Market Saturation and Substantial Equivalence Illustrated

The tough thing about the hop and malt price bump is that it comes at a time of US consumer uncertainty. Something of a double whammy. Add to this the idea that I have come across recently to express something I have thought about for some time in my idle half-baked way: substantive equivalence. The other day in response to Pete Brown's inquiry about Fine Beer, I mentioned:

Beer is naturally non exclusive in that it is not tied to a crop but production. You can't get a second grape harvest but you can put on an extra mash a week. Also it is an example of substantive equivalence as one fine beer at ten bucks a 750 ml is replacable by another fine beer at ten bucks a 750 ml. Wine vendors have foisted product as well as price exclusivity upon us. Except maybe sherry and other dessert wines. Sherry sales and prices appear to act more like beer as there is little snobby elitism in a fine oloroso despite how subtantively wonderful it is.

As you can see it is a jumbled paragraph in a jumbled comment but in there somewhere is the hint of the thing. We are price sensitive buyers and whether you think prices are too low or too high, positions which depend largely on one's role in the beer trade, the fundamental thing is that you have to make a person open a wallet. That the bottom line both figuratively and literally. It was well expressed in a post yesterday on Rooftop Brew, a blog I picked up through the wonder that is the RSBS aggretron-a-rama:

...my prediction is this:

Thousands of bottles of beer will age to the point of spoiling because the price has been raised beyond what consumers are willing to pay.

This is a loss/loss. I love beer and the craft of brewing, but if I’m going to pay the equivalent of $10 a six pack for something I’d paid $6-$7 just 2 months ago, I’d rather spend it on draft beer. Or homebrewing ingredients. I think this coming year my dollars spent on commercially produced beer are going to go to my local brewers only. Sorry Belgium. Sorry California. Sorry Colorado. The reason I came to this prediction is that I just spent $8 on two 22oz beers, each of which is clearly past their prime. This is not going to be a happy year for brewers...

A sad tale but one with a moral making it a timely one for both brewers and consumers. Be wary of those who would tell you prices will go up so you just better suck it up. That is not how markets work - the customer is always right because the customer controls the wallet. Also be wary of those who tell you in a recession(-ette) that brewers deserve more. This is the time when they will earn the loyalty of customers through product innovation and price point savvy. That may mean some brewers close, some consolidate and some do things we have not seen before. Over priced imports may face locally brewed replicants that are substantially the same or at least an interesting equivalent. The good thing is good brewers are a prudent lot with a keen awareness of the need to please the customer through good service and well-priced goods - hallmarks of a trade riddled with substantial equivalence in a time of heightened price inelasticity. Expect to see less marketing about "beer as luxury" and more "good beer for an honest price" if and/or as things tighten. Otherwise, expect to see gathering dust as more bottles sit on shelves.

I, by the way, have just acquired enough supply for about 20 gallons of homebrew.