The Black Market of Beer

[Jon Walker]

Great article;
http://www.washingtonpost.com/lifestyle ... story.html

By Daniel Fromson, Tuesday, September 6, 11:57 AM

One Friday in February 2010, hundreds of beer geeks descended upon California’s Russian River Brewing Co. to score some Pliny the Younger, an imperial India pale ale that is released just once a year — only on draft. Within eight hours, they had bought all 600 gallons, and within days, 64-ounce growlers were selling on eBay for $150 and up. To thwart profiteers, this year Russian River decided not to fill containers. “The only way it was going to get out of there,” co-owner Natalie Cilurzo says, “was in your stomach.”

Nonetheless, Cilurzo caught two men trying to smuggle Pliny out of the brew pub, and an eBay listing appeared once again and was removed only after she complained to both eBay and the seller.

Her experience is not unique. The Web site has become beer’s most high-profile black market, a market that is increasingly angering some of the world’s best brewers, who consider resale immoral, illegal or just plain insulting.

In the words of Tomme Arthur, whose Lost Abbey beers are routinely resold for hundreds of dollars, “We believe those selling beer on eBay should be chased down.” The site’s alcohol policy explicitly forbids the sale of alcohol, except for pre-approved sales of wine, and eBay spokeswoman Amanda Coffee says the company “works with law enforcement and regulatory authorities to ensure listings are in compliance.”

But the beer trade persists, thanks to a loophole that allows the sale of “collectible containers” as long as sellers post an eBay-provided disclaimer, which states that “any incidental contents are not intended for consumption.” The disclaimer also notes that “the buyers and sellers ensure that the sale complies with all applicable laws” — even though many beer sales probably do not.

“There’s an awfully good chance that somebody selling interstate will be running afoul of state law,” says Thomas Hogue, congressional liaison for the Alcohol and Tobacco Tax and Trade Bureau. Still, eBay beer sales seem to be on the rise. “It’s becoming a more typical practice,” says the Bruery’s Patrick Rue, who brews the imperial stout Black Tuesday, an eBay favorite. “And a lot more breweries are becoming aware of it and trying to stop it.”

Last month, for example, San Diego’s Stone Brewing Co., whose rare Vertical Epic beers are sometimes listed on eBay for more than $1,000 per bottle, began selling the first beer in its new Quingenti Millilitre series via a lottery system, and Stone has announced that people who try to resell it will be banned from future drawings. “We have involuntarily been a part of the eBay aftermarket for many years,” says Greg Koch, Stone’s co-founder and chief executive. “This is the first time we’ve come out, laid it on the table and said very point-blank, ‘Please, do not resell.’”

On Sept. 17, when residents of the Washington area will be able to participate in what is probably the most creative response to eBay piracy thus far: Zwanze Day. Belgium’s Cantillon Brewery, whose beers are considered the gold standard of the spontaneously fermented style known as lambic, has shipped barrels of its annual Zwanze release to 20 leading beer bars spanning the globe from Finland to California to Japan, including Washington’s ChurchKey. The beer is not being sold in bottles, and all of the barrels will be tapped that Saturday, at the local equivalent of 3 p.m. EST where possible, resulting in a synchronized worldwide celebration that discourages stockpiling and online sales.

Jean Van Roy, Cantillon’s head brewer, came up with that plan after noticing that Zwanze 2010, which he sold for six euros per bottle, was soon going on eBay for 70 or 80 euros. “The goal with Zwanze Day is to try to reach directly the beer fan, the Cantillon fan,” he says, “and to give the possibility to those people to taste the beer at a correct price.” Likewise, Stone’s use of a lottery is intended to keep its beer accessible and relatively inexpensive. The brewery hopes to reward devotees rather than opportunists, and although it is selling the beer for $25 per bottle, that price reflects the cost of production instead of what the market will bear.

“In another life, I would be a consumer advocate,” Stone’s Koch says, adding that high prices also are problematic because they often accompany second-tier products. Some beers, such as hoppy India pale ales, quickly lose their vibrancy or go rancid when exposed to light and heat. “Frankly, somebody’s naive if they pay big dollars for this stuff on eBay,” Koch says. “They think they get a rare, special beer, but the reality is that they get a rare beer but it’s no longer special.”

Ultimately, though, what seems to upset brewers most is their sense that they are being exploited. “You want to hear about the framboise story?” said Russian River’s Cilurzo. “I am furious about this.”

Last September, Russian River released Framboise for a Cure, a raspberry-flavored beer that it sold for $12 per bottle to raise money for a local breast cancer treatment center. The beer sold out in a day, and soon somebody sold a bottle on eBay for $400. Then someone else put one up for sale. “We contacted that person,” Cilurzo says, “and we said, ‘This is absolutely ridiculous, because we donated 100 percent of this for charity.’”

The seller didn’t budge. “The guy said, ‘I have to support my habit somehow.’ ” Not heroin or cocaine. He meant craft beer.

[Belgian]

Thanks for sharing with the group.

Great article;
http://www.washingtonpost.com/lifestyle ... story.html

Last September, Russian River released Framboise for a Cure... someone else put one up for sale. “We contacted that person,” Cilurzo says, “and we said, ‘This is absolutely ridiculous, because we donated 100 percent of this for charity.’”

The seller didn’t budge. “The guy said, ‘I have to support my habit somehow.’ ” Not heroin or cocaine. He meant craft beer.

This is the side of beer geek behavior that scares me - everyone's justified in ANY troll-like behavior in the name of getting special beer (or trading for it / financing it in money-grubbing ways /clambering over still-warm bodies of victims to gain some advantage.) This is The Dark Side and I am averse to it.

But distasteful as this re-selling Framboise for a Cure may be, it's no big mystery it would happen. I mean do they have a clue at RR? Pathetic to trot out the cause of women suffering from cancer to make a point in this article.

[JesseM]

This is the side of beer geek behavior that scares me......This is The Dark Side and I am averse to it.

But Jonas, fear leads to anger, anger leads to hate, and hate leads to the Dark Side!

Then again, one must study the Dark Side in order to fully understand the Force, it's really where the Jedi went wrong....

[A]

Thanks for sharing with the group.

Great article;
http://www.washingtonpost.com/lifestyle ... story.html

Last September, Russian River released Framboise for a Cure... someone else put one up for sale. “We contacted that person,” Cilurzo says, “and we said, ‘This is absolutely ridiculous, because we donated 100 percent of this for charity.’”

The seller didn’t budge. “The guy said, ‘I have to support my habit somehow.’ ” Not heroin or cocaine. He meant craft beer.

This is the side of beer geek behavior that scares me - everyone's justified in ANY troll-like behavior in the name of getting special beer (or trading for it / financing it in money-grubbing ways /clambering over still-warm bodies of victims to gain some advantage.) This is The Dark Side and I am averse to it.

But distasteful as this re-selling Framboise for a Cure may be, it's no big mystery it would happen. I mean do they have a clue at RR? Pathetic to trot out the cause of women suffering from cancer to make a point in this article.

Look, this is ridiculous - why does the brewery care what happens to the product after they sell it? Scalping/reselling provides a valuable service - it allows someone to be able to enjoy a product they would not have otherwise been able to. Whats the real harm? Practically speaking this makes up only a tiny percentage of the sales, its not like anyone who was able to actually get it locally was shut out because someone decided to resell on eBay.

If it wasn't for scalping I would not have been able to go to Dark Lord Day this year - literally not able to, the website would not sell to anyone without a US address. So don't try to tell me reselling does not provide a valuable service.

Same thing with concert tickets - bands complain about scalpers because it keeps tickets out of the hands of "Real Fans" - who exactly do they think buys scalped tickets? Real Fans, who happen to have a little scratch but not the ability to camp overnight in line with a wristband for some show...

[Kel Varnsen]

Thanks for sharing with the group.

Great article;
http://www.washingtonpost.com/lifestyle ... story.html

Last September, Russian River released Framboise for a Cure... someone else put one up for sale. “We contacted that person,” Cilurzo says, “and we said, ‘This is absolutely ridiculous, because we donated 100 percent of this for charity.’”

The seller didn’t budge. “The guy said, ‘I have to support my habit somehow.’ ” Not heroin or cocaine. He meant craft beer.

This is the side of beer geek behavior that scares me - everyone's justified in ANY troll-like behavior in the name of getting special beer (or trading for it / financing it in money-grubbing ways /clambering over still-warm bodies of victims to gain some advantage.) This is The Dark Side and I am averse to it.

But distasteful as this re-selling Framboise for a Cure may be, it's no big mystery it would happen. I mean do they have a clue at RR? Pathetic to trot out the cause of women suffering from cancer to make a point in this article.

Look, this is ridiculous - why does the brewery care what happens to the product after they sell it? Scalping/reselling provides a valuable service - it allows someone to be able to enjoy a product they would not have otherwise been able to. Whats the real harm? Practically speaking this makes up only a tiny percentage of the sales, its not like anyone who was able to actually get it locally was shut out because someone decided to resell on eBay.

If it wasn't for scalping I would not have been able to go to Dark Lord Day this year - literally not able to, the website would not sell to anyone without a US address. So don't try to tell me reselling does not provide a valuable service.

Same thing with concert tickets - bands complain about scalpers because it keeps tickets out of the hands of "Real Fans" - who exactly do they think buys scalped tickets? Real Fans, who happen to have a little scratch but not the ability to camp overnight in line with a wristband for some show...

I agree with this. I don't understand how brewers can act so surprised by this. I mean it's just simple supply and demand so to me they have two options. Either they can increase the supply of these rare beers, so everyone who wants one can easily get it (and the increased supply would decrease the resale price) or they can increase the price that they sell their rare brews for so that they make more cash themeslves (as there is obviously a demand) and make it more difficult for resellers to make enough of a profit to make it worth it. Then again like most things where this kind of thing happens, I think the producers don't really care and they like the media exposure of a rare beer, and they like the extra exposure they get out of stories like this.

[A]

That being said, reselling growlers is just gross But if someone wants to buy 'em more power to them!

[The Mick]

I don't think brewers are really suprised by this, it just annoys them, which I understand. They don't want to make more of their beer because it's suppose to be a special experience for the drinker and they are making it to celebrate their craft and and bring something exciting to the table, not to overcharge patrons and make boat loads of cash, they're not Molson.

I get that people can't always make it to the location in order to buy the special release and that online distribution makes it accessible to a greater number of consumers, so maybe the brewers could start selling a portion through their websites when these releases come about (if that is within legal boudaries) If that were the case though, how would you feel if you made the trip down to Cali for the release of Younger and you were next in line to try, but because they had to reserve a special amount for online sales you don't get any.

You can't really say that it doesn't take away from a locals that would want it either, as the 600 gallons were gone in hours, so there were probably some locals that didn't get to try any that would have liked to.

Also, I agree with the Jedi comment.

[Kel Varnsen]

I don't think brewers are really suprised by this, it just annoys them, which I understand. They don't want to make more of their beer because it's suppose to be a special experience for the drinker and they are making it to celebrate their craft and and bring something exciting to the table, not to overcharge patrons and make boat loads of cash, they're not Molson.

I think in reality it doesn't really annoy them that much since it drives demand for their product, and gives their company added exposure when articles like this are written. To me that is a win-win situation. I used to collect a bunch of concert posters and people would complain all the time about how small print runs would only drive up prices in the secondary market and how if artists would just print more they would make more money themselves and kill that market. But a bunch of artists went on record that they liked the small print runs, since it boosted the demand for their products, and by extenion, their popularity and the other products they had for sale.

[The Mick]

There is definitely no draw back to the exposure they're going to recieve from this, agreed; no such thing as bad press, but they probably recieve a fair amount of exposure when doing the releases without having their stuff re-sold. I think it does probably annoy them, but the exposure is a silver lining, like when my friends decide we're going to the Hard Rock Cafe for beers; I'm annoyed that I can't order anything I'd prefer to drink, but I don't mind that the bartender is going to be a hot blonde. Similar to press, no such thing as a hot blonde serving beer.

[JerCraigs]

I think part of the concern for brewers like Stone is that the PR value of the reselling is probably less help to their sales, than that of actually getting these rare beers into customers hands at a reasonable price. Eg. Selling a beer geek Rare Beer X for $25 may help sell them more of their regular product line.

Other factors:
- Quality control. Brewers don't want their beer to be mistreated before it gets to the customer.
- other...


Regardless, I think that there are a number of easy ways that breweries can control it (Lottery systems, pre-selling, etc.) if they want to. With Tsarina Katrina Scotch Irish pre-sold the beer. Doing this for other rare beers would allow brewers do decide how much of a new batch they want to brew.

You could even have a system where say, I commit to buy 2 bottles of Lost Abbey TBD, and I pay for one even if there is an issue with the batch to mitigate the risk of an experimental process etc.

I wonder - If scalpers are selling Dark Lord for example for $60, and the brewery charges $15. If the brewery charged $30, would the resale value stay the same? (and thus reduce the profits for the scalper?)

[ErkLR]

Regardless, I think that there are a number of easy ways that breweries can control it (Lottery systems, pre-selling, etc.) if they want to.
[snip]
I wonder - If scalpers are selling Dark Lord for example for $60, and the brewery charges $15. If the brewery charged $30, would the resale value stay the same? (and thus reduce the profits for the scalper?)

But what's to stop me from entering the lottery and if I win, re-sell the beer after I pick it up? I had thought of doing this with the Utopias release, but really I can't be arsed.

Regarding upping the price of rare beer, I think the Utopias experience shows that increasing the first sell price, increases the resale price. I know Gambrinus has sold some Utopias over the summer and I think it's >$300 CAD isn't it?

Also A, wristbands and camping out over-night? When's the last time you went to a concert? It's all pre-sale codes and ticket "brokers" with banks of computers and credit cards now.

[JerCraigs]

But what's to stop me from entering the lottery and if I win, re-sell the beer after I pick it up? I had thought of doing this with the Utopias release, but really I can't be arsed.

Nothing, but for the crazy big releases you could do something like every person can have one entry online, every person who buys a case of beer from the brewery store gets another entry with each case. Thus rewarding regular customers.

Regarding upping the price of rare beer, I think the Utopias experience shows that increasing the first sell price, increases the resale price. I know Gambrinus has sold some Utopias over the summer and I think it's >$300 CAD isn't it?

I meant more resale by scalpers, not at a bar. Every bar has a mark-up, that's pretty normal. But if the "market price" (e.g. the most people are willing to pay for it) for a beer is a certain price, then the closer to that price the brewery is charging, than the less the profits for scalpers/resellers.

[mintjellie]

I'm surprised some of you are bothered by this. No one was bothered when a local beer bar advertised they were reselling Westy.

[Kel Varnsen]

I think part of the concern for brewers like Stone is that the PR value of the reselling is probably less help to their sales, than that of actually getting these rare beers into customers hands at a reasonable price. Eg. Selling a beer geek Rare Beer X for $25 may help sell them more of their regular product line.

I don't know I think the result could possibly be the opposite. For your Stone example, someone who likes beer but has never tried Stone products might read a story about their rare beers selling for crazy prices on ebay. Sure it might not interest them enough to start bidding on those bottles, but it might generate enough interest for them to think that the beers from that brewery must be good, and convince them to try the more readily available beers like Arrogant Bastard or Ruination. Because I think the whole point of these rare releases is to get the brewery more exposure and get people interested in the main line beers they produce.

[Torontoblue]

I'm surprised some of you are bothered by this. No one was bothered when a local beer bar advertised they were reselling Westy.

Touche