Competitions: Are they worth it?

Tuesday, 1 October, 2013
Norman McFarlane
Just when you thought it was safe to go back into the wine industry water, another wine competition rears its head, and sets about schmoozing for entries, proclaiming that it is the definitive last word in wine competitions.
Most recently, the Vitis Vinifera Awards has happened, proclaiming that it will award far more medals than other competitions do, because there are so many good quality value wines at acceptable price points that ought to be brought to the attention of the wine drinking public. Importantly, it will not be awarding any silver or bronze medals, because according to the website blurb “….they are largely considered irrelevant.”
That winners of silver and bronze medals at the likes of the Old Mutual Trophy Wine Show, The Veritas Wine Awards, The International Wine and Spirit Competition and Concours Mondial de Bruxelles may have a slightly different view is axiomatic, something that the organisers of this latest assault on the purse of the wine industry may want to consider.

The question is of course, how many producers will feel compelled to enter what amounts to yet another competition? Well another relatively recent entrant to the competition space, might well give an indication. The presumptuously titled Top SA 100 Wines, which made its debut in 2011, has attracted no more than just over 400 entries each year. That Platter’s South African Wines 2013 lists over 7000 wines, suggests that extravagant claims notwithstanding, the competition space is becoming a trifle crowded in the local wine industry.

But if competition achievements do help to sell wine – and that’s what pretty much every competition will assert in their blandishments to attract entries – why don’t producers simply enter everything that comes their way? Okay, if you talk to retailers, they’ll tell you that the various stickers that are affixed to a bottle of wine once it has won something at a competition, do in fact help to sell wine. Apparently something like 85% of wine sold off-trade is bought by housewives who base their decision on the number of stickers on the bottle.

Assuming that a well-decorated bottle does contain something worth drinking (the inconsistencies in results across different competitions notwithstanding), one would assume that it makes sense to enter as many competitions as possible.  All well and good, but if you’re a small producer- and the vast majority of South African producers fall into that category – the price ticket may well be unacceptably high. Let’s take an example of a typical producer that enters a crop of the mainstream local competitions (Old Mutual Trophy Wine Show, Veritas Wine Awards, Michelangelo International Wine Awards) and the better known (locally) international competitions (International Wine and Spirit Competition (IWSC), Concours Mondial de Bruxelles (CMB), Decanter World Wine Awards (DWWA)), and take a look at what it costs to enter these competitions, including the cost of winning.

If a producer enters two wines in each competition, the up-front entry fees would be R5460 for the local, and R12122 (at current exchange rates) for the international competitions. Add on another R300 odd for shipping the samples via courier locally, but for the international competitions you’re looking at around R1500 in shipping costs. Total so far, R19382, you’ve shelled out, with no guarantee that you’ll actually win anything.

If you actually win something at each of those competitions, there are other costs that you will have to bear, for bottle stickers and in some instances, wine for various promotional events, and a certain volume of wine to the organisers at trade price. Let’s say that you win a gold at the Old Mutual Trophy Wine Show (OMTWS) for your Bordeaux-style red blend, a double gold at Veritas for your Riesling, and a silver at Michelangelo for your Shiraz. You’ll have to stump up the equivalent of 36x750ml bottles free of charge (for the various tastings) and 25 of 12x750ml bottles at trade price to OMTWS. Assuming that you’ve produced 10000 bottles of each wine, stickers will cost you R3150 from OMTWS (R315/1000), R4924.80 from Veritas (first 1200 free, thereafter R547.20/1000), and R2508 from Michelangelo (R250.80/1000). The latter two do not require free or trade price wines to be supplied.

Turning to the international competitions, let’s assume you win a silver at IWSC for your Bordeaux-style red blend, and a bronze for your Shiraz at CMB and a silver at DWWA for your Riesling. You’ll not have to supply any more wine internationally (thankfully perhaps), but your stickers will cost you R9550 from IWSC (R955/1000 up to 10000), R4344.90 from CMB (R467.91/1000 up to 5000, R401.07/1000, 5001 to 10000), and a R9120 from DWWA (R912/1000), somewhat more pricey than the local labels.

Don’t forget of course, that somebody must now sit and affix 60000 labels to 30000 bottles of wine by hand, since you won two medals each between the local and international competitions you entered. If you’d won six medals in total with six different wines, it would make the handling and logistics even more onerous, but be that as it may.
Adding the total label cost (R23,104.90) to the entry fees (R19,382), gives a grand total of R42,396.90. Divided by the total number of bottles – 30000 since you’ve won two medals with each of three wines – means it adds R1.41 to the cost of each bottle, not too significant you might say, but it is a tidy sum of money for the average producer to finance out of cashflow, in an environment where wine sales are in the doldrums, and there is significant pressure on discretionary spending.

The stark reality of these figures suggests that the last thing the average small scale producer needs is yet another wine competition – and mark my words, there will be more – popping up and competing with the rather scarce resources needed to keep the business afloat – hard cash.

Whether the shiny new stickers which now adorn your wine bottles will actually result in you selling any more wine than you would have done without them, is difficult to determine, but it does feed into the notion, that it costs you more to not enter the new competition than it does to enter, because your competitor’s wine sitting next to yours on the retail shelf, may have a sticker on it that yours does not, a sentiment expressed to me by a goodly number of producers to whom I have spoken in the recent past.

In an industry where watching the pennies is becoming something of an obsession, it would be great if we had some firm metrics that give an indication of the kind of return on investment which can be expected if one enters and wins something in a particular competition. For those producers who consciously set about collecting the data needed to arrive at a meaningful conclusion, the answer may come as something of a shock.

Having said that, it makes sense that it will motivate producers to spend their scarce resources far more carefully, by reducing the number of competitions that they enter, opting rather for those that may well be expensive, but because of their prominence in the mind of the wine consumer, are likely to contribute relatively more to increasing wine sales.

Click here to view the cost comparison table