all know that it’s just legalistic boilerplate, and we (me, too) tend to sympathize with the anger of a masterful brewer who people are making a profit on – but not because these people are copying and pasting text on their eBay listings. That’s very much a peripheral thing, in my mind.
But Tomme has every right to be irritated.
@zdk
Personally, I’d be very interested. Sounds cool.
The Hop Press site is getting a complete overhaul this weekend, courtesy of Joe T and Mario, and there will hopefully be a more streamlined process included in that to get individual articles up on the site. We’ve been a little slow with that in the past.
I’ll forward along your info to Mario via email and get back to you. I’d like to make it work. Shoot me a beermail if you don’t hear from me by early next week.
What struck me most was your line, “We’re not always sure what we want.” I think the first step is for beer geeks to truly understand the cost of the beer in their pint glass. Then an objective price decision can be made.