Sunday, October 21, 2012
The Bucket Shop
Why do I do what I do? I get these weird thoughts in my head, and I have to figure them out to determine if my books and rules make sense. Take the bucket shop. Every morning, the workers march off to their jobs and leave their buckets at the bucket shop. Every evening they march home and pick up their buckets of beer. How big? Well, three pints for a husband and wife seems “normal”, but when you’re talking about buckets, they could be any size. We’ll stick with three pints. The brewer needs to sell to 88 people in order to make his 12sc per day. Where did that come from? Well, I worked it out. Grain Into Gold tells me that a pound of barley is required to make a gallon of beer. It also tells me that a pound of barley costs 2.75cc (copper coins), and a pint of beer sells for 1cc. That was based on a cottage industry model of tripling costs. (2.75cc x 3 = 8.25cc for a gallon or 1cc for a pint) Then I looked at everything that goes into turning barley into malt. It takes a couple weeks, and lot of space. It also takes a cistern and a good sized oven/kiln. I’ve recently priced malt at 4.35cc per lb. I worked it out as whether it was done by the local farmer or by a malthouse and both really seemed to work at that level. So the brewer, seeking to make 12sc per day buys malt at 4.35cc per pound and over the course of weeks/a month, produces beer that he sells for 8cc per gallon. Thing is, he has multiple batches running all the time, to produce reasonably fresh beer for his customers. His profit margin is 3.65cc per pint, so to get his 12sc, he needs to sell about 33 gallons (thus 264 pints or 88 customers). If each customer bought four pints, then he’d only need 66. Doesn’t seem like a lot does it? one guy making 33 gallons of beer? if this is his full time job? But think about it this way: #1 - he likely lives very well on 12sc a day (that’s often considered skilled craftsman wages). #2 - assuming it takes about 30 days to brew the beer, he has over 400sc invested various ingredients in his brewery or well over a month’s wages. That’s a lot to risk. #3 - he had to invest in all the equipment to brew the beer at the multiple stages and store it. While it may not seem like a lot of output, you have to wonder how long it took this guy to put together the capital to have all these ingredients and all this equipment. Could he afford to have more going at any given time? Now, when I expand this to the big breweries, they’ll be able to process far more than 33 gallons per person. That means that they will make more profits, the kind of profits that pay for all those bosses and brew masters. Why do I do it? Because it works! Grain Into Gold has been on the market for about six years now, and while it isn’t 100% perfect, it works in just about every scenario I’ve tried. If you’re looking to avoid doing all this math for yourself - You might want to pick up Grain Into Gold.