`Brewery consulting case (upstate New York)`

Tom's first big consulting job, 1975. Illustrates advertising-dominant cost structure in consumer goods.

What makes beer expensive? It's all the ads on TV and other places. My first big consulting job was in a brewery in upstate New York, and at that time it cost them, as I remember, thirteen cents a gallon to make beer. They were never selling it, even in 1975, for thirteen cents a gallon. There's a big markup. Today beer might cost fifty or sixty cents a gallon to make, but they get a big markup because there's an awful lot of advertising in that.