Monday, May 23, 2011

Just How Lucrative Are Wine Competitions?

In the old days - 50 or so years ago - a wine competition was fairly straight forward. Entries were grouped by varietal or style, and panels of judges from the winemaking, wine marketing, wine teaching and wine writing worlds tasted through the classes without knowing the identity of the wines, awarding gold, silver and bronze medals as they progressed.

That's still more or less the model of longstanding competitions. But in recent years novelty wine competitions have cropped up. One competition, for example, is judged only by people who buy wines for grocery stores, restaurants, cruise lines and the like. There's a competition judged by sommeliers. There's a competition where all entries are wines made by women, judged only by women. There's a competition where entries are wines made biodynamically, judged by biodynamic winemakers. There's a competition judged only by mainstream consumers. Another is judged only by members of the millennial generation. And a new competition will be judged by three panels of judges - one made up of wine-industry professionals, another of millennials, the third of Hispanics. Yet to be introduced is a competition of wines made only by gay winemakers, and a competition of older wines judging only by elderly vintners, but don't be surprised.

This proliferation of wine competitions comes at a curious time. With few exceptions, the number of entries at established judgings is stagnant or falling. Perhaps competitions are cannibalizing each other. Perhaps vintners are questioning the educational and marketing value of competitions. Perhaps entry fees have become just too darn high.

Nevertheless, the rise in the number of competitions suggests that there's money to be made in them, and not only by wineries fortunate enough to win gold medals and other high awards. Wine competitions must be profitable for the people who organize them, right? Nothing wrong with that, but I've been wondering just how much profit a wine competition can make, so I went to Norb Bartosik, general manager and CEO of the California State Fair, which sponsors two competitions, one for commercial winemakers, the other for home winemakers.

Let's look first at the commercial wine competition, this year's edition of which will be next week at Cal Expo in Sacramento. Bottom line: There doesn't look to be much money in running a wine competition, not even one as historic and as large as the State Fair's. Based on early entries and projected costs, all of which have been trimmed this year, the State Fair's general budget is expected to realize a profit of only about $17,000 from next week's judging. That's almost identical to what it earned last year. In 2009, the competition actually lost money, nearly $19,000, according to budget summaries compiled by Bartosik.

Revenues come largely from entry fees, expected to be around $156,000 this year, compared with $165,000 last year and almost $138,000 in 2009. Expenses this year include $24,600 for a cellar master who spends six or seven months organizing the inflow of wines and generally overseeing logistics (down nearly $7,000 from 2009), $46,360 for "professional services," which includes remuneration for the chief judge, computer programmer and volunteer coordinator, along with catering costs for the meals served judges (down nearly $7,000 from 2009), nearly $20,000 for judges fees (basically the same as they were two years ago), $13,000 for awards (no change), and nearly $23,000 for "overhead," which includes air conditioning for the facility where wines are stored before and during the competition, lodging for judges, website management, janitorial services, insurance and the like (down $2,000 over the past two years).

As to the State Fair's home-winemaking competition, it is expected to lose $2,387 this year, less than last year's losses of nearly $5,000 but a little more than the approximate $2,000 lost in 2009. Entry fees have risen over the past three years, now topping $13,000, and while the cost of "professional services" has dropped to $4,535 from nearly $8,000, "general expenses" have risen from less than $1,000 two years ago to more than $5,000 for this year's competition. No "salaries and benefits" are budgeted for the home-winemaking competition.

These figures provide insight to just one wine competition. They point to a lot of revenue going through Cal Expo, but don't indicate that anyone is getting rich off the judging, not even the State Fair.

Aside from the competitions, the State Fair is shaking up one of its wine programs this year. In the past it's put on Grape & Gourmet, a gala during which high awards from the State Fair's commercial wine competition were handed out. In recent years it's been at the Sacramento Convention Center. This year, however, it's being returned to Cal Expo and is being rechristened "Taste & Celebrate the Best," to be held July 29. The program will be much the same, with awards presented and participants able to taste winning wines, but the array of vendors providing food will be virtually eliminated, given the proximity of smoked turkey legs and corndogs.

Proceeds from both Grape & Gourmet and the State Fair Gala, which involves wine tasting and an auction on the eve of the fair's run, as well as profits from the fair's livestock auction, benefit the exposition's scholarship fund. Generally, between $25,000 and $40,000 in scholarship money is raised by various State Fair programs, said Bartosik. Attendance at last year's Grape & Gourmet took a dive, however, and little revenue was generated by the event for scholarships. Thus the move to Cal Expo. The State Fair, incidentally, runs July 14 to July 31 this year.

(Disclosure: Though I've been a judge at the State Fair's commercial and home wine competitions, I didn't participate last year and won't this year. I'm also a member of the State Fair's wine advisory task force.)

3 comments:

  1. Here's a way to trip the expenses. There are plenty of volunteers ready to judge competition without remuneration. Use local judges that do not need lodgings, and cut out the paid meals. Judging wines is not that complicated, and once a formula is in place everything else is just opinion. Limit the amount of wines any one judge has to evaluate, and simply get more volunteer judges. The results of these competitions are subjective at best, but at least the game could be played with less expense. Eliminate many of the overheads and administration costs, and you could reduce the exorbitant entry fees getting more participation which would offer a better evaluatory cross section for the industry.

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  2. Good work on an interesting question!
    As a winery owner/operator it seems there are about as many wine competitions seeking participants as there are charities looking for wine donations these days. Given this, we select our competitions as carefully as we select the charities we support. I'd guess many producers are as curious about the impacts of both winning and losing competitions on particular products as well as the bottom line. Do you have any plan to study the "lucrative" competition question from the perspective of the entrants?

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  3. Thanks for researching the numbers behind the State Fair's wine competition, Mike! One question: Who books the revenue from the wine bar stocked with medal winners that's adjacent to the horticultural exhibits? I know that major grocery chains typically sponsor that wine bar, but I thought that the revenue from that operation went to the State Fair.

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