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The Real Economics of Home Brewing

Originally published at GeekBeer. Please leave any comments there.

So you want to start homebrewing because you’re tired of spending so much money on good beer? If you’re really going to try this, let’s really give it a go.

Let’s be up front about this right now: Most craft beer, particularly the really good stuff, is a luxury. It’s expensive compared to macro brews, and beer as a rule isn’t a necessity by anyone’s definition. Redhook is probably the most affordable craft brew brand in the Northwest, and it’s approximately $7 a six pack on sale (which, of course, it always is). Local brews from Seattle brewer Elysian are about $5 per 22oz bottle, which is also typical of the larger California brews like Rogue and Stone. Prices, of course, go all the way up, as high as you want to pay. Bottleworks has bottles of Stone’s ‘03 Epic Vertical ale for $50 right now. The recent sour Confluence from Allagash is $23 per bottle (I know because I just bought one). Even the more affordable craft brews from the Northwest have specialty brews that cost more: Deschutes’ Mirror Mirror Barley Wine was $13 a bottle when I purchased 4 a couple weeks ago.

Because of its status as a luxury item, craft beer is an easy thing to get axed from the shopping list when folks need to make cutbacks. There are varying reports about how the current economic malaise has been affecting the beer industry, but if Oregon is any indication, things aren’t good. Beer sales in oregon were up overall, but craft beer sales were down. Implication? That craft beer drinkers are switching out their craft beer purchases for macrobrew purchases.

Ouch.

Naturally, desperate times call for desperate measures, and many folks online have been touting homebrewing as a cost-effective replacement for purchasing craft beer. Now, I know that I’ve posted about this before, but I’m going to go into some serious detail this time around, and hopefully people will understand this time around: Homebrewing does not save you money.

Many folks have recently come out on the “It saves you money” side of the equation. This post was inspired by a recent post by @brewnas on twitter, but the original article at The Simple Dollar has been cited all over the internet at this point. Even Wiki Answers claims that this is the case, and there is no shortage of other blogs claiming the same thing.

First thing’s first: what mark are we trying to hit with this effort? Let’s assume that you are the kind of beer drinker who would rather drink nothing than drink Bud Light. Note that this is already unrealistic, because clearly there is a large segment of Oregon craft beer drinkers that would rather get their buzz from Bud than not get their buzz at all, but for the sake of argument and comparison, let’s assume if you can’t drink beer that’s better than Bud Light, you’re not drinking at all.

So how much is a beer that’s better than Bud Light? I think there are three contenders for this spot: Samuel Adams Boston Lager, Redhook’s ESB, and Budweiser’s own American Ale. Samual Adams is $6.15 per six pack at Amazon Fresh right now (on sale). Redhook isn’t on sale and clocks in at $7.49 per six pack. American Ale is $13.49 for 12 bottles.

So let’s say that our mark is $1 per beer. If we can homebrew for $1 per beer, I’m willing to admit that homebrewing is a better way to go.

Note that this ignores a lot of things:

  • Beer drinkers are willing and able to substitute beers, as is clear from the statistics in Oregon. And Bud Light is cheap.
  • Most craft beer drinkers don’t drink the same thing day and day out. If you’re homebrewing on the cheap, odds are that you’re going to have a tough time having more than one style of beer available at any given time.
  • Most homebrewers also buy commercial beer. We’re trying to eliminate that expense, so if you’re homebrewing, you’re only drinking homebrew.
  • Your time isn’t worth anything.
I’m also going to make a number of other assumptions about the homebrewing process, but we’ll get there in a minute.

The cheapest “starter kit” that I’ve been able to find was linked from the Bargaineering blog. We’ll assume that this starter kit is available to you locally (though I know that my local starter kits are more expensive — between $80 and $100).

Cost so far: $57.95+tax+shipping. Note that this particular starter kit is really enticing, since it includes a set of ingredients for your first batch! Note that it doesn’t come with a boil kettle large enough to boil 6 gallons of liquid. See below for how that might change things. Let’s also assume that you’re using ice to cool down your beer after boiling, and that you have that ice in your freezer and won’t need to buy it.

But assuming 5% sales tax (it’s actually 9% here in WA, but there’s no sales tax in Oregon, so your mileage may vary), plus let’s say $8 for ultra-cheap shipping, that’s just under $69 for your first batch of beer into the primary.

Total cost for your first batch into the primary: $69.

I’m going to assume, just for the sake of argument, that you have bottles lying around. The reusable kind — not twist caps. Let’s assume you’ve been drinking Bud American Ale for a while and you have several dozen of those bottles around. I’ll assume you sterilize with bleach. The kit above (again, insanely cheap!) includes caps and a capper, so the cost of your first batch is still $69 into bottles. Woohoo! How many bottles did you get?

Let’s assume (see below) that you get all 5 gallons out of the batch and into bottles. 128 ounces in a gallon, 12 ounces per bottle, that’s 53 bottles. Ouch. At $1.30 per bottle, that’s more expensive than all three of the craft brews listed above.

Can you do better in the future? What do you need to buy in the future? Just ingredients, right?

The cheapest batch of beer I ever brewed was a Hefeweizen. I bought just over 6 pounds of bulk liquid wheat malt, an $8 yeast smack pack from Wyeast, and a small amount of specialty grain. It was $22, and it was that cheap because I already had hops in the freezer at home. If I would have had to buy hops, it would have been closer to $26-30 depending on the kind and amount of hops. But let’s say it’s $30 for future batches. After the second batch, where are you?

You’ve made 10 gallons of beer (106 bottles) and spent $108 total. Looking good for that $1 a bottle mark at this point! Hell, if you keep brewing that $30 recipe, you’ll be below $1 a bottle very soon. In fact, after 2 more batches, you’ll be at Bud Light levels of cost (86 cents a bottle, not on sale).

So you can definitely hit the “Cheap Beer” mark by homebrewing!

Except… there are some rather unrealistic things we’re assuming about the homebrew process, besides what’s already mentioned above.

  • You never screw up a batch so badly that you don’t want to drink it. As someone that has started and restarted to homebrew 3 times, I can tell you this isn’t likely.
  • You have bottles, and you’re willing to use table sugar (which you probably already have) for priming. Note that “having bottles” is not easy. Having 53 bottles isn’t good enough because batch sizes vary. You need 60 empties per batch to be sure that you’ll have enough, and if you’re going to have been all the time, you need 120 empties total. 120 empties is a lot of beer to have drunk. If you’re buying unused bottles from the brew store, then you shouldn’t even really be reading this.
  • You are getting the full 5 gallons of beer every time you brew. Honestly, I can’t remember the last time I got a full 5 gallons into bottles. My most successful brew in recent memory was 4.9 gallons into bottles. The $22 batch mentioned above came out at 4.3 gallons into bottles (7.66 six-packs).
  • You never need to buy replacement equipment. I would say the most commonly broken thing in the homebrew setup is the hydrometer, which is by necessity made from extremely thin glass. Replacement hydrometers are $6, and if you break one inside your beer, you’ve wasted a whole batch.
  • You never want to improve your brewing process. The amortization of equipment costs assumes that you never throw away any equipment and never buy any new equipment.
  • You have a source of sterile water to dillute with, or you have a kettle large enough to boil 6 gallons of liquid. You can dillute with water straight from your tap, but trust me when I say that’s playing with fire. Note that the cheapest way to sterilize water is to run it through a water filter. The most basic such filters suitable for brewing run $40 and hook up to your faucet. They work for about 100 gallons.
  • You’re willing to either let the wort chill in the kettle after boiling — probably for several hours — or you don’t have to buy ice. The former is frightening due to contamination concerns, and the latter seems unlikely unless you (a) trust your water source to be free of bacteria an (b) have an ice maker capable of making 3-4 gallons of water worth of ice at a time. Otherwise you’re buying ice every time you brew, which is both annoying and adds to brew cost. Don’t want to buy ice? Wort chillers are only $30! After 5 more batches, that’s only 10 cents per beer!
But other than all those assumptions, any one of which would drive your price-per-batch up, you can totally do it!

Note that there are cheaper ways to brew your own. Mr Beer and the kits from Cooper’s are both fine methods. I’ve never used these and I can’t speak to the quality of the beer, but based on assessments from Tom about Mr. Beer, and the fact that you don’t even boil the Cooper’s kits, that these kits are competing with the Bud Light and downward (Natural Ice, etc) crowd rather than the Bud American Ale crowd.

Oh, I suppose it’s worth mentioning that at the local Costco here in WA, where liquor is insanely expensive, they sell 24-bottle racks of Kirkland Signature (Costco-brand) beer, brewed by Gordon Biersch, for $18. Oh… And those 12 ounce bottles that we were assuming earlier are actually more like 11-11.5 ounce bottles for the typical homebrewer, since you lose something at the bottom duh to bottle conditioning.

Awwwwww, nuggets!

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