Beer Festivals: Inside the Industry

It’s a beautiful, sunny, Saturday in San Diego and you have just paid $50 for all-you-can-drink of your favorite local beers at an outdoor beer festival. Along with unlimited tastes of beer, you are treated to live music and entertainment. The best part is that the fest benefits a charity! Everyone’s a winner, right?

Craft breweries, like any businesses, are often asked to give donations. Whether schools are in need of a monetary donations, local charities need a place to hold a fundraiser or beer donations are requested for fundraising at their own event, most craft breweries are happy help out, and look forward to being active in their local communities.

One type of donation that breweries are asked for is beer donations to festivals where there is a charity benefiting from the proceeds. Beer festivals are a lot of fun to attend, but make no mistake, they are quite lucrative too. While it’s cool that festival organizers are generous enough to give a portion of their proceeds to a charity, most festivals need charities to be attached in order for them to get the one-day, ABC permit needed to serve beer at the festival location.

Furthermore, all fests are not created equal. When it comes to picking and choosing which festivals to participate in, we look at a lot of different factors: Who is putting on the fest? Who is benefiting from the proceeds and do we know how much money is being donated? Are the festivals buying the beer or asking for it to be donated? Some festivals are put on by the charitable organizations they are benefiting (like Adams Ave Street Fair, North Park Fest of the Arts, SD Zoo Food and Wine Fest), some are put on by the SD Brewers Guild (a non-profit), while others are put on by companies who make festival organizing their business model.

San Diego is home to some huge beer festivals in that third category, including ones that draw thousands of attendees like Best Coast Beer Fest, Heroes Fest, Mission Valley Beer Fest, San Diego Brew Fest, San Diego Winter Brew Fest and more. While many of these festivals ask for beer donations some of them pay the breweries for the beer needed to hold the event.

This got us thinking, how is it that some of these beer festivals manage to pay for the beer while still turning a profit and donating to their charity of choice while others ask for the beer to be donated?

Breaking Down Festival Numbers

Based upon past festivals we have attended, it seems like the average festival has 50 breweries representing and pouring their beer. On average, 2500 people attend any one beer fest with some being much bigger (Best Coast Beer Fest expects 6,500 to attend this coming March and offers 80 breweries for example) and some smaller. Most fest tickets cost about $50, give or take $10. Kegs are all different, but an average keg costs $180 from craft breweries like TSB. So, 50 breweries donating 2 kegs each at $180 should mean that the festival receives about $18,000 in donated product. If 2500 people attend a fest at $50 each, the total gross for that fest is around $125,000.

Even if half of the gross went to putting the event on, which would be on the high end, there is more than $60k left over for the charity and for the festival organizers. Most craft breweries are not flush with cash. We are local businesses with small margins and tight budgets and often put every penny back into the brewery. While donating $360 worth of product (plus the cost of staffing the event at about $100 per fest), doesn’t seem like a crazy amount, when we are asked to do it 20 times in a year, it can really add up.

Isn’t it a Write-Off Anyway?

While we can write-off the amount it cost us to make the keg of beer, we can’t write-off the amount we would sell the keg for if the festival was buying the beer (still at wholesale cost). Furthermore, most of these festivals are lacking in transparency as to how much money they actually donate to the charity. Legally, that information has to be available somewhere, but it certainly isn’t easy to find. We don’t really know if festivals are giving $1000 or $10,000 to the charity. Festivals where all proceeds go to the charity are much less common, and we are always happy to donate to those.

Beer festivals are a good time and we enjoy working them, but why can’t breweries get paid for the product they provide if the company running the festival is making a profit beyond what they donate to the charity?

The Solution

So what can breweries do? One option is that we can stop donating to these types of “for profit” festivals asking for donations and only participate in ones that pay for the beer. San Diego Beer Fest, which does two festivals per year and the San Diego Winter Brew Fest (in Balboa Park), are just two of the festivals that pay breweries for beer and low and behold, they still turn a good profit while donating to their cause. Another option would be to ask the festivals who want the beer donated to pay for the beer and we would, in turn, donate the dollar amount of the kegs directly to the charity. Not only would this give a lot more money to the charity, but breweries could write off the full amount of the donation rather than just the cost of making the beer and the festivals would still make a good profit.

Maybe San Diego breweries need to band together like they have in Kansas City, Nashville, and Chicago, to say we won’t donate to “for profit” beer fests anymore. We would be happy to participate if they pay for our beer, but it seems ludicrous to give it away to these companies who are turning a large profit by organizing the festival.