Competition brings lower prices on craft beers in North Texas
12/09/2013 12:09 PM
12/11/2013 9:03 AM
A price war is bringing bargains to craft beer lovers, who are seeing a dollar or more shaved off six-packs of top brands.
Broc Wagner, founding CEO of St. Arnold’s Brewing Co. of Houston, said he has seen instances where some Dallas-Fort Worth retailers are selling suds as a loss leader — below cost — to lure customers.
Supermarket chains like Central Market and Kroger are responding to so-called category killers like Total Wine, a Maryland-based chain that regularly sells Sierra Nevada Pale Ale 12-packs for $11.99, and often runs $9.99 specials.
Heightening the competitive environment are Trader Joe’s and Aldi. Both German-owned food retailers offer exclusively labeled beers for $5.99 a six-pack. Trader Joe’s contracts with U.S. and Canadian brewers while Aldi’s line is mainly imported from Europe. Costco also steeply discounts 24-bottle cases of Samuel Adams and other brands.
Chris Bostad, Dallas-based director of nonperishables at Central Market, sees a couple of reasons for the relatively low craft and microbrew prices in the North Texas region.
With the easing of Texas laws, an increasing number of start-up breweries emerged and all are fighting for shelf space, Bostad said. “People are having to be more aggressive to get market share.”
Goody Goody’s general manager agrees. “I think there’s more specials being offered,” said Randy Furry. “All of the craft brands are fighting against each other for a piece of the pie.”
Furry also noted change in consumer behavior, with some beer buyers switching from 24-packs of Coors Light, Bud Light or Miller Light to smaller quantities of craft and microbrews. And while they were once loyal to the major national brands, the craft beer drinker generally is always trying something new, he added.
Several years ago, Fort Worth’s Rahr & Sons was the lone North Texas microbrewery offering packaged ales and lagers. With an artisanal beer culture catching on, Rahr’s local competition now includes Revolver Brewing in Granbury; Peticolas Brewing, Community Beer Co. and Deep Ellum Brewing in Dallas; Martin House Brewing in Fort Worth; Franconia Brewing of McKinney; and Cedar Creek Brewery in Seven Points, just east of Ennis.
“Before, the new beers were coming from California, Colorado and elsewhere,” Central Market’s Bostad said. “Now they’re from here and people are more aware of beer launchings.”
While Rahr had to struggle for years to get into supermarkets, new brewers like Cedar Creek Brewery, which won a gold medal at this year’s Great American Beer Festival, got picked up quickly by Trader Joe’s and others. Martin House debuted at Central Market soon after it began a canning line this year.
Bostad also noted the new big-box retailers in the market. Aside from Total Wine, Spec’s has moved its similarly sprawling concept over from Houston, and Dallas-based Goody Goody’s has expanded westward into Fort Worth in recent years.
“With increased competition at the retail level in the market, everyone follows everyone’s retail pricing,” he said
St. Arnold’s Wagner noted that North Texas retailers once priced his line about $1 higher than similar stores in the Houston area. Now most have dropped at least a buck per six-pack despite his brewery charging more due to higher raw material costs.
“In DFW, we have seen retailers working at lower margins,” Wagner said. “This is the result of much more competition between retailers than existed in the era of wet/dry precincts and a limited number of liquor store chains. With Spec’s and Total Wine moving in, plus many more wet grocery stores, retailers have been reducing their markups.”
Bostad said the biggest discounts seem to be on brands that have outgrown their “craft” image, and are considered more mainstream by retailers. These brands include Boston Beer’s Samuel Adams; Sierra Nevada, which invented the American Pale Ale style; New Belgium, the Colorado maker of Fat Tire; and Full Sail of Oregon.
An example of a dramatically lowered price is Trumer Pils, brewed in Berkeley, Calif., by the owner of the Shiner brand using an Austrian recipe. It fetched upwards of $9.98 a six-pack several years ago. Today, Central Market prices it at $6.99, Total Wine $7.99. The famous Czech import Pilsner Urquell has dropped more than a buck to $6.79 at Spec’s and $6.99 at Central Market. Both Total Wine and Central Market sell core Sierra Nevada styles at $6.49. Leinenkugel beers sell at just $5.99 at Central Market and Total Wine.
Cutthroat retail pricing seems to be benefiting brewers.
Chris Nuñez, sales and marketing manager at Blanco-based Real Ale Brewing Co., maker of Firemans 4 and Devil’s Backbone, said its year-to-date sales in Fort Worth have increased 18 percent, and that’s without changing its prices to distributors except for one seasonal offering.
Real Ale’s owner, Brad Farbstein, says it has kept prices stable, but in a move he says was dictated more by philosophy than market forces, he lowered the wholesale cost of the brewery’s seasonal offerings so that the suggested retail price is $8.99, down from $9.49.
“We do a lot of market research and we were noticing our beer was priced the same as beer from California and the East Coast. To us, that doesn’t represent what’s a ‘local brewery,’ considering the transportation is so much shorter,” said Farbstein, explaining the price drop.
“Our strategy is, we want to be the six-pack everybody has in their fridge that they’re dreaming about while driving home.”
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