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Chilean Winemakers Enliven Image With Move Upmarket

August 6, 2013

Chile, the fourth-largest imported wine category in the U.S. after Italy, Australia and France, has long been a significant player in the under-$15 segment, but the country’s key producers are eager to show American consumers what Chile can offer at the high end. Overall, Chile’s bottled wine exports to the U.S. were down 5% to 6.62 million cases last year, according to Impact Databank, following a similar decline in 2011.

“We feel Chile has been labeled unfairly as a ‘safe but boring’ option,” says Viña Montes founder Aurelio Montes. In recent weeks, Montes introduced a new “super icon” wine called Taita, intended to showcase Chile’s luxury-tier potential. Composed of 85% Cabernet Sauvignon and a rotating blend of varietals like Syrah, Carmenere and Petit Verdot, Taita—which translates roughly to “wise old grandfather”—retails at around $300 and is on strict allocation.

Viña Montes traditionally has been one of Chile’s stronger upmarket players, with its key price range around $15-$20 prior to the economic downturn. Now, it’s seeing better results at its $10-$15 tier. “The U.S. has become a very price-oriented market post-recession,” Montes says. “But we’re working hard with our importer TGIC, and putting money into marketing to boost the higher-priced wines. What we won’t do is decrease prices. Once you go down that road, you’re there forever.” Montes’s U.S. depletions were down slightly to 120,000 cases in 2012, but the company tells SND it’s on pace for a big bump this year, to approximately 180,000 cases.

Chilean behemoth Concha y Toro is pursuing a value strategy, making its $10-and-above wines—beginning with its Casillero del Diablo level—its top priority. Overall, Concha y Toro’s U.S. depletions were up 8% to 2.8 million cases last year. “Our super-premium wines—including Marques de Casa Concha ($19.99) and the recently launched Concha y Toro Gran Reserva ($14.99)—are showing very good performance,” says company marketing director Isabella Guilisasti. “We grew 15% in that segment last year, and had a small decrease on Frontera ($5-$6).”

Another large Chilean producer investing aggressively is Carolina Wine Brands, whose flagship Santa Carolina label saw U.S. shipments rise 17% to 132,000 cases last year. The Santa Carolina brand—which sells 2 million cases globally—has just undergone a packaging revamp, with its new look currently rolling out to the U.S. market. The repack crowns a series of recent investments for Carolina, whose controlling Larrain family has become more hands-on lately, pouring $50 million into the business since 2009 (the year of Chile’s devastating earthquake).

The Carolina Wine Brands USA unit is also focusing on the $10-and-up segment, led by Santa Carolina Reserva at around $10-$12. “Prior to 2006 (when Santa Carolina was imported by Constellation), 99% of our sales were in the 1.5-liter format. Now, 80% are Reserva and up,” says the group’s global commercial director, Christian Wylie. “We don’t really play below $10, except for exclusives we sometimes do for Publix and other chains.

“Above $20, Chile is still somewhat foreign to U.S. consumers,” Wylie adds. “But we believe the value you get out of Chile at $50 matches up to Napa at $150, and Chile at $100 matches up to Bordeaux at $300. We’re making inroads, slowly but surely.”

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