$200,000 in state funds spent on PR for beer festival

Nation-wide, craft brewing is on the rise, and Alaska is no exception: 3,947,554 gallons of beer were brewed in state during 2015.

On Saturday, downtown Anchorage hosted the first ever tasting festival made up exclusively of small brewing and distilling companies based in Alaska. The small industry is thriving for a variety of reasons, including a recent appropriation through the state’s Department of Commerce, Community, and Economic Development.

But taxpayer-funded support for the burgeoning alcohol sector doesn’t sit well with everyone.

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It was gray and drizzling rain on a fenced-in section of F Street as a few hundred people roamed from tent-to-tent filling small tasting glasses with beer, part of the Alaska Crafted festival.

“Besides the weather it’s been good,” laughed Brian Swanson, one of the three owners of Odd Man Rush. The brew-pub opened last September in Eagle River, where Swanson grew up.

Like a lot of brewers, Swanson started off making beer as a side-project. Now, he describes it as a “hobby on steroids.”

“It’s a scary thing to invest your own time and money,” Swanson said of the decision to make brewing his occupation.

“Your families have to embrace it,” he went on. “It’s just been kind of humbling to see it happen.”

It’s not an easy line of work. Starting a brewing business combines the low-profit financial risk of a restaurant with the labyrinth of state and local regulations governing alcohol licensing. Which makes it puzzling why local breweries continue opening and expanding across the state, up and down the Railbelt, all the way to Hoonah and other southeast communities off the road-system (the exception is western Alaska, where transport and energy costs are high, and the majority of communities are damp or dry).

Locally-made beer is moving from a novelty to an economic fixture in Alaska. There are 1,436 full time jobs connected to brewing, which doesn’t include the handful of companies distilling hard alcohol. A recent report by Southeast Strategies estimates the industry has a direct impact of $83,975,524 in Alaska, although only 25 percent of that is retained in state (due in part to brewers having to import key ingredients like hops and glass bottles from the Lower 48).

One reason these figures exist is because as an industry independent craft brewing has matured to the point of hiring a lobbyist.

Ryan Makinster is the Executive Director of Brewers Guild of Alaska. Though in the past he served as a legislative staffer in Juneau, Makinster’s current job with the Brewers Guild involves providing expertise to new businesses and ensuring the small industry has a voice in regulations and policy-making.

He sees the Crafted Festival as a big deal because it’s the first time a major beer and spirits tasting is made up solely of Alaska suppliers.

“The lift on creating something like this is pretty time intensive, and actually there’s a cost involved in it,” Makinster said during an interview a few days before the event.

Support for the Crafted Festival came in a lot of different forms, like donated goods and volunteer hours.

But it also came from a $200,000 appropriation from DCCED to organize and pay for the festival’s up-front expenses.

“It’s basically their event currently,” Makinster said, “we’re just participants in it and sponsors.”

Because most brewing businesses are small, without much spare capital or capacity, the state’s forward-funding of the Crafted Festival was crucial, according to Makinster.

“It’s gotten us to this point,” he said. “I don’t think we could have done this without the state support.”

The money is a piece of a $1.77 million economic assistance program approved by lawmakers for Fiscal Year 2013. According to the Capital Project Summary, the appropriation’s aim is long-term economic growth by promoting industries like “minerals, forest products, and transportation logistics.”

Craft brewing is one of the state’s few growing manufacturing sectors, and a rare bright spot in Alaska’s current economy.

“It’s something that uses local materials, adds value, and then is something that we can actually export out of Alaska,” explained Gretchen Fauske, business development officer for DCCED’s Division of Economic Development, which was the state entity involved in the Crafted Festival.

DED sees the Crafted Festival as an attempt to cultivate an export market by raising the profile of Alaska’s brewers and distillers. To do that, they signed a contract with marketing firm Brilliant Media Strategies to handle the event’s logistics, promotion, and public relations.

The contract lays out that the “cost of the event is to be refunded with ticket sales,” which at $75 dollars a piece works out to 2,667 in ticket sales (exact receipts were still being counted, Fauske wrote in a mid-week email).

Part of the promotional work spelled out in the contract was local advertising. Another piece was fostering recognition beyond Alaska, which included a press tour arranged for five freelance writers and bloggers over the weekend, valued at $30,000.

“I think national attention to the event would be a huge success for us,” Fauske said in an interview ahead of the event. “We want people outside of Alaska to know about the products that are being made here. One, because they are such high quality. And two, because it can ease our way into those markets and attract people to visit Alaska and taste the products for themselves.”

But not everyone thinks it’s a worthwhile investment.

“I don’t see why the state would want to forward-fund a festival built around consumption of alcohol,” said Jeff Jessee, CEO of the Alaska Mental Health Trust Authority, which combats substance abuse across the state.

Sitting in his office, Jessee said that while it’s fine for the industry to host a celebration and try to expand its reach, he doesn’t believe a street festival with live bands, a cocktail contest, and 40 drink tickets per attendee does much to cultivate an export market. Nor, does he think the state has any business contributing funds toward alcohol, which cost taxpayers $42 million in just prevention and treatment services across Alaska last year.

“It’s not a moral dilemma, it’s a public health, public safety and budgetary problem,” Jessee said.

In years to come, the Alaska Crafted festival is expected to be paid for solely by the Brewers and Distillers Guilds.

DED’s full contract with Brilliant Media Strategies is worth $375,000, which includes services unrelated to the Alaska Crafted festival. The full value of the contract with renewal options is $1,125,000 through 2019.