Thursday, August 27, 2015

Beer Economics: To Brew or not to Brew . . .

We all have our "thing".  The "thing" . . . you know, the one that you, savor extraordinaire, just won't budge on.  It goes against every principle you try to uphold on a daily basis.  It's material, it's expensive, it's unnecessary, but it's sooooooo good!  Maybe it's coffee?  No, you would never frequent Starbucks each morning for a $5 Pumpkin Spice Latte with your name spelled incorrectly down the side - that would be asinine.  But there are still ways to get your fix, to feed that craving, and conquer that one weakness for a reasonable price.  Maybe when you're at the grocery store staring at that wall of Folgers and Maxwell House, maybe you can't help yourself but reach for a bag of Peet's for only $1 more per bag, or 15 cents more per pot.

Mine?  Mine is craft beer.  My dad had been brewing beer long before it was hip.  I sidestepped the Icehouse college phase.  I never "moved up" to the expensive Coors Light.  Nope, my first "bad" beer was Sam Adam's.  At that point, I was doomed.  It's a one way track.  A guy can move from Iowa to California and he'll understand what he had been missing, but you can't expect a Californian to relocate from San Diego to Des Moines and survive.  It's a step backwards, in his eyes.  After my dad's craft beer, there was no turning back. 

But craft beer exploded.  Now, a six pack of Lagunitas Little Sumpin' Extra ale will set you back $9.99, if you're lucky, and that's before taxes.  You want to buy Ballast Point Sculpin in Chicago?  How about $13 minimum?!

So what's a frugal guy to do?  There was only one other option:  Brew your own beer! 

Let's put some numbers to it and see how it shakes out for a 5 gallon batch:

You'll need equipment.
-Carboy for fermentation, bucket for priming and bottling, wire brush for cleaning, hydrometer for calculating alcohol content, bottle capper, sampler, sanitizer - all of this can be bought in a brew kit for around $91.
-I like to "rack" to another carboy for secondary fermentation to separate out the wort (unfermented beer) from the sediment and add clarity.  Second carboy$23.
-You'll need a burner to boil the wort.  Burner$50.
-You'll need an oversized kettle to boil your wort on the burner.  I prefer something over 10 gallons to prevent boil over.  Kettle$78
-Bottles.  22 oz. 2 cases of 12 ea:  $12.
-Misc. airstops, bubblers, grain bags, hoses, etc.:  $40.

Total long term Assets$294.  Let's capitalize this over 5 years on a straight line basis, for estimation sake and call it $58.80/year and, furthermore, let's say you brew 5 times per year = $11.76/brew.  (Disclaimer: Brewing can be as technical or simple as you want.  If you want to brew "all-grain", you will need some additional equipment.  You can also buy high end burners, pots, etc., but the list above is enough to get started and will allow you to make some pretty good beer.)

Ingredients and Recurring Costs:

-You can buy a clone kit from Northern Brewer for around $40 with shipping.  This will include your extract (again, if you're brewing all grain, this list will vary - but extract kits make very good beer these days), specialty grains, and hops.  Pre-packaged kits can range in price from $20 up to around $80 - it just all depends on your taste.  A $40 kit is perfectly acceptable.
-Add another $10 for yeast and priming sugar to carbonate your beer.
-I'm going to neglect water cost, assuming you can use your tap water.  You can treat the water with different minerals and additives if you'd like or even use bottled water.  That will obviously increase your cost.
-Propane.  Say a refill of a tank is $17 and we'll say 3 brews per tank = $4.25/brew.
-Caps, additional sanitizer, clarifying agents (fish bladder, Irish moss) and other misc. recurring costs:  Estimate at $3/brew.

Total Short Term Assets$57.25/brew.

Labor:  What do you value your time at?  You could claim minimum wage of $7.25/hour.  You could claim $0, simply because you view it as a hobby and enjoy spending your time brewing.  You could say $40/hour, because maybe that's what you are paid at work.  I enjoy brewing, but it is time consuming and I am making a sacrifice by spending all morning over a brew pot.  I'll say $10/hour.  Brewing an extract kit can take around 4 hours, then add another hour of bottling, cleaning, etc. = 5 hours  $10/hour = $50/brew.

Overall cost per brew:  $11.76 + $57.25 + $50.00 = $119.01/Brew

I have found that, with minimal spillage, I can brew around 23 - 22 oz. bottles per 5 gallon batch.  (22 oz. bottles are used, so you don't have to fill as many bottles, which minimizes spillage). 

So how does it all shake out?  $119.01/brew/(23 bottles x 22 oz. per bottle) = $0.235oz.  So, equating this to a standard 6 pack of 12 oz. bottles, you have $0.235 per oz x (6 bottles x 12 oz. per bottle) = $16.93 per six pack!  Wow! 

Even if you love brewing and value your time at $0/hour, your six pack price is $9.82 per six - or just below a solid Lagunitas price.  Best case scenario, if your equipment is still in working order after 5 years and you only have the ingredient costs, while valuing your time at $0, you only get down to $8.15 per sixerTime to shelf that brewing equipment and head to BevMo!

Guys, the lesson here is:  You can now honestly tell your wife that you are taking the fiscally responsible approach by buying that Zombie Dust for $14/six!

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