Brewers, especially those at small breweries, are paid less than comparable professions

Most brewers will tell you they chose their career because of a passion for brewing and the enjoyment they get from making great beer. That’s a good thing, because they aren’t getting rich doing it.

A recent survey of brewer compensation by Jeff Alworth showed all brewers typically make between $30,000 and $50,000 per year. At larger breweries above 10,000 barrels, Alworth found Brewmasters and Head Brewers making considerably more, $70,000-$80,000, with brewers with less seniority still earning under $50,000. These figures are comparable to other brewer compensation reported by employment websites Glassdoor and Payscale, and the Houston Chronicle. While Alworth pointed out most brewers make a living wage, which he explained as enough to cover their minimum basic needs ranging from $22,000 per year in a small town to $28,000 in a large city. However, many brewers make little more than that. Alworth also found that brewers often received little in additional benefits like health care, vacation time, and retirement.

This compares unfavorably to winemaker salaries, which range from $60,000-$90,000 according to Glassdoor, while Payscale indicates the middle 50% of winemakers earn between $45,000 and $76,000 annually. The Houston Chronicle reports that Senior Winemakers routinely earn over $100,000. These numbers are probably elevated somewhat since many winemakers live in California coastal areas where wages are higher, but are still well above what brewers earn.

Since breweries are essentially beer factories, let’s compare brewer salaries to leadership positions in food manufacturing.  Look there and you’ll find Production Supervisors, Quality Assurance Managers, Production and Plant Manager in food manufacturing make between $45,000-$100,000.

Think brewers are like chefs?  Head Chef salaries range from $30,000-$60,000. But chefs at high end restaurants can earn between $70,000 to over $100,000, depending on the type of restaurant and location.

While brewer compensation depends on things like brewery size, location, and years of experience, it’s a good bet in any city, a skilled Brewmaster at a small brewery makes considerably less than the Head Winemaker at a nearby winery, less than the Head Chefs at the city’s better restaurants, and less than those in leadership positions at food and beverage factories.

Part of the allure of America’s brewing revolution is that legions of self taught home brewers without any formal brewing education turned their hobbies into a business, but that might be why so many brewers earn less than their counterparts in similar industries. Alworth noted that education and experience played a significant role in how much a brewer earns.  Head and Master Brewers running larger breweries pumping out over 10,000 barrels a year often requires a college degree, completion of a brewing certification program, or at least several years experience at a production brewery. In that respect, these positions at large breweries are similar to running factories, which usually require college degrees and at least a few years experience, and the pay is comparable.

One of the great things about craft brewing is that it’s open anyone, regardless of background or experience, as long as you make good beer. But for many, there just isn’t a lot of money in it.

 

 

 

Economic Study Suggests Collectable Beer Release Prices to Continue to Go Up

There’s been a fair amount of discussion and hand-wringing about the rising costs of limited release beers. It seems craft breweries are producing more and more special releases, collaborations, and other collectible beers, at prices that seem to be going nowhere but up. I recently found a paper presented at the First Beeronomics Conference held in May of 2009 which suggests this trend will continue.

In his paper entitled “The Price of Unique”, economist Phil Armour studied the prices of Stone Brewing’s Vertical Epic series on EBay. By correlating the mean winning bids for Vertical Epic bottles transacted on EBay as a function of the volume of each beer produced by Stone Brewing in the series, Armour calculated an economic quantity called the Own Price Elasticity of beer in the Vertical Epic Series, and compared it to data found in rare wine auctions.

Own Price Elasticity describes the change in the price of an item caused by a change of its available quantity. Generally, as more of an item is produced, it’s price goes down. What Own Price Elasticity determines is how dependent is the price of the product to its supply. If an item becomes rare, is the price bid up to incredibly high levels by people desperate for it? Or does the higher price quickly drive people out of the bidding? The higher the Own Price Elasticity is, the more likely people will pay high prices for a scarce item. Water is sometimes considered highly price elastic since when it is rare, people will still pay high prices for it to survive, while sugar is considered highly inelastic, since people historically turns to other sweeteners like honey, molasses or corn syrup when the price of sugar increases even marginally.

Armour found that the Price Elasticity of the Vertical Epic Series was higher than in auctions for rare, first growth Bordeaux wines. What this suggests is that in the case of these rare wines auctions, bidders were more likely to decline to bid on as the price increased, and turn to different vintages, while those coveting the Vertical Epic series on EBay decided they had fewer alternatives, and therefore, continued bid up the prices higher.

From my vantage point, it seems that as the craft brewing industry grows, more potential buyers of rare releases enter the market, and thus, more people are available to bid up the prices in the marketplace. Since these special releases sell out quickly, and are often spotted on EBay selling at above the retail price, breweries are simply motivated to brew more of them, and sell them at a higher price, simply because the market allows them to do so. Both anecdotal evidence and Armour’s study suggest the market for special collectible beer releases is not saturated, and so we can expect breweries to release more of these special rare brews and command higher prices for them. To my mind, it remains to be seen if and when the craft beer market becomes over saturated with these beers.