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Beer prices vs. wine prices
Josh writes to me:
This might not be normal, but last night I started wondering why beer prices are not listed on menus, while wine prices are. My next thought was "Tyler Cowen would know the exact answer to that". I know you are busy and it is a rather trivial question, but I was wondering if you could explain the differences in wine and beer that lead restaurants to include the price of one and not the price of the other on their menus.
Only sentence two is foolish but at least on this I am meta-rational and I appeal to you for help. One possibility is that wine prices don't have such a tight upper bound so you had better get the customer's buy-in for a relatively expensive bottle. Or if fine bottles are being sold relatively cheaply that is worth screaming about but how much can you discount a quality beer?
Posted by Tyler Cowen on July 18, 2008 at 02:06 PM in Food and Drink | Permalink
Comments
One possibility is that wine prices don't have such a tight upper bound so you had better get the customer's buy-in for a relatively expensive bottle.
I'd say that's almost surely the case.
Posted by: Peter at Jul 18, 2008 2:43:48 PM
Isn't it because restaurants have a better margin on the beer than the wine? If you knew that a longneck (that you could buy in bulk from the stores for $1 or $2 a bottle) is going to cost you $5 in the restaurant, you might think twice.
Posted by: sunbomb at Jul 18, 2008 2:46:03 PM
I would think that it's because beers typically aren't priced individually, but rather in tiers (import, domestic, premium) and that the price tends to be the same for all beers in the same tier and will thus only be listed once on the menu (at the beginning of where they list all the beers in that tier.)
Posted by: sbard at Jul 18, 2008 2:49:15 PM
Wine gets a lot more expensive than beer. Ordinary beers, that is.
Here in NYC, where restaurants regularly feature esoteric beers made by, say, Trappist monks in Belgium, beers can get very expensive too, so beer prices are listed on the menu.
Posted by: Diana at Jul 18, 2008 2:49:59 PM
Maybe sentence two wasn't so foolish!
Posted by: Tyler Cowen at Jul 18, 2008 2:53:12 PM
Aren't people more likely to recognize beer than wine on the menu, and therefore have an idea of what its price will be? Many restaurants only carry a selection of well known beers, but even restaurants with a bad wine selection tend to have a wildly varying wine selection--at least I never seem to recognize many. I'm much more into beer than wine, but I think this is still true for the general population.
Posted by: Justin at Jul 18, 2008 2:54:38 PM
I suspect most people choose wine by the Price, rather than the Brand.
As in, "I'll drink a $15 bottle today" or "I'll drink a $100 bottle."
There are so many brands out there and the differences are so subtle, that I suspect you could price a $15 bottle $100 and 90% of wine drinkers wouldn't notice (and would probably enjoy it more).
Posted by: JB at Jul 18, 2008 2:55:22 PM
I've seen beer prices at restaurants that serve an extensive list of craft brewed varieties or exotic imports. Most of those can be bought in bulk (six pack) for a relatively low cost, but the price is still listed in spite of the markup.
Posted by: Mike at Jul 18, 2008 2:56:46 PM
Your theory makes sense to me. In fact, assuming more or less ordinary craft, micro, import, and mass market brews, the prices for beer are likely to be in a fairly tight range with the premium ones going for maybe a buck or two more than the BudMillCoors swill--excuse me, light lagers. For a given restaurant, I could look at the food menu and probably guess the price for a Sam or a Bud pretty accurately. So, just as you're not likely to end up with a $50 coffee, beither are you likely to end up with a $50 beer when you figured on paying about $5.
When a restaurant does traffic in relatively exotic Belgian imports, barley wines, and so forth, then beer prices do tend to be listed (often in a separate bar menu) reflecting the greater range and non-obvious pricing.
Posted by: Gordon Haff at Jul 18, 2008 2:57:44 PM
I suspect it has to due with the lack of price variation among most beers. Many restaurants sell beers at essentially two price points: major domestic brands (Bud, Miller, Coors...) and imported and microbrews (Bass, Stella, Guinness, Sam Adams, Sierra Nevada...) The difference between the two price points is usually only $1-2 per glass.
If you are at a restaurant with Belgian beers or "extreme" beers, there is more variation, and those prices are always listed, in my experience.
Posted by: wph at Jul 18, 2008 2:58:02 PM
Don't forget that the names on the list are something that some people pay for. As in, I eat at restaurants that have extensive wine lists. Or, I eat at restaurants that feature esoteric beers. There's a reason that restaurants invest in wine inventory, and I don't think it's just because they sell wine.
Posted by: Thomas at Jul 18, 2008 2:59:04 PM
My guess would be that wine drinkers are more likely to think of themselves as discriminating, so by offering more expensive options and including the price you can encourage them to spend more. Beer drinkers are more likely to think "That much? Screw it, I'll just get Schlitz." Plus, wine has a much longer shelf life, so restaurants can invest in expensive options, and print menus including them, without worrying that it won't sell.
Posted by: Mario at Jul 18, 2008 2:59:29 PM
Wine is more often tied to status than beer.
Price is a proxy for status in the absence of actual knowledge about the wine.
I would suspect, many restraunts know this and having the price listed causes patrons to be easily
upsold in the presence of a dinner date, a client or friends -- i.e. restraunts know that their patrons don't want
to be seen buying 3 buck chuck.
Posted by: jip at Jul 18, 2008 3:01:30 PM
I would like to point out that most restaurants also don't put a soft drink price on the menu, either. Perhaps the assumption is that if you're going to order one, you don't care how much it costs. Wine, on the other hand, has a large price fluctuation, and the casual diner can't necessarily know how much a given glass or bottle would go for.
Posted by: Pete Krawczyk at Jul 18, 2008 3:03:23 PM
why doesn't the same logic apply outside the US? (or at least, not in EU)
Posted by: Luis Enrique at Jul 18, 2008 3:11:26 PM
Three buck Chuck?
Wow, inflation really is beginning to bite!
Posted by: cure at Jul 18, 2008 3:18:21 PM
I would agree with the line of thought that wine-lovers, more so than beer-lovers, are seeking positive social status by the very act of drinking wine, and so are inclined to signal their status by wanting to buy an expensive bottle (and having a publicly shown price helps reinforce this).
Furthermore, beer comes in individuals serving sizes mostly (except for picthers), whereas when someone purchases fairly nice wine they buy an entire bottle (which is more than most individuals want to drink on their own). Because they're buying for two or more people usually (and often on a date, anniversary, etc.) the signalling factor jumps out even more.
Posted by: Andrew at Jul 18, 2008 3:29:31 PM
Isn't it just that there is a lot more variance in wine prices. You can ballpark the price of a beer within a couple of dollars, wine within maybe $30. The information is simply more valuable.
Although, frankly, I'm not sure beer prices aren't usually listed as well.
Posted by: josh at Jul 18, 2008 3:42:29 PM
Okay. I think this is one of those situations where economists go to deep. Personally, having worked in a student restaurants I see two reasons:
1) Practical. There are many types of wines. You need to have a menu to describe them. Unless you are at a "brauerei" like the ones here in Vienna, or an English pub that prides itself in local ales, you won't find "beer descriptions." There is no need to tell someone how a Budweiser tastes.
2) Status. Do you honestly want to see "Coors Light" below the Rose at a fancy restaurant? Seriously. When is the next time a gourmet dinner is going to think "Oh, I'm having the fish- that means I should have a Coors instead of the Budweiser."
Posted by: Daniel Corradi at Jul 18, 2008 4:07:51 PM
I suspect they're just sheepish about calling premium quality local beers "imports" and cheap imported beers "domestics," as so many restaurants tend to do.
Actually, I think Justin's answer rings most true, with Pete K.'s following. I do use price of wine as a metric for quality because I often have so little other information about it. But when I see a $5 as the price for a bottle of beer that I know I already have in my refrigerator (or when the price of a soda creep up to $2 or more), I'm more likely to stick with water.
Does that make me more price sensitive about the cheaper goods? I suppose so.
Posted by: DC at Jul 18, 2008 4:39:48 PM
Where are these restaurants that don't list the beer prices? It's true that there's never a separate beer list like the wine list, but every menu I remember seeing lists the prices. I guess I need to start going to fancier restaurants.
Posted by: DM at Jul 18, 2008 5:42:54 PM
There's a restaurant here in Boston that sells some pretty pricey beers, and they list the prices of them. I figure usually beers are fairly predictable and relatively cheap in cost compared to wine, and when they are unusually pricey they tend to get listed so patrons don't get surprised, which seems in line with Tyler's observation on wine.
Posted by: Mike Kenny at Jul 18, 2008 7:09:12 PM
First, I reject the premise of the question. Prices are usually listed for beer, at least at places where I go.
Second, to the extent that this is true, I think JB hits it on the head.
Posted by: Alex F at Jul 18, 2008 7:11:01 PM
Here in Gawgia, restaurants list beer prices, the better ones have beer lists, and the grocery stories are stocked with "exotic" Trappist beers from Belgium. Wine and beer marketing has converged.
I find price information hardest to find for umbrella cocktails at really tacky restaurants.
Posted by: DK at Jul 18, 2008 8:35:49 PM
Here in Manhattan beer prices are often listed.
More general question? In the case of things like this, why go to an economist? Why not go to a bartender, or someone who runs a restaurant, or people in the wine and/or beer biz?
Posted by: Michael Blowhard at Jul 19, 2008 2:13:56 PM
