The Diminishing Returns of Limited Release Beer

The audience for craft beer is booming. One of the more concrete pieces of evidence is the growing numbers of beer geeks clamoring for limited release beer. Where Dark Lord Day once was an anomaly, there are now limited release events happening on an almost weekly basis, with drinkers lining up in person or online to get their hands on the latest and greatest rare beer.

The success rate of these release events are hit and miss. The underplanned, understaffed brewery met with overwhelming crowd size has become a regular part of the landscape. Online events often lead to a failure of technology, as breweries suffer the death of thousand clicks.

Despite the increasing demand, there are those who have managed to repeatedly get it right, as well as those who are repeatedly overwhelmed. As events get more crowded, and acquiring your favorite beer becomes a bigger and bigger headache, perhaps it's time to ask: "Is this fun anymore?"

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Pliny the Younger, Westvleteren 12, Founders CBS, Vanilla Bean Dark Lord, Armand'4 Oude Geuze Lente, Founders KBS, Cantillon Blåbær Lambik, Rare D.O.S.: Eight of the current top ten beers on Beer Advocate.com. Eight beers that have become nearly impossible for the average person to get their hands on. In fact, of the top 50 beers on Beer Advocate (as of 12/14/11), just five - Russian River Pliny the Elder, The Alchemist Heady Topper, Ballast Point Sculpin IPA, St. Bernardus Abt12, and Weihenstepahner Hefe - are regular release, regularly-available year-round beers*.

With high ratings come high demand, and regardless of how a highly sought-out beer is released, the road to the drinker's hand is wrought with obstacles for both the brewery and the drinker.

The On-Premise Beer Release Event

Perhaps the most commonly cited example of the problem of the on-premise release - or at least the one we're most familiar with here in Indiana - is Three Floyds Dark Lord Day. The problems started in 2008, with a larger than expected crowd and slow moving lines. 2009 had marked improvements, but 2010's event was considered by many to be a disaster in crowd-control. By the time the 2011 event happened, the brewery had put in hundreds of hours trying to fix previous problems, limiting crowd size through the use of "golden tickets", and providing Dark Lord fans with a rewarding day at the brewery.

Of course, Three Floyds isn't the only brewery that has dealt with a sudden and surprising demand for their scarcely-available beer.

Buyers [of Westvleteren 12] were originally limited to ten 24-bottle crates of the beer per car, but as the beer increased in popularity, this was first reduced to five, then to three and now to two or one crates. For the Westvleteren 12 in 2009, it was limited to one case. When making an order now, the type and quantity of beer available for sale are revealed. Sales are limited to one order a month per person per license plate and phone number. (from wikipedia)

Westvleteren may have been the first, but it seems as though the problem has recently become widespread.

The annual release of Russian River's Pliny the Younger - with a supply that lasted the brewery eleven days in 2009 - sold out in just eight hours in 2010. The 2011 supply lasted weeks, as the brewery distributed a few kegs to selected accounts, as well as completely eliminating growler sales in the pub.

Another example was Portsmouth Brewery's Kate the Great release, which started as a small event before overwhelming the small downtown area where the New Hampshire brewery is located. The 2010 event, where hopeful drinkers collected daily-calendar pages to reserve their two-bottle allotment - backfired on the brewery when the 500-plus-sized crowd flooded the street in front of the brewery. In 2011, the brewery released one thousand $2.00 scratch-off lottery tickets in the days leading up to the release, ultimately providing nine hundred winners with one bottle of the beer, to be picked up in a one-month window.

If there's one factor that seems to smooth out the on-premise release, it's clear and constant information. Beer fans are much more likely to empathize when they know a brewery is working with them instead of against them. Time windows and predetermined (and non-changing) bottle allocations show the audience that the brewery thinks ahead. An informed and regularly updated security team keeps lines orderly, as line jumpers are minimized, lines move more quickly, and patrons are at least given the impression that this thing is working.

The Online Release and the Failure of Technology

Breweries looking to avoid the headaches of the on-premise release may choose to use the power of the internet to eliminate some of those problems. Locally, Upland has chosen to use the combination of an email list with an online reservation system to handle the demand of their highly sought-out lambic series. Potential buyers on Upland's mailing list receive an email providing a date and time to place reservations for their bottles on Upland's website. Once all reservations are made and the allocation has sold out, the reservation system closes, and customers are free to pick up their bottles within a predetermined window of time.

Upland's first go-around with this system was fraught with problems, as many potential buyers were met with a crashing website and the frustrations that occur when an overwhelmed website is bombarded with traffic. For customers participating in the rush, the only course of action is to continue refreshing the reservation pages, leading to even more problems on the back end. The final result: a few lucky customers who had made their way through, and a collection of unhappy beer fans with little recourse. To Upland's credit, their second attempt at online reservations went much better for customers, with a website that was fully prepared for the onslaught of demand that comes with a limited release. Although the beer sold out in just two minutes, at least customers knew when to give up trying.

A more recent example of the problems of online reservation would be the November 2011 release of Pelican Brewery's Mother of All Storms. The folks at Pelican had alerted the public of the midnight event on both their Facebook and Twitter pages, and as the midnight hour approached the brewery's website was swamped with traffic, eventually leading to an all-out website crash that hadn't been resolved by the next morning. When the brewery attempted to reroute demand by suggesting that thirsty drinkers place their order by phone, they found out just how strong the desire for their beer was; their phone system also crashed.

In many cases the problems with an online system are no different than those of the on-premise release: the brewery's underestimation of demand. Without the proper tools in place to harness that demand, all parties suffer.

Distribution Through the Liquor Store: Blame the Middleman

An often suggested solution to the problems of the limited release is distribution through liquor stores. The argument seems to be that one-time events drive up demand, leading to crowds of not only brewery regulars, but also dedicated craft beer fans, undeserving bandwagon/casual drinkers, BeerAdvocate-type hoarders, and cold-hearted people who'll only resell the beer on Ebay. While there is certainly some truth in that argument, the liquor store release is not the perfect answer.

As demand for craft beer has increased, so has the amount of manipulation of the product by both distributors and liquor stores. On the distributor end, oftentimes the decision of who gets what comes down to sales volume; a liquor store that moves more of a brewery's everyday lineup is more likely to be allocated the limited release product. This isn't an unusual practice in any industry - it's common sense to take better care of those who take better care of you. While these choices are usually out of the brewery's hands, they are completely understandable.

On the liquor store end, possession of limited release beer can mean reservation lists, and ultimately, favoritism, as store employees themselves make the decision on who get the latest and greatest. It's not at all unusual for limited releases to never see the store shelves, as they're kept behind counters or "in the back", waiting for collection by a buyer on a list that other customers never see and can only hope to be a part of. It's also not unusual for the buyers on these lists to find that they've dissolved overnight, as the beer reserved with one employee was unknowingly sold by another.

Another problem with the liquor store solution lies in pricing. After Upland's first release of their lambic series, the brewery was surprised to find that Bloomington's own Sahara Mart had under-priced their very own pricing by $2 a bottle. Having set case pricing at a level that liquor stores could match brewery pricing ($15/bottle in this case), the brewery had no way of controlling final store pricing. In this case, not only could the brewery have made more money by selling the bottles in-house, but they could have eliminated the egg on the face that came with being undersold by the guy down the street.

Perhaps a bigger problem is when the guy down the street marks the beer up. That's what happened to Minnesota's Surly Brewing after the release of their highly-sought Darkness Imperial Stout in November 2011. Surdyk's Liqours, a Minneapolis beer and wine retailer, priced their bottles of Darkness at the unheard of price of $36.99, nearly twice the $18 that customers paid at Darkness Day, Surly's on-premise event. While the brewery was definitely unhappy with that pricing (going as far as to tweet about it), store owner Jim Surdyk justified the price by noting, "“The bottles were selling on eBay for $75. To each their own.” (Quote from/more on the controversy at HeavyTable.com)

It's hard to imagine that breweries would consider the liquor store the ultimate answer, but at least in cases like these they can be largely removed from the blame when a customer goes home angry or empty-handed. While there is pressure from distributors and liqour stores to get the most amount of a product possible, at least the brewery isn't fielding complaints from angry drinkers.

The Embarrassment of Riches Versus the Goose that Laid the Golden Egg

If you're a dedicated craft beer drinker, or even if you know one, there's a pretty decent chance you've experienced a group tasting event. It's these events - like our own Tailgate for Nothing - where collectors pull out the beers they've been saving, in hopes that they'll find a receptive and appreciative audience. And perhaps they will - these events are certainly fun, and it's always great to try something you haven't had before.

But little thought or appreciation really goes into the amount of time put in to make something like the group tasting event happen. It's happened to us all; the bottle you spent time, money, and stress over acquiring is passed around, each drinker getting their two ounce sample, and it's only then you realize: All of this is good, some of it is even great. But after the bottle has made its rounds, there's a strong chance that half the bottle will be left sitting on the table while everyone moves on to the next thing. When you've served up stout number 8 in a 20 stout tasting, was it really worth the effort?

The craft beer landscape is now inundated with limited release beer. But what makes the beer all that more rare is the hoarding that now takes place every time your local liquor store receives a shipment. While the market is certainly growing for these beers, it hardly makes sense that - in a world where there's a new brewery every ten minutes - genuine "need to drink" demand is outpacing release schedules. Beers that were once easy to acquire have moved into limited release territory not by lower production or significantly bigger audience, but by overzealous collection by an specific brand of beer geek that continues to throw it into the pile in their home cellars and beer closets.

Is There a Solution?

If you're wondering if things will ever go back to where they were - the days when bottles of Bourbon County Stout or the more limited Founders releases actually sat on liquor store shelves longer than a day - don't hold your breath. It wasn't so long ago when it was only the rare craft beer fan that had a closet full of beer. Now it's almost a requirement to belong to the club.

The laws of supply and demand say that if demand increases and supply remains unchanged, then it leads to higher equilibrium price and quantity. We've certainly seen this in practice with limited release beer, as prices continue to climb, even with the additional options on the market.

So brace yourself, it's only going to get worse.

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*By my count, anyway. Of course it depends on where you live.

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Addendum

March 3, 2012 Founders KBS release A group of 150+ eager drinkers camp out overnight (starting as early at 10:30pm) in anticipation for the Saturday release and are awarded with line tickets despite the brewery stating ahead of time "don't camp out" (according to BeerAdvocate, anyway. I can't find record of this anywhere).

Somewhere along the line the folks at Founders realized that the 315 cases they had allocated for the event weren't going to be enough to take care of the 1000 people in line, and they halved the allotment to make more folks happy. This didn't sit well with everyone.

I am done with any and all Founders products and collabs. Henceforth it is poisoned, as far as I'm concerned.

While I understand you wanted to make more of the masses happy by deciding to change your limit to a half case, after advertising a higher full case limit, you’ve done nothing more but bait and switch the public. This is the absolute lowest form of marketing. While I know it may gain you more marketshare overall. It completely destroys your base fan base. I may see you one day again, but not any time soon. Keep up the fine beer making and success, just avoid the deceptive marketing practices in the future. Next thing I know you’ll be paying kids in China 10 cents an hour to make beer like WALMART does to make clothes.

Thanks for making a five hour drive feel like a swift kick in the sack.

I was one of the people who got there at 1 in the morning and bared the elements on what was easily the coldest, longest night of my life (also one of the funnest) just to find out last minute that I was only going to get half a case. I would not have made the over 3 hour drive and stood outside for that long if I knew this ahead of time. You decided to make some people happy but in turn make the hardcore people who planned properly feel shafted. On our way out we talked to a few people in line who had numbered tickets that had gotten there at 6am. I get this may come off as selfish but it didn't seem fair to us after being out in that for so long.

I hate to say this but Founders went from my favorite brewery to just another company on a self of hundreds today. A company must stand behind its printed words and today Founders betrayed its loyal customers in an attempt to please the masses. The website said we were entitled to one case and the 9.5 hours in 26 to 40 degree should have delievered this promise. Instead, Founders allowed line-jumpers and masses to destroy what had become a great event. My group drove 11 hours to purchase a product that would have been cheaper on ebay.

Those joining the line at 6:00am finally arrived at the building to get their beer at 1:45pm. Those arriving at 6:30 AM to pick up what they thought was going to be a case of KBS got no line tickets and left empty-handed. Stories of folks driving up to six hours for the event were not unheard of.

After the event, Founders posted a statement on their website apologizing for the decision but also explaining that the did what they thought was best. Founders also promised that they would triple KBS producing next year - which, at the previously promised case allotment, would be just enough to cover those who stood in line this year.

Just a few days later, Founders announced that they would be moving to an online ticketing system for the next KBS release.

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March 17 and 18, 2012 Dark Lord Day Ticketing Using what most people now consider the best possible method, Three Floyds Dark Lord Day tickets (for three release sessions) sell out online in just under one hour. Later in the day the brewery announced (via Facebook and their website) that they would have a limited number of tickets on sale at the brewery for locals on Sunday the 18th.

We realize that online sales create a difficult situation. In an effort to make sure our loyal locals have the ability to attend DLD, we’re offering a few hundred tickets for sale at the Pub today at face value. There is a 2 ticket per person limit and all sales are cash and final. We will also have standard favorites plus some limited barrel aged beers available during the ticket sale (2 case per person limit). Ticket sales will begin at 9:30 this morning. The brewery property is closed until 9:00 am as we set up. You must be 21 or over to purchase Dark Lord Day tickets. There will be an ATM available on site. We hope to see you this morning.

The local-allocation tickets sold out in just around an hour and appeared on ebay in short order. As of March 19th, the highest bid on ebay for a pair of tickets to the event was $801, or a 2125% markup over the $36 cost.