Is the cost of producing beer higher than other non-alcoholic drink

[kenny1999]

Generally speaking, is the cost of producing beer (which include cost of ingredients and necessary manufacturing process, excluding marketing costs.) higher than most of other non-alcoholic drinks? In my country, price per ml for beer is usually a lot higher than most of other drinks e.g. coke or other sugary drinks. 

[CharonY]

Depends on where you are and which non-alcoholic drinks you are thinking about. Tap waters is a non-alcoholic drink and very cheap, for example.

But generally speaking, high beer cost is typically caused by high taxes on alcohol more than anything else. 

[Sensei]

16 minutes ago, kenny1999 said:

Generally speaking, is the cost of producing beer (which include cost of ingredients and necessary manufacturing process, excluding marketing costs.) higher than most of other non-alcoholic drinks? In my country, price per ml for beer is usually a lot higher than most of other drinks e.g. coke or other sugary drinks. 

Beer contains ethanol. In most countries, producers of alcoholic beverages must pay excise taxes on alcohol. The amount to be paid depends on the type of beverage, i.e. beer, wine, whiskey, vodka (basically, if it is distilled (high concentration) or not distilled (low concentration)).

You should not compare the price of cola or sweetened beverages with beer, but compare the price of beer with wine and vodka, taking into account the percentage of alcohol they contain.

For instance, beer has 6% of alcohol and is in 500 mL bottle. 0.5L * 0.06 = 0.03 L = 30 mL

vodka has 40% and is in 500 mL bottle. 0.5 L * 0.4 = 0.2 L = 200 mL

200 mL / 30 mL = 6.67 x

So, if one beer costs $0.75 (my price for beer), one vodka should cost $5 (but costs $6.75-7). i.e. it is more economical to buy 7 beers with the same amount of ethanol than single vodka.

[exchemist]

36 minutes ago, kenny1999 said:

Generally speaking, is the cost of producing beer (which include cost of ingredients and necessary manufacturing process, excluding marketing costs.) higher than most of other non-alcoholic drinks? In my country, price per ml for beer is usually a lot higher than most of other drinks e.g. coke or other sugary drinks. 

In addition to @Sensei's point about excise duty on alcoholic beverages there is also the need to avoid confusing cost with price. Price is set by supply and demand for the goods in question. The connection to cost can be fairly indirect. 

[swansont]

7 minutes ago, Sensei said:

You should not compare the price of cola or sweetened beverages with beer

Except that was the question that was asked. Is the production cost of beer greater than sugary drinks.

 

[kenny1999]

Well, excluding marketing costs, related taxes, supply and demand, considering only the necessary ingredients and processes involved, is the cost of producing beer (not other expensive wine) usually (a lot) higher than non-alcohlic drinks?

[CharonY]

43 minutes ago, kenny1999 said:

Well, excluding marketing costs, related taxes, supply and demand, considering only the necessary ingredients and processes involved, is the cost of producing beer (not other expensive wine) usually (a lot) higher than non-alcohlic drinks?

If there are no taxes and easy access to all the ingredients, the equipment is readily available with, then no or perhaps yes. The real answer is  dependent on how well you streamlined production, how much you scaled it up etc. Small-scale production are quite a bit more expensive regardless what types of drinks you make, for example. But there are of course also rather expensive non-alcoholic drinks. Kopi Luwak coffee is likely going to outprice all but the most exotic beers.

 

[mistermack]

You would think that beer would be one of the cheaper drinks to produce, as the raw materials are pretty basic and easy to produce in bulk. The price difference is definitely due to the alcohol tax. Cider is equally basic in raw materials. Apples are cheaper and easier to grow than grapes, you would think. There is a difference in that brewing takes time, and can spoil. But when it comes to bulk manufacturing, the differences would be fairly low.

Marketing and distribution can't be ignored. Look at the cost of bottled water. The raw material cost is nearly nothing, but it's not cheap in the shops.

[CharonY]

The cheapest non-alcoholic drink to produce is arguably bottled water. Everything else is an additive.

[exchemist]

9 hours ago, kenny1999 said:

Well, excluding marketing costs, related taxes, supply and demand, considering only the necessary ingredients and processes involved, is the cost of producing beer (not other expensive wine) usually (a lot) higher than non-alcohlic drinks?

Getting at actual production costs is very hard, for commercial reasons, unless one is actually in the business. Data I’ve seen on line for brewing suggests ingredients plus production, excluding packaging, is only 30% of total costs, with another 30% or so being due to packaging. The rest will be distribution, sales and marketing, tax etc. For soft drinks, I imagine these non-production costs would be similar with the obvious exception of tax.
 

 As for the production process itself, my guess is beer production is more complex, with more steps in it, than soft drink production, since it involves malting and fermentation, which are fairly subtle biochemical processes, whereas soft drink production is just a matter of blending. Also it takes longer, which increases working capital.  I would not like to put numbers to the difference. 
 

But you can see from this that even if production costs were twice as high for beer as for soft drinks, that would only make total cost about 15% higher. Tax will be the other big difference. 
 

Actually there may be 3rd element in some cases. Glass bottles are a hell of lot heavier than PET packaging. This may have a big effect on distribution costs.

[John Cuthber]

4 hours ago, CharonY said:

The cheapest non-alcoholic drink to produce is arguably bottled water. Everything else is an additive.

That's a good order of magnitude or two more expensive than tap water.
A friend of mine who used to work in a  pub was always pleased to see people drinking cola in his bar.
It had a mark-up of essentially 100 %.
The brewery supplied CO2 for dispensing beer, so he didn't pay for that. The price of tap water is quoted in pennies per ton.
The flavouring syrup  cost a few pence. He sold the drink for a few pounds.
I think he worked out the most expensive bit was paying someone to wash the glass afterwards.
 

[CharonY]

4 hours ago, John Cuthber said:

That's a good order of magnitude or two more expensive than tap water.
A friend of mine who used to work in a  pub was always pleased to see people drinking cola in his bar.
It had a mark-up of essentially 100 %.
The brewery supplied CO2 for dispensing beer, so he didn't pay for that. The price of tap water is quoted in pennies per ton.
The flavouring syrup  cost a few pence. He sold the drink for a few pounds.
I think he worked out the most expensive bit was paying someone to wash the glass afterwards.
 

Well both are often tap water, I assumed bottling process for all drinks. If not, self service soda fountain could be cheaper (no labor).