The Cost Of Beer Vs Mixed Drinks: Which Is Cheaper?

The cost of alcoholic drinks is a complex topic, with many variables affecting the price. The price of a drink is influenced by factors such as the type of alcohol, the number and cost of ingredients, the venue, and the intended profit margin. When comparing mixed drinks and beer, the price can vary depending on the specific drink and the location. Mixed drinks can range from inexpensive, simple combinations to complex, innovative cocktails with higher-priced ingredients. Beer, on the other hand, tends to have a wider range of serving sizes and can be purchased by the bottle or draft, affecting its cost. Ultimately, the decision between mixed drinks and beer may come down to personal preferences, taste, and the desired drinking experience rather than solely the price.

Mixed drinks can be made cheaply

Another strategy is to take advantage of happy hour deals or avoid special menu drinks, which tend to be more expensive. Making drinks at home is also a great way to save money, as bars often mark up the prices of their cocktails. When stocking your home bar, look for specials on alcohol and buy in bulk to get a better deal.

Furthermore, you can disguise the taste of cheaper liquors by mixing them with soda, citrus, or fruit juice. Fresh fruit can also be used to create inexpensive fruity drinks, and growing your own mint to muddle in drinks is another way to enhance flavour without increasing costs.

Finally, vodka is a good choice for cheap drinks as it is relatively flavourless, so you can find a well-distilled yet inexpensive option that won't compromise the taste of your cocktail.

Beer is more profitable for bars

Secondly, beer has a higher profit margin than mixed drinks. While the exact profit margin varies depending on the type of drink and the establishment, beer typically yields between 75% and 80% gross profit margin. This means that for every dollar spent on beer, the bar keeps 75 to 80 cents as profit. Mixed drinks, on the other hand, often have lower profit margins due to the higher cost of ingredients and labour required for their preparation.

Additionally, beer is a more consistent and stable product than mixed drinks. The production process for beer is generally more standardised and less prone to variations in quality or taste. Mixed drinks, on the other hand, can vary significantly depending on the bartender's skill, the quality of ingredients, and the specific recipe used. This inconsistency can impact customer satisfaction and affect the bar's reputation and profitability.

Furthermore, beer is often a more popular and in-demand beverage than mixed drinks. It caters to a wider range of consumers, including those who may not be interested in cocktails or spirits. By offering a variety of beers, bars can attract a larger customer base and increase their sales and profits.

Lastly, beer is more efficient and faster to serve than mixed drinks. Mixed drinks often require careful preparation and mixing, taking up valuable time and resources behind the bar. Beer, on the other hand, can be quickly and easily served, either by the bottle or on tap, reducing wait times and increasing table turnover for the establishment.

No- and low-alcohol beers are more expensive to produce

It is a common misconception that non-alcoholic drinks should be cheaper than their alcoholic equivalents. However, this is not always the case, especially when it comes to beer. In fact, research has shown that no- and low-alcohol drinks tend to be more expensive than standard alcoholic beverages. This is particularly true for beer and spirits, and to a lesser extent, cider.

So, why are non-alcoholic beers more expensive to produce? One reason is that the process of manufacturing alcohol-free beer is more complex and costly than that of standard beer. Most non-alcoholic beers are produced by first making a standard alcoholic beer and then removing the alcohol through a process called "dealcoholisation". While the exact costs of this process are not publicly available, it is likely that they are significant, as alcohol-free beer is more expensive to produce even without the alcohol duty that is payable on standard beer.

Another factor that contributes to the higher price of non-alcoholic beer is the small size of the market. Non-alcoholic drinks, including beer, still only represent a small proportion of the overall alcoholic drinks market. This means that producers of these drinks have less economies of scale and may have higher costs per unit. Additionally, non-alcoholic beers are often sold in smaller multipacks, which further increases the average price per unit.

The ingredients used in non-alcoholic beers can also be more expensive. For example, Athletic Brewing, a craft non-alcoholic beer company, uses certified organic grains, which are about 40% more expensive than non-organic grains. Other non-alcoholic beverage companies also prioritise using premium, sustainably sourced ingredients, which can drive up costs.

Finally, the cost of marketing and distribution for non-alcoholic drinks can be significant. As this market is still relatively new and consumers are used to paying less for non-alcoholic options, companies have to invest in educating their customers about the benefits of their products. This can involve expensive marketing and advertising campaigns, as well as negotiating with suppliers and distributors who may be unfamiliar with non-alcoholic products.

Liquor costs are important for bar profits

Liquor costs are a critical metric for bar managers to monitor as they directly impact a bar's profitability. Liquor costs, also known as pour costs or beverage costs, refer to the price paid to distributors for purchasing alcohol. However, the important figure to focus on is the pour cost percentage, which represents the ratio of liquor costs to liquor sales. A higher pour cost percentage results in lower profits, and it is a variable cost that bar managers can significantly control.

Bar operators often take a long-term view of their liquor costs by examining the Cost of Goods Sold (COGS) for a specific financial period. COGS includes not only the liquor costs but also mixers, garnishes, consumables, and other direct costs required to make and sell drinks. By understanding COGS and pour costs, bar managers can make informed decisions to maximise gross profit margin percentages and overall gross profits.

To calculate liquor cost percentage, you can use the formula:

> Liquor Cost Percentage = (Liquor Cost / Liquor Sales) x 100

For example, if a bar sold $10,000 worth of alcohol inventory and generated $50,000 in sales, the liquor cost percentage would be 20%, resulting in 80% of alcohol sales as gross profits.

While controlling liquor costs is essential, bar managers should also consider other factors such as inventory turnover and cost per ounce to optimise their beverage program. Additionally, understanding customer preferences and pricing drinks accordingly is vital. By pricing drinks based on their popularity and cost, bars can increase their profitability and customer satisfaction.

In summary, liquor costs play a pivotal role in a bar's success. By effectively managing these costs, bar managers can increase their profit margins and overall revenue.

Mixed drinks are more labour-intensive

The time and skill required to make a cocktail can impact its price. A cocktail that takes two minutes to make can only be made 30 times in an hour, whereas a simpler drink that takes 15 seconds to make can be made 240 times in an hour. The former will likely be more expensive to account for the increased labour required to make it.

The number of ingredients in a cocktail can also affect its price. A cocktail with two to three inexpensive ingredients will likely be cheaper than one with five or more ingredients, some of which may be rarer or more expensive.

The type of alcohol used in a mixed drink can also impact its price. A cocktail made with a cheaper liquor may be less expensive than one made with a premium spirit. However, it's important to note that using fresh juice or other perishable ingredients in a cocktail can also increase its cost, as these ingredients may go to waste if the drink doesn't sell.

Additionally, the location and atmosphere of the bar or restaurant serving the cocktails can influence pricing. A cocktail at a high-end establishment in a major city will likely be more expensive than one at a casual bar in a smaller town.

Finally, it's worth noting that mixed drinks often have higher profit margins than beer. This is because the cost of beer is usually lower than that of liquor, and beer is often sold in larger quantities, such as pitchers or kegs. As a result, bars may price mixed drinks higher to maximise their profits.

Frequently asked questions