Sunday, January 27, 2008

Brewers deserve to get paid

Don't worry, this isn't a screed about beer prices being too low. It's about beer prices being non-existent. I'm talking about brewers being asked -- forced -- to donate beer to beer festivals.

Folks, if you're unaware of this, it happens all the time. There are parts of the country where beer festivals do regularly pay brewers for the beer that they pour, but there are also places where that's not how the game is played. Brewers are invited to festivals, some of which are for charities, some of which are not (and as one brewer I'm friends with says, "Just because it's your charity doesn't mean it's my charity."), and then told how much beer they're going to be bringing and not getting paid for. People are paying for tickets, people are paying for food, people are paying for breweriana, t-shirts, pint glasses, and everything else, but the brewers aren't getting paid for their beer.

Why do they do this? The festival promoters know that for the larger brewers -- craft and not-so-craft -- it's a write-off, a promotional expense they're more than happy to pay. I know it's the case for large spirits companies: they're happy to bring booze to festivals because sampling is the most effective way to sell a good product.

And let's be deadly honest: larger breweries often give free beer to retail accounts. It's illegal in the U.S., but it happens every week: bars order three kegs and get four, they take a competitor off-tap and get X number of free kegs. I've talked to brewers who've seen it, I've talked to retailers who've had it offered. It doesn't get prosecuted because no retailer is going to rat it out...and kill the goose that lays the golden kegs. Is this news to anyone? The same kind of spending drives free beer at festivals.

Smaller brewers are working on much smaller margins and overall budgets, and four half-barrels means some real money to them. Why do they do it? They feel they have to. And festival promoters -- charitable and profitable alike -- will tell them about the "exposure" they're getting. As Jerry Bailey, the former prez of Old Dominion once told me, "exposure" is a bad word when you're talking about getting caught outside. I've had people ask me to do events for free because it would be "great exposure!" Hey, you know what? I'm so damned exposed already that I'm naked and shivering, I don't need more of it!

What really torques me about this is how many times there is entertainment at these events, and they're getting paid! No one ever suggests to the band or DJ that playing at the beer festival will be great exposure so they should do it for free. Because they wouldn't do it.

There are responsible festivals. Jim Anderson's events in Philadelphia were always paid-beer events. The Alström Brothers have told me that their BeerAdvocate events are all paid-beer events. There are also some fests that are put in a tough position by screwy local laws, where buying the beer would jeopardize or cancel their permit: the better fests of this type compensate by throwing the brewers free room and board. But some fests don't even give the brewers free parking, fergodssake.

You know what? There are a LOT of festivals out there these days. Beer festivals are popular. Wanna bet you and I now know one big reason why? Low overhead. Do yourself and your local brewer a favor: start asking questions the next time, before you buy tix for a beer festival. "Is the beer at this fest paid for?" "What's the charity? What percentage of the take do they get?"

And if you're a brewer? Look, if you like the charity, or if the venue's a really cool place you like visiting, or if the festival really is right smack-dab in the middle of your target audience (and they haven't already all tasted your beer), okay, you're an adult, make your decision. But think about that "naked and shivering" line. How "exposed" do you want to be? If they're not going to respect you...why respect them?

16 comments:

sam k said...

OK, who put the bee in your bonnet on this one? Nice topic; one that has been lurking in the shadows for quite some time. This will probably put off a lot of promoters, but the truth is, truth hurts! Some are better than others, but most of these festivals are suspect at best regarding transparency. Ask questions! Inquiriing minds want to know!

Good luck making 365, BTW!

bill mc said...

Well, now how can we know if the festivals are paid or not (apart from BA's seal of approval)? Who do we ask without being too big a pain?

I try to attend a new festival(s) every year but I always look at it as a chance to try breweries that are new to me or I've had bad experiences with in the past. I've learned a lot at festivals about beers and their appreciation because I can talk to a brewer or the assistant and I can ask questions and actually converse with them.

When I find a brewery I like, my wife and I will make it a point to go to their location or, if possible, I will hunt their beer.

So, there is the benefit (at least with my micro-economy) of a new customer who will spend at their establishment as well as the educationsl component. But, sadly I know this is not always the case.

It would be nice if the brewers got paid something for their time and product but it isn't always possible. My sister-in-law owns a restaurant and she's always getting asked for stuff from this group and that group, so I'm always hesitant to ask for something if there is an event at my library. It's like she said, "...why can't these people wear a hat or shirt with the restaurant name on it or at least come in when they don't want something..." (of course I'm in there way too much, at least according to my wife [and checkbook]. So, its similar to these festivals with everybody wanting something for nothing and not "repaying" the favor.

It just looks like its a sad fact and I hope it won't stop brewers from going to festivals bacause I think they are a great experience.

Lew Bryson said...

Sam,
It's something that's been bugging me for a while, and I've actually had this post floating around as a draft since before Christmas. You're right about the transparency, too.

Bill,
Any real resistance and questioning and action is going to have to come from the brewers. But it's going to help a lot for just the question to come from the customers, too. That makes it more than just brewers who want money, it makes it a fairness issue. If the fests could just pay the cost of the kegs, so the brewers aren't losing money, that would be great, and beautifully fair.

As it is, I'm suspicious that there's an unseen third party in the transaction: the area bar owners, who -- shortsightedly -- see beer festivals as a loss of a day's business. If the beer's not paid for, they know that the brewers can't keep it up forever. I've heard tavern owners complain about festivals "siphoning off business," which, I'm sorry, is just incredibly stupid.

Because it's true, fests are exposure for beers and brewers, and makes people aware of new beers, which can ultimately help the tavern owners' business, if they choose to take advantage of it. I just don't think that the brewers should be blackmailed into giving away free beer for it. I also wonder about the legality of the whole "donation" of beer to for-profit festivals model.

ed from troegs said...

good one lew.

i am happy to report that the harrisburg brewers fest will be paying an honorarium for breweries attending this year's event.

one thing. due to strict by-laws, it is difficult for non-profits to "pay out" and incur a lot of debt for events.

we have been telling the cystic fibrosis foundation for four years that paying for beer would make this a better event and allow us to attrach even more breweries.

so, finally, after four years (and almost $400K raised) they have agreed. but, they couldn't just write checks to pay for the beer--that is against their national bylaws.

so what the have agreed to is a honorarium that will give each brewery a set fee (less than retail) and we will continue to give one free hotel room to all participants who drive over 40 miles to this event.

we hope it starts a trend.

Anonymous said...

Lew,

It's true that we usually are asked to donate the beer for the festivals, but most of the time we are getting a free room in a nearby hotel in return. Plus, we get to sell a lot of merchandise in return, t-shirts, pint glasses, etc. So we usually make back some of the money in merchandise sales, we get to meet a lot of new customers, and we get to have a good time as well.

That's for the local festivals. This is probably heresy, but the big ones like the GABF are the ones that tick me off. It's ridiculously expensive to pay to enter your beers, to pay for a flight out, hotel room, rental car, meals, etc, in the hopes that you win a medal and can use that in marketing. Most of the festival goers will never have the chance again to drink some of the more regional beers, so there's no value in creating a new customer in them. And it's a FOR PROFIT event. No charities involved. At least when we are asked to DONATE beer to a local beer festival, a portion of the revenues from the event go to a local charity. At the GABF we have to pay a ton to participate.

- An anonymous brewer who doesn't want to get "blackballed"

Eric Trimmer said...

Why don't they let breweries sell beer at these events?

I went to a wine festival in Pennsylvania a few years ago where producers were pouring free samples, but selling merchandise and wine-by-the-glass. They were also selling bottles of wine for take-home or immediate consumption.

Most of the wines were from Pennsylvania, but there were a few producers from other states.

I know the legal issues here are a little thorny, but if they can let wineries sell at festivals, why not breweries?

Lew Bryson said...

Eric,

Indeed. I know of an independent Scotch whisky bottler who finances their entire travel budget by selling bottles at European festivals. People try it, and if they like it, they buy it: bang, right there. Kinda makes sense.

Once again, though, wine gets a different deal. Wine gets this because it's supposedly an agricultural commodity in the state. If a brewer grows three bines of hops, does that make them agricultural? I'm really tired of the special treatment wine gets from governments. Of course, I shouldn't complain too much: beer's taxed at a much lower rate...

Anonymous said...

Also anonymous because I don't want to cause trouble among my friends in the industry:

I have been hearing for years many breweries/brewpubs complain loudly about the business model of the Great American Beer Festival because, as one sagely put it, "I'm in business to sell beer, not give it away." I've heard sharp expletives thrown at the BA/AHA and other festival organizers over their alleged/perceived business practices, and I can really see their points, especially when we're talking a place that makes beers that would probably win a neckful of medals but can barely keep up with supplying their own taps, let alone some in far-off Denver. (On the other hand, I've had a brewery owner point to a display case full of GABF, WBC, and state competition medals and say "If you think there's no PR value there except for beer geeks, you have another think coming.")

And, yes, as pointed out by others above, sometimes the logistics of buying/paying for things like a keg or firkin can be insurmountable thanks to local and state liquor laws. I have a chap that wanted to get real ale from a local brewery to his local cultural festival; it would be far easier to just let Guinness/Bud pay to show up with a truck than to go get two firkins from a mile away through "proper" channels. Thankfully, we found a local importer willing to not only pull the legal work but show up with his own employee, van, and inventory and just sell bottles of good stuff at $5 each. Hell, how do you even price a "one-off" firkin of an experimental beer?

Brewers and brewpubs will just have to judge for themselves the relative goodwill value of festival participation, bringing regular beers versus stellar "geek" beers, charity outreach, etcetera. There are never any right or wrong answers. It would be nice, however, to start seeing "This Beer DONATED By...." signs atop some tap handles or kegs.....

Stonch said...

For comparison purposes: I might be wrong, but I believe brewers almost always get paid for the beer they deliver to British beer festivals, be they organised by CAMRA or otherwise.

Danner said...

I generally agree with your sentiment, but I'd like to point out that in some cases it may be a choice between having a beer festival and not paying the brewers or having no beer festival at all. And here in the Deep South where beer fests (and beer culture) are relatively uncommon, the brewers benefit financially a lot more in the long run by pouring unpaid beer and getting exposure than they would from the one time payment on a couple kegs of their beer.

I'm speaking from experience, having been heavily involved in the planning of the First Annual Magic City Brewfest last year in Birmingham. We partnered with an event promoter to put on the festival and split the profits 50/50 with his company. Of course our half of the profits went to pay for our efforts to reform AL's beer laws, which benefits brewers.

Anyway, all the beer was donated by the wholesalers; even then the profits were not extravagant and if we'd had to pay for all the beer, there wouldn't have been enough profit potential to make the event worthwhile. In other words, if we'd had to buy the beer, the festival simply would not have happened. And it is now the only beer festival in the state. It's a massive advertisement for craft beer and retailers later told me their craft beer sales shot up very noticeably for several months after the event. So the breweries profited off it without being paid for the beer they brought to the event.

larry said...

Ok, I don't have the time to lay it all out there, but anyone who thinks they need a 'drunk fest' to sell beer is smoking crack. Best way to sell beer is one barstool at a time, one customer at a time. How many people do you actually get to trial at a beer fest...99 times out of 100 you get folks sticking their arms out saying 'hick', I'll take whateveryougot 'hick'. Beer dinners, meet the brewer nights, ride alongs, and samplings at distributorships (where consumers go to buy beer) are the way to go. How many times have you heard "I wonder where [insert brewery name] is...I don't see them here at this fest" It's a MYTH, MYTH, MYTH that beer fests sell beer. As a matter of fact, when was the last time YOU left a fest and headed to the beer store? Oh, and for those of you who say some fests are better than others (charity aside), I say: Which ones are good for talking to customer? Off hand I can't think of one I've been to in the last 10 years where I could even talk over the band...and I ain't quiet. I could go on forever...

Anonymous said...

I am a professional Brewer that has been in the business for going on 15 years now. I work at a brewpub outside of the metro area of Boston and we brew 600-800 barrels every year. I have never in my hundreds of beer shows where I have spent the entire day promoting my product, gotten handed a check or as much offered a payment for bringing beer by any beer event promoter, this especially including Beer Advocate! I am certainly done kissing ass at my point in my career so I only rely on shows to promote what's going on to people who might never heard of us. Sure compensation would be nice but I won't hold my breath. Then on top of that are the promoters that ask you to bring a little something extra for all the volunteers who helped out, but it may sound a little skewed, but aren't we volunteers too? A little compensation would be nice!

Lew Bryson said...

Looks like this got some brewer's eyeballs lately.

I like the sign on the tap "This beer DONATED by..." idea.

Anonymous said...

Question for the ALA fest promoter.
How much beer was donated and how large was the attendance?

Seems to me a simple $5 increase in each ticket would more than cover the cost of the beer poured.

That is if there are 2000 people 1k per session. $120 per keg comes out to 83 kegs of beer.
Thats a little more than 3 kegs per brewery at 25 brewerys.

Im sure than an additional $5 to $10 each session would keep out the rif raf and possibly make the fest a more enjoyable one
Hell the brewers would certainly be happier Im sure.

just my $.02 worth

bierman2000 said...

anonymous cmon get a real ID be bold
anyway organziers neeed to PAY for beer Now as raw materials are out of the roof

Big Boy said...

A bunch of you guys sound like sad micro brewers who have done a poor job marketing your products and managing your finances - or even more likely you have crap product. If you worked a little harder maybe your breweries would be more profitable and wouldn't mind "comping" a couple kegs because you would be making a done of cash

Bottomline: If you don't want to be at these events, then don't go. Like one poster said, they pay the band because they have to or else no one would pay. Thatds exactly right. They DON'T pay the breweries because then don't have to and TONs of excellent brewers show up.

Stop complaining and stop going to the fests if you don't like it!