When the smallest company in the marketing competition wins a prize, most people are pleased.

If this same company has the tiniest budget in the competition, it raises eyebrows.

When the marketing show’s main sponsor is a giant newspaper and this little trader has spent nothing on print (or broadcast, or display) it is a revolutionary surprise.

Especially when the prize is the Grand Prix of Marketing in South Africa sponsored by SABC, and the overall sponsor is The Sunday Times.

Stormhoek, the winner, is a tiny business, based on a beautiful farm in Wellington, with half a dozen employees and no conventional advertising budget.

Stormhoek is a ground breaker in new media. Stormhoek.com is far and away the best known wine brand in the world of wine sales and consumption. In the high budget world of international wine club e-commerce and national and corporate wine marketing, Stormhoek rides at the top. According to Google, after Stormhoek, the second most talked-about wine brand is in a second division, with far less activity.

What did Stormhoek do to impress the judges?

The 4 year old company has taken a major share of the medium priced market for SA wines in the UK and the USA, has made a significant impact in SA’s share in the Scandinavian market and is rising fast in South Africa, while brand exposure is exclusively through www.stormhoek.com.

Second, third and fourth prizes in the Marketing Excellence Awards went to brands with mega-budgets, the kind that the sponsors just love to read.

Will this kind of irreverence be allowed next year?

Thanks to Business 2.0 and Tom McNichol, for a really nice article in the August 2007 issue about some of our online work.

The article has now been published online by CNNmoney.com and can be viewed here.

“BW Small Biz Editor Nick Leiber talks to Greg Verdino, marketing blogger and chief strategy officer at marketing firm Crayon, about how small-business owners can use new, low-cost Web tools to market their products and services.”

Greg’s nice enough to mention Stormhoek and Hugh.

Here’s the Vid

We all take things for granted: Turning on the light switch, filling up at the pump, opening the tap. Yet without these simple necessities, society would disintegrate overnight. And it seems we in the wine trade are soon about to re-learn this lesson the hard way.

Why? Bottles. Yes, bottles.

A very large percentage of wine is filled in to glass bottles. It is said that the invention of glass containers has been the single most important development in the history of wine. Imagine hauling home a 300 lb. earthenware “amphora” from your local wine shop, and you get the picture.

The wine industry has taken the plentiful supply of cheap glass bottles for granted. Outside the US and Australia, the glass bottle market has been very competitive, with oversupply the rule. There are lots of reasons for the surplus, but one basic challenge for bottle manufacturers is that once they flip the switch on a glass furnace, it cannot be turned off. It must run 24/7, 365 days a year. With every country in Western Europe producing wine, there have always been lots of manufacturers, competition… and supply.

Over the years, we’ve noticed a few anomalies with glass pricing: For example, in a low cost energy market like the US, low end wine bottles have historically cost nearly three times what they cost in Europe, where energy costs are much higher. It never made much sense until one realizes that the glass bottle business in the US is an oligopoly.

Graham was quoted in an article in wine.co.za last week about the shortage of glass in South Africa.
Taken in isolation, the ZA glass ‘shortage’ looks like the unintended consequence of one of the two glass manufacturers taking a furnace out of production to upgrade and add capacity. However, this is not a story exclusive to South African.

The reality is that furnaces are allegedly being taken out all over Europe as well. Coincidence? The way we see it, glass manufacturers are putting the squeeze on the wine industry. Glass prices are skyrocketing and the world’s largest glass manufacturer, Owens Illinois, with dominant market position in wine bottle markets of South Africa, Europe and many other countries, declared a 33% increase in earnings on 15% increase in sales. (Share price has tripled this year)

I am not a conspiracy theorist, but It is not hard to pencil out a carefully crafted plan, instigated by a couple of glass manufacturers to create shortages in the market and take massive price increases. This is just how it looks to me, and glass industry people are talking amongst themselves about it.

Take it from me, to have gone to all the trouble of producing a great wine, only to discover you can’t deliver it because of a shortage of something you had hithero always taken for granted- the glass bottle to put it in- is a mind-blowing experience.

To have your wine sitting in tanks without any way of getting it into consumer’s glasses, is an irony not lost on the bottle manufacturers.

It is a very bad situation for all wine producers. Mark my words, the biggest story in the wine trade this year won’t be about wine, it’ll be about shortages of glass bottles keeping the wine from getting to market.

There is much more to this story and I will try to post more on it.

The biggest drinks phenomenon of the Summer has hit the UK and South Africa. COUTURE {by Stormhoek} - a limited production world exclusive rosé crafted to taste better with ice and fruit has been launched exclusively by Threshers (UK) - 6.99 (Buy 3 for 2 and get Couture for 4.66 each).

Have a look at the video of our June launch in Regents Park at Taste London 2007. We were sited in the Thresher Wine Zone where we had a fully kitted out COUTURE BAR and loads of SWAG (stripy flip flops, t-shirts, caps, lollies, etc.). The launch was a huge success and we’re doing some more consumer shows towards the end of the year!!

We’ve been looking at creating a Fairtrade Stormhoek wine, but been struggling with what we see as a disconnect between the market and the ideal. Fair Trade is very much the hot ticket these days, all of big UK retailers are in pursuit and it seems to be a moral imperative that retailers stock more of the stuff.

For those who don’t know, Fair Trade is a certification assuring that workers or growers of certain products and commodities are treated and paid fairly. The idea is a good one especially for small growers of commodities such as coffee and cocoa where world commodity prices fluctuate wildly with the bottom of the market being below the actual growing costs. The Fairtrade certification sets floors to these prices which assures that these growers can earn a living.

For wine, tea and other ‘estate’ products, Fairtrade guarantees that the owner of the property is paying fair wages and providing good working conditions.

In any case, Fairtrade is about passing more money to the laborers and ensuring that they are treated in accordance with set standards.

And as we explore the possibilities, we see that exercise of ‘trading fairly’ is one where all of the parties in the value chain must share the responsibility.

It is obvious that “Fairtrade” does equal higher cost and any objective observer will ask: Where is this extra money supposed to come from?

Retailers must deal with the vagaries of consumer demand and while the large grocers are interested in supporting good causes and showing that they care about the community, stakeholders and suppliers, they will balk at selling something for more money that the equivalent non “Fairtrade” wine.

So, if there is no more money in the retail price, and we assume that the grocers work on standard profit margin, the UK government takes their customary 16.06 pounds per dozen in duty, plus 17.5% VAT and the EU takes the approximately E1.20 per dozen, then where is extra to pay workers coming from? Where in the value chain is the “Fair” coming from. It is not in the producers’ budgets as already it was recently reported that 80% of all wineries do not make money- and we can attest to the fact that it is very difficult to make money in the business- not to mention that the UK/EU government takes more of the value of an average bottle of wine than the winery receives.

So, if we are all not going to be intellectually dishonest, then everyone who is involved in the business must agree to “Fairly” contribute to the value chain.

With this in mind, we would like to propose a Fairtrade Manifesto:

1) The Consumer must become a ‘stakeholder’ by being willing to pay a reasonable supplement to the normal cost of the wine. Even if this is 10p a bottle, it provides tangiable meaning to what will otherwise inevitably become a meaningless term.

2) Fairtrade, unlike the term ‘organic’ must not be used to as emotional blackmail to guilt the consumer into spending more than the wine is reasonably worth.

3) The retailer and importer must contribute to the Fair Value Chain by being willing to contribute some portion of the ‘normal margin’ to the benefit of the workers. This is essentially paying a bit more and reducing margin, even if it is a few percent.

4) Wineries must pass the extra proceeds from above to the workers in accordance with the terms of Fairtrade regulations and better those terms, if the proceeds exist from the value chain.

5) Finally, the biggest beneficiary from wine sales in the UK is the Government, and there should be a set aside or some similar contribution or rollback of duty in order to help sustain the FT system.

Without a “contract” between all the parties in the value chain, the temptation will be for some in the chain not to participate in delivering the real meaning of the endeavour. One of the implications of “Fairtrade” is that others, who are not part of Fairtrade, trade “Less Fairly”. “Fairtrade”, by definition, means more cost and if everyone along the way is expecting to make the same amount, and the consumer is unwilling to pay a bit more, then the system will not work and it will be another cynical endeavour, with duplicity reigning.

Let’s not all just take advantage of the nice halo that Fairtrade can offer, but truly own the fundamentals of what Fairtrade stands for by everyone who benefits from the sale of the product, contributing to the betterment of others who need the help.

We think that there is more to the Fairtrade discussion and we’ll be posting some more on the subject.

[Pete in a state of woe etc.]

Poor ol’ Pete sent me the following e-mail yesterday:

Hi Hugh.

Here begins a tale of woe.

Having purchased (and thoroughly enjoyed) a bottle of your fine pinotage last night [i.e. the night before the new Stormhoek promo was posted] for the first time, myself and my two colleagues (one of them happens to be my wife) decided to take you up on your challenge today and ran (literally) to the local Tesco to take our photos there. Just outside the building, my foot found its way into the hole where a brick once lived and I seriously sprained my ankle.

Not only this, but the Tesco we ran to didn’t have any Stormhoek! After helping me limp back to the office, my lovely wife’s off to find an ankle support and some frozen peas.

Anyway, I’ve attached some photos of me looking sad in Tesco (ok i’m not looking sad, but it really hurts), and a photo of my foot and some wine. Surely this has to be worth a case?

[Pete’s foot in a state of woe etc.]

(Keep in mind that, if I wasn’t one of the first 6, it’s because I had to limp back). Oh well… you can’t blame me for trying.)

Thanks, and keep up the good work.

Pete

Heh. Check out Pete’s neat website, “Your Name On Toast”.

[Note To Self:] I vote Pete gets a case of Stormhoek, anyway…

We have our first winner… Thanks, Wil!

[Wil’s Flickr pic is here.]

[Outside Tesco’s this afternoon, Pinotage and Sauvingnon Blanc in hand etc.]

I’m not sure why exactly, but I always like it when I see new Stormhoek photos on Flickr. Something kinda affirming about it.

So what the heck, I was thinking, Stormhoek is now doing a wee promotion at Tesco’s in UK, where a bottle is going for £3.99 [£1.00 off the usual £4.99], for the next week or two. So maybe there’s an opportunity to have some fun here.

Therefore, the first 500 people, aged 18 or over, who send me a pic of themselves in Tesco’s, holding a bottle of Stormhoek, will receive a £5.00 Tesco voucher from us, to cover the cost of the wine [N.B. These vouchers are not sponsored by Tesco’s. We’re covering the cost out of our own pocket].

And hey, you don’t even have to buy the wine if you don’t feel like it. You can spend the voucher on whatever you want. Nor do you have to blog it. Frankly, I’m more interested in the photos.

And to make it a bit more interesting, we’ll post our favorite pics on the Stormhoek blog, and each week we’ll send a complimentary case of wine to the person who took our favorite picture that week.

[AFTERTHOUGHT:] To get the ball rolling, I’ll send a case of Stormhoek [6 bottles] to the first six people who send in a photo [on condition that you’re over 18 years old, of course]. Again, you don’t even have to buy the wine, nor do you have to blog it.

[CAVEAT:] Though this promotion is in most Tesco stores, it isn’t in all of them. If your local Tesco doesn’t carry Stormhoek, apologies in advance. Drop me an e-mail if this happens and I’ll see what I can do. Thanks.

[P.S. For all you Wine Geeks:] The Stormhoek Pinotage that won the “Best Pinotage in The World” award last year is part of the promotion. Rock on.

This might turn out to be quite groovy, it might not. Whatever. Fail fast, fail often etc. But it’s a cool enough idea to make it worth a try. Feel free to send your photos to gapingvoid@gmail.com. Thanks Again.

[This was originally posted on my personal blog, gapingvoid.com]

Next week is the annual London Wine Trade Fair at Excel in the Docklands. Thousands of people from around the world attend, and it is an opportunity to chat with customers, and meet folks who have never even heard of us.

As one might expect, we have a slightly different view of what a Fair should be. And this is the third year of us trying to break through the clutter, confusion and hubbub.

As little guys, we always think about how it is possible to have an impact with a tiny budget, in an industry populated by enormous mega-drinks companies. On the one hand, we don’t want to upset the Big Guys, lest we wind up like the little yellow guy below. But at the same time, we do have a job to do.

Typically, wine fairs consist of many shiny, expensive stands, populated with bottle, and largely middle-aged guys talking about wine, gossiping and nursing their very nasty hangovers (Yes, the wine guys do tend to drink too much) .

While the show starts on Tuesday, we got into gear two months ago (about two months late), but there was no point in rushing, as our London Wine Fair Maestro, Andrew, pictured below, he has an uncanny ability to pull entire families of rabbits out of a single hat- He does his best work under pressure.

Here’s what is going on this year:

New and improved WineFairLive.com, which will be displayed on a (according to Andrew) “fucking huge” LED screen [think Wembley] in the central boulevard of Excel.

Wine Fair Live this year is being authored in part by “Deep Throat”, a faceless, nameless member of the trade, s/he could be your boss, colleague, client or drinking partner, so beware what you say as deep throat tells all, and s/he can be emailed at deepthroatiest@gmail.com, if there are any morsels that you’d like revealed anonymously.

Wine Fair Live this year will have roaming cameramen, the world famous Hugh MacLeod cartooning, Sandra D and Lil’ Jo of Shipwrecked
will be helping out.

When one enters the Hall this year, about 100 metres past the video wall, you’ll see a quite substantial structure which has, in its center, a screening room. We will be showing “Smarter Wine: The Movie”. It stars such luminaries as Dan Jago of Tesco, and Justin King. Justin is a bit of a legend around our office, as he went from being Nick and Al’s boss of the BWS department at Asda, to MD of J. Sainsbury quicker than you can say trockenbeerenauslese [Come on Justin, what’s the recipe for the secret sauce?].

You’ll have to see the movie for yourself, but it is an instructional guide of what you need for success today in the UK market.

Tuesday afternoon, we are sponsoring a seminar entitled: “Terroir is Dead, Long Live Terroir!” Nick will be moderating, and the panel will include number of industry folks. We’re going to see if there is a way to foment a spirited debate on the usually excruciatingly boring subject of terroir. Prediction: tears and rants.

On Wednesday night our sister wine, Camden Park, will be sponsoring the Camden Park Steak-Out in aid of the Benevolent. And we will have a mechanical bull at the Fair, for those brave enough to give it a try.

We will also be showing a “Big Love” flick at our stand from Hugh’s tour around Tesco earlier this year.

There is too much to write about in this one post, so I will update as the week progresses.