Garlic is big business

What started in 1979 as a small community food festival centered on the small, stinky, cousin of the onion has since turned into a world-recognized, Guinness record-holding, multimillion-dollar destination that helped put little Gilroy on the map. The Garlic Festival is a non-profit, but it’s also big business–not just for the festival itself, but the entire South Valley, along with one of Gilroy’s most recognizable companies, Christopher Ranch.

The Garlic Festival has been the biggest weekend in Gilroy nearly every year for the past 40 years. Organizing the festival is a yearlong job. Executive Director Brian Bowe, who is paid $140,630 a year, along with an assistant executive director and a part-time receptionist, are the only paid staff at Gilroy Garlic Festival Association, Inc.

As with the Garlic Festival weekend itself, planning the event depends heavily on volunteers, who staff the board of directors along with various planning committees.

With volunteer and paid staff together, the Garlic Festival brought in $3,119,746 in revenue last year, according to its annual 990 report to the Internal Revenue Service. With $2,750,975 in expenses, the festival had $368,771 excess revenue over expenditures in 2017.

One of the most enduring hallmarks of the Garlic Festival is volunteerism. More than 4,000 volunteers are expected to donate their time working at the Garlic Festival this year, and aside from community spirit and fun, the festival’s volunteer equity program uses their hours worked to determine how much money is donated to the volunteers’ charity of choice. Last year, volunteers worked to accumulate $271,901 in donations to various local charities.

The Garlic Festival has come a long way since its founding in 1979. What started as a small-town weekend festival at Christmas Hill Park has ballooned to a food festival that draws over 100,000 to a town of approximately 55,000 people.

Television, specifically the Food Network, and social media have been two of the engines that have driven the festival’s increase in notoriety in the last 10 years.

“There has been an entire shift in what people do with their time and how they access information,” Bowe said. “When I started 12 years ago, there was so little social media. With social media, the event is much more accessible. It also helps us to hype everything up.”

The big two revenue generators are ticket sales, $1,089,292, and sales at Gourmet Alley, $701,676. Raley’s, Rabobank, Pepsi and Christopher Ranch are among 37 sponsors who paid the festival $209,650 in 2017. The Gilroy Garlic Festival Association, Inc. would not disclose exact amounts of each sponsorship.

The Gilroy Chamber of Commerce runs the three beer tents at the festival, which took in gross sales of more than $1.4 million last year, resulting in $141,798 for the festival.

“The beer sales are 100 percent run by the Gilroy Chamber of Commerce, and it’s been that way since day one,” Bowe said. “We take about 10 percent of beer sales.”

The Gilroy Chamber of Commerce has a two-year contract with Bottomley Distributing Company to supply between 300 and 325 kegs of beer for the festival. After the contract expires following the close of the festival, the chamber will wait until the end of the year to receive bids. In addition to paying 10 percent of the sales to the Gilroy Garlic Festival Association, the Chamber of Commerce has also agreed to pay a significant portion of the festival’s $126,523 bill for security.

“We have contributed a larger sum beyond the 10 percent to help offset the increased transportation cost. The chamber negotiated that agreement in good faith two years ago,” Gilroy Chamber of Commerce President/CEO Mark Turner said.

The Chamber of Commerce has nine years remaining on its beer sales agreement with the Gilroy Garlic Festival Association.

Parking and transportation are two of the biggest expenses for the Garlic Festival. The festival uses parking lots on private land near Gavilan College at Mesa Road and near Christopher High School on Day Road for parking, charging $10 a day, which brought in $184,451 last year compared to $178,946 in parking expenses. The small profit is minimal compared to the cost of transporting festival goers by bus, Storer Coachways out of Modesto, from parking to the festival, $357,894, the festival’s single largest expenditure.  

Administrative costs, $333,055, and the cost of operating Gourmet Alley, $393,094, are two other large expenditures.

A main draw of the Garlic Festival are the food and arts and crafts booths, which attendees can explore and savor; they brought in $141,798 in revenue to the festival in 2017. For-profit food booths cost the vendor $1,750 per 10 feet of booth frontage for the weekend while nonprofits pay $750 per 10 feet of booth frontage. Other fees for vendors include waste disposal costs: $50 minimum for grease, charcoal and other food prep waste; and $25 at the minimum for dirty water disposal. Other vendor expenses include $70 for liability insurance, $625 for liquor liability insurance, a $500 deposit for logo licensing, and a refundable $300 deposit.

Art booths cost $750 for a 10-by-10-foot area, $1,000 for a 15-feet-by-10-feet space, and $1,350 for a 20-by10-foot booth. Corner spaces cost an additional $200. Art booths pay a $500 logo licensing deposit and a $70 liability insurance fee.

About 10 years ago, the Garlic Festival became more celebrity-centric when they were able to book Guy Fieri and the then up-and-coming country band Rascal Flatts.

“We got really lucky to get Rascal Flatts at the beginning,” Bowe said. “A few months after the festival, their careers really rocketed. Now, we have some really big names like Giada De Laurentiis and Michael Symon. If you’re a foodie, you know who these people are.”

“Christopher Ranch donates about $200,000, which pays for celebrities and also for general festival costs, said Bowe. “With all of the garlic they donate, it is an incredible relationship that’s been there since year one. With Don Christopher, it has been a mutually beneficial, and having the that relationship with the family and the brand means everything to this event.”

“The economic impact of the festival is significant not just here, but hotel rooms are packed in Morgan Hill and Hollister as well,” Bowe said. “RV campsites are full. Restaurants, gas stations and the outlets see a bump in sales. Beyond that, the Garlic Festival gives us publicity. There are so many destinations that are jealous of us, being a small town that has something like this.”

Full Rooms

The Garlic Fest is the cherry on top for tourism in Gilroy. With over 100,000 visitors flocking to town, many need a place to stay, and throughout the weekend all 736 hotel rooms in Gilroy will be full. Full rooms equal sweet transient occupancy tax, $202,890 last July, into the city’s general fund. Overall, the city received more than $2 million in transient occupancy tax last year.   

As of May, the average daily rate for a hotel room in Gilroy was $108.84, compared to about $103 per room last year. Hotels generate $76.72 in revenue from each room, a $2.60 increase per room compared to the previous year.

Gilroy wineries see an extra tourism benefit from Garlic Festival visitors. There will be 17 area wineries featured at the Gilroy Garlic Festival Wine Pavilion, which is run by the Gilroy Rotary Club.

“They get the immediate visitors, but there’s also the long-term benefit because they can market the wineries and the area,” Howard said.

“You have people in town, and that’s the key,” Howard said. “It brings us national attention, and we are amazed by the interest and excitement the festival brings. Last year we had visitors who came from Russia, just to come to the Garlic Festival.”

Having notable celebrities is a significant benefit when spreading the word of the Garlic Festival. When Giada De Laurentiis headlined the festival last year, the state’s official tourism agency, Visit California, took particular notice. Big stars come with big bills, however, and according to Christopher Ranch Executive Vice President Ken Christopher, De Laurentiis commanded a six-figure fee, more than $100,000.

Christopher Ranch writes the checks for the big celebrities, but the Garlic Festival Association takes care of the day-to-day arrangements, including booking rooms at CordeValle Hotel in San Martin.   

Every Bite

There could be no Gilroy Garlic Festival without garlic. Christopher Ranch has it covered with 4,000 pounds of donated California garlic.

“Every bite of garlic at the festival comes from us,” Ken Christopher said.

Considering the worldwide reach of the Garlic Festival, Christopher Ranch—and the garlic industry as a whole—have significantly benefited from the increased exposure. Christopher Ranch has been there since the beginning when Don Christopher was among the founding figures of the festival. The company’s involvement continues today.

“We donate from the family and the ranch, and it’s safe to say, it’s more than $200,000, which is no drop in the bucket,” Christopher said. “It’s the signature event for the city and the company. It is known the world over, and the Garlic Festival has brought a level of exposure that is beyond belief. Back in the ’70s, Gilroy was a fraction of what it was now, but since the Garlic Festival started, consumption jumped dramatically.”

This year Christopher Ranch will celebrate the Garlic Festival simultaneously with one of its most robust harvests to date, over 100 million pounds. Christopher Ranch will only sell American garlic, foregoing what Ken Christopher imports from Argentina and Spain—not from China, a clear rebuke of the Netflix series “Rotten,” which alleged that Christopher Ranch imported Chinese garlic peeled by prison labor.

“We have absolutely not, never, used Chinese garlic, past, present or future,” Ken Christopher said.

Gilroy may be the “Garlic Capital of the World,’ but only 300 of Christopher Ranch’s 5,500 acres of garlic in California are used for growing the stinking rose in Gilroy. While a fraction of the Christopher garlic grown comes from Gilroy, all 100 million pounds of garlic processed by Christopher Ranch statewide comes to the company’s facility on Bloomfield Road.

“We are in the middle of the harvest, and we’ll have 15 million pounds coming in over the next few weeks until the end of July,” Christopher said. “It’s a mad scramble to determine quality for long and short-term storage. We want to save the best garlic for the holidays.”

This year’s Garlic Festival will be the first year of the Great Garlic Giveaway; attendees can enter a contest to win a year’s worth of Christopher Ranch garlic.