Why is Beer So Expensive? – Craft Beer 103

Christopher Koopman, Peter Jaworski,

Release Date
October 8, 2015


Free Markets and Capitalism

Why is the beer you drink so expensive? Beer is one of the most highly regulated industries, across the country. Ultimately, these regulations are like putting lead boots on craft breweries and entrepreneurs.
This video describes the level of taxation and regulation applied to brewing and selling beer at all levels of government.
Can you imagine a world in which consumers had even greater access to cheap and delicious beer? Leave your comments below!

Bottling Up Innovation in Craft Brewing (paper): Christopher Koopman and Matthew Mitchell review the barriers and challenges for craft brewers.
Tax Bites (article): A breakdown of how much of goods’ prices are from taxes.
Trouble Brewing for Craft Beer (article): Christopher Koopman and Matthew Mitchell explain how regulations negatively affect craft beer brewers.

Thank you. Thank you. Yo, Peter.
>> Yeah what’s the emergency?
>> I didn’t bring my wallet. I only carry bit coin.
>> Oh my God, this is so expensive!
>> I know right? Imagine what it would be like without taxes?
>> So, tell me about taxes on the beer.
How much of this beer is taxes?
>> So let me give you an idea of how much of the price of this beer, is actually paying for the taxes that are associated with it.
>> That’s almost half.
>> There you go. About 44% of that beer, the price of this beer, is to pay for the state and federal taxes.
And the local taxes, so these are all the taxes, the sales taxes, as well as the particular beer related taxes, that come along with brewing and selling this beer.
>> So every time I buy a beer and I’m enjoying this beer, the government gets drunk on like 44% of my beer.
>> If we were to be honest with ourselves, it probably look a little more like this.
>> I think something like this is a little more accurate in terms of how much you’re actually paying for beer, versus how much you’re actually paying for all of the other costs associated with the taxes and regulations that have to do with getting that beer to you.
One thing I can tell you, is that beer is probably one of the most highly regulated industries, across the country. That you’re looking at someone that’s saying, I just want to make you a drink. That’s all I want to do, is take some things and mix them together, and give it to you, because it’s good and you like it.
These regulations ultimately, they’re like putting lead boots on these craft breweries and these entrepreneurs. And you take a little entrepreneur and drop him in this beer glass, he’s got these lead boots on. He sinks to the bottom. And a lot of times the regulatory response, or the solution that policymakers come up with, is to try to design some really elaborate breathing apparatus or some giant straw to get to the bottom of the glass to help him breath, so he can continue to survive.
>> So, suppose we eliminate a lot of these regulations and we lower the tax burden, what happens?
>> It’s pretty simple. There’s gonna be more competition among brewers. There’s gonna be more options for you as a beer drinker. And ultimately that leads to greater choice and cheaper beer for everyone looking for a delicious brew to spend their time with.
>> So more beer, more variety, lower price. Let’s drink to that kind of future. Cheers.