Friday, February 1, 2008

Beeronomics: Oh Happy Day!!

A distant uncle of mine once said:

Be not the slave of your own past. Plunge into the sublime seas, dive deep and swim far, so you shall come back with self-respect, with new power, with an advanced experience that shall explain and overlook the old.

-Ralph Waldo Emerson

This just about sums up how I feel about craft beer. The day I first tasted a Hair of the Dog 'Fred', everything I ever assumed I knew about beer was changed and I have never looked back (thanks Alan).

Which is why today is such a good day. Rare indeed is the day as good as the one in which you are able to get your hands on two bottles each of Full Sail's Top Sail and Deschutes' The Abyss. I now possess two of the finest examples of the brewmaster's art. These are limited releases and don't last long. Whispers in my ear from two knowledgeable sources (thanks Jeff and John) began my quest which ended quickly at Corvallis' University Market (in case you would like a weekend as good as mine -Portland is runnig out of Abyss quickly today). They are not cheap but worth every last penny. Go. Buy. Enjoy.

Which brings me to economics once again. I have been thinking a lot about preferences, experience goods, variety, branding and the Oregon craft beer industry lately. Some of this I have blogged about before. Seems to me that variety is also sometimes risky because by producing a beer at a far end of the spectrum, you may capture some first time drinkers of your brand but quickly loose them forever if they dislike what you have offered. Beer is a type of product that economists call 'experience goods,' goods whose quality you cannot determine until you consume it (as opposed to clothes, say, which you can touch, feel, try on, etc., and have a pretty good idea of the quality before you buy). Since many people more familiar with macro pilsners don't really know what to expect from an aggressively hopped Oregon IPA, it may be better to introduce them first to a milder pale ale. But you can't really control this if you are a beer company offering a lot of distinct beers - so are beer companies hurting themselves by offering too many distinct beers thus increasing the chances of a bad first encounter? What is the 'optimal' level of product variety in this case? Open questions.

Another take is that by producing beers like Top Sail and The Abyss, breweries establish their credentials with beer snobs and the beer press and add luster to their brand - somehow a Full Sail pale is that much better knowing it comes from the company that brought you Top Sail.

Once again, I understand that brewers' motivations are many, but they do have to sell to survive so economics considerations remain very important.

1 comment:

Jeff Alworth said...

It's also true that the Abyss created a buying frenzy like I have rarely seen in Oregon. Even at $10 (or $11) a bottle, the entire batch was snatched up within days. It is surely the case that this beer cost the brewery more to produce, but they also charged three times the usual price. So in addition to burnishing the brewery's image, it made them a tidy bundle. I expect there will be no returns on the Top Sail, either.