Global Economics

Oktoberfest Inc.: Big Money in Munich


The annual German festival is back in style and it has become a billion dollar business that's trying not to go commercial

Ask Sepp Krätz, who runs the Hippodrom tent at the Munich's annual Oktoberfest, how to score a spot in one of the festival's tents, and he'll laugh sympathetically and tell you: "It's impossible."

Every spot in Krätz's tent has been booked up since April -- completely and utterly sold-out. There's not a seat left in the house, he insists. "You can see what I mean," says Krätz -- pointing to the packed crowds in the festively decorated tent, which dates back to 1902. At 2 p.m. on a normal workday, there are 3,200 guests jostling each other on the benches.

Krätz's mobile phone rings and he extracts it from his traditional suede Bavarian outfit. "Hi, Doreen. How are you?" he answers. "Of course I saw you in Playboy. Exquisite." Within three minutes the cover girl and her entourage of ten have a table reservation. "She just happens to be a nice girl," says Krätz. More important, of course, is the fact that Doreen is a celebrity, a minor starlet, but a celebrity nonetheless.

Celebrities, as it happens, are the most important currency at the world's biggest festival. They are the lubricant that keeps the Oktoberfest party machine going -- from opening hours to late at night -- for a full 16 days. Ordinary folk are drawn to Munich's Theresienwiese in droves, hoping to catch a glimpse of celebrities like tennis great Boris Becker and his current girlfriend.

A Billion Euro Business

As old-fashioned and rustic as this event may seem, it is a really efficiently organized affair, a veritable Oktoberfest, Inc. Last year it attracted a record 6.5 million guests, who consumed 6.9 million liters (1.8 million gallons) of beer, 58,000 liters (15,320 gallons) of wine, close to 500,000 roast chickens and 102 oxen.

Last year's beer-gulping orgy brought in €955 million ($1.35 billion). Of that, €449 million came from the festival itself, €301 million from lodging expenses for out-of-towners, and €205 million for food, shopping and transportation expenses. This year's Oktoberfest run is expected to rake in revenues of €1 billion.

In recent years, the festival has discarded its traditional image and become hip once again, especially for the younger generation. Sixty percent of visitors are under 30. The new generation has shown an enthusiasm bordering on fanaticism when it comes to dressing up in the full traditional garb, the men sporting knee-length stockings, lederhosen (the traditional leather shorts cum suspenders) and stout shoes, and the women decked out in dirndls, the flowing dresses with aprons and puffy-sleeved blouses that push their breasts up to the point that they look like the dumplings being served at Oktoberfest.

Keeping the Advertisers at Bay

This stimulating environment has also aroused the desires of the corporate world, whose companies would kill for the chance to advertise at the event with its cult-like draw. Indeed, in some ways, you can say that most of the tables are already in corporate hands since Munich employers traditionally invite their employees and business partners from around to world to join them at their reserved tables at the Wiesn. Legend also has it that several major contracts have been sealed over beer and ox roasted on a spit.

PR professionals, eager to capitalize on Oktoberfest's appeal as a promotional vehicle, dream of lounges in the tents plastered with company logos and signs, product exhibits and press conferences. But that's not going to happen as long as Gabriele Weishäupl has anything say about it. As general manager of the Munich Tourist Office, Weishäupl is in charge of organizing Oktoberfest, a job that includes making sure that the event remains non-commercial. In fact, Section 42 of the event's rules clearly states that promotional events, advertising, press conferences and fashion shows will remain strictly prohibited.

Weishäupl has clamped down on attempts to commercialize Oktoberfest, especially in light of the way some have managed to bend the rules in recent years. Hotel heiress Paris Hilton tried to advertise prosecco in cans, German entertainment personality Verona Pooth organized a dirndl fashion show and the president of the Sixt car rental agency had a BMW surrounded by samba dancers placed in the middle of the tent where she held her traditional "Damenwiesn" (Ladies' Wiesn) event. All of this has now been banned, leading Sixt to promptly cancel its event.

But not every corporate-sponsored event is as garish, as Wolfgang Bierlein, managing director of Tiffany's Germany demonstrated when he held his traditional breakfast for invited guests at his Munich store at the beginning of the Oktoberfest. Wolfgang Armbrecht, head of the BMW branch in Munich, organizes a shooting contest for business associates in the Armbrustschützenzelt (Crossbow Shooters' Tent), and cigar lovers can sit back and relax in the Davidoff corner of Krätz's Hippodrom tent. But these are the exceptions. Other corporate sponsors must make do with slapping their logos on paper napkin rings and the large glass beer mugs.

Part 2: Like Winning the Lottery

Oktoberfest's hosts welcome Munich's strict adherence to the rules. They fear that the festival's traditional Bavarian charm would be lost if their Oktoberfest were turned into an advertising showcase. For them, even without advertising revenues, having a Wiesn license is like winning the lottery -- and getting it is just as difficult. In the past 17 years, the city council has only issued a single new license. The 14 major hosts in the tents must satisfy extremely rigorous standards. Each of them must demonstrate that he is capable of operating a large-scale food and beverage concession at a consistent level of quality. Their tax-paying history must be completely free of blemishes, and they must maintain a good relationship with the city, which renews their licenses annually.

Toni Roiderer, a spokesman for the hosts and manager of the Hacker tent, also has a few unofficial criteria. In his opinion a Wiesn host must be "an upstanding man and not a wimp." Besides, he should weigh at least 100 kilos (221 lbs.) so that he remains grounded, so to speak. Wiesn hosts are more popular in Munich than many political figures. "I get in wherever I want," says Roiderer with a grin. Like his fellow hosts, Roiderer is constantly investing in innovative features for his Oktoberfest concession.

Having already spent millions on improvements, including a retractable roof and a rotating stage for the band, Roiderer is annoyed by never-ending complaints about high beer prices (up to €7.90 ($11.20) for a liter mug, or "Mass") and the supposedly money-grubbing hosts.

Attending a match of Munich's legendary FC Bayern soccer club, says Roiderer, is naturally more expensive than watching a regional league team play. And spending €60 on a match doesn't even come with the guarantee that it'll actually be worth watching. "But those who come to our tent are guaranteed a good time," Roiderer says. So why should people begrudge him his Porsche?

Big Costs for the Big Event...

These complainers, says Roiderer, have no idea what it costs to stage an event of this scale. Setting up and taking down his 9,400-seat tent costs him about €2 million a year. The entire setup process takes 10 weeks. On top of that, Roiderer pays the city a fee ranging from €150,000 to €180,000 to rent the site. Musicians cost him between €100,000 and €150,000. And since 9/11, insurance premiums have jumped eightfold -- to anywhere from €70,000 to €90,000 per tent.

Roiderer employs a staff of 420 people for the 16-day event, including 80 security guards, at a cost of a quarter of a million euros. A stocky Bavarian, he almost loses his cool when he sees his bouncers treating guests poorly, and lets them have it. "Hey, what do you think you are, Guantanamo guards?" he barks. "Don't roughhouse, you fools! You're supposed to protect people, not threaten them!"

Hippodrom owner Krätz also pays close attention to the quality of his service employees -- and no wonder, given that labor costs eat up 30 percent of his revenues. He spends two days training his staff, teaching waitresses the unique and harrowing Oktoberfest method of balancing 12 beer mugs at a time and the art of the smile, which he feels his choice customers deserve.

Krätz took over the run-down tent 12 years ago. He had a prominent architect redesign the interior, brought in tablecloths and upholstered the benches, added coffee and champagne to the menu and improved the quality of the food and the music. Each waitress is responsible for 20 guests, and she is expected to know the names of each and every one of them. The customer, says Krätz, should experience nothing less than pure delight.

...and Bigger Rewards

Krätz's Hippodrom is the third most popular place at the Wiesn today. He is constantly walking through the corridors, slapping Ukrainian heavyweight boxing champion Wladimir Klitschko on the back and cozying up to fashion czar Werner Baldessarini. His commitment is worth it. Krätz's operation brings in €600,000 on a good day and about half as much on an ordinary day.

Michael Käfer grins like a Cheshire cat when asked about his sales figures. "No Wiesn host has ever gone bankrupt," is all he says. Käfer never talks about money, partly because the Wiesn hosts are constantly under public scrutiny. He presides over the Käferschränke (or "Beetle Bar"), the most popular spot at Oktoberfest. Instead of a tent, Käfer's establishment is a log house built in the style of an alpine cottage, filled with intimate corners with room enough inside for 1,400 guests and for another 1,900 in the garden area.

Käfer, who runs the gourmet food empire of the same name, isn't concerned about attracting celebrities. Many are already regulars at his restaurants and his nightclub, P1, or are customers of his catering business. The professional restaurateur and third-generation owner of the family business grew up at Oktoberfest and knows how important his presence is. "Guests expect to see the host," says Käfer. The host's job is to provide discretion amidst all the confusion. Käfer's bouncers make sure that, as the night wears on, his exclusive clientele can climb up on the benches and blithely bellow out German beer drinking songs. After 11 p.m., the bouncers keep the doors to Käfer's palace shut to all but the most select guests, making sure that the rich, the famous and the noble can let it all hang out without running the risk of rubbing shoulders with the hoi poloi.

By then the members of Käfer's select crowd have nothing to worry about, and even the DJ can finally let his hair down. "Cheers, dudes," he shouts at the crowd. And the dudes shout back: "Cheers, dude!"

Translated from the German by Christopher Sultan


China's Killer Profits
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus