Concha y Toro’s Exports Struggle In Third Quarter, As Plans Begin To Take Shape On FetzerOctober 12, 2011
Bolstered by Chilean market growth and the integration of Fetzer Vineyards, Chile’s Concha y Toro posted a 6.7% increase in its third quarter sales to P118.3 billion ($216.9m). P13.9 billion ($25.5m) of that came from Fetzer. Concha y Toro’s third-quarter sales declined by 6.6%. For the first nine months of the year, total sales—including Fetzer—rose by 8.8% to P290.8 billion ($533.2m). Without Fetzer, the company’s nine-month sales were up by 3.6%.
Concha y Toro’s domestic wine sales grew by 1% in the third quarter and increased by 6.2% from January-September. But third-quarter export sales fell by 9.1%, and export sales for the nine-month period were off by 2.8%.
Concha y Toro acquired Fetzer Vineyards from Brown-Forman in April for $238 million. “We’re making strategic adjustments to Fetzer as a winery and not just as a brand,” new Fetzer CEO Giancarlo Bianchetti told Shanken News Daily. “We’re now reviewing what’s relevant in the portfolio, and we may need to do some pruning to assure future growth.”
Fetzer will indeed need some work to restore growth in the U.S. market. In calendar 2010, the portfolio, which includes Fetzer, Bonterra, Five Rivers, Jekel, Sanctuary and Little Black Dress, decreased by around about 5% to 2.874 million nine-liter cases—down just over 3 million cases in the previous year, according to Impact Databank.
New plans for Fetzer are taking shape. A revamped look for the Fetzer brand is expected by year-end. “We’re working on a new presentation as well as working on some of the wines,” said Bianchetti. In July, Concha y Toro formed Excelsior Wine Company, a marketing and sales joint venture with its long-standing U.S. importer Banfi Vintners. Excelsior, which has about 30 employees, is responsible for Little Black Dress and Five Rivers wine brands. Fetzer Vineyards is directly managing Fetzer, Bonterra, Jekel and Sanctuary.
The Fetzer acquisition included about 900 acres of vineyards in Mendocino County, production capacity for 36 million liters in Hopland and 6 million liters in Paso Robles, as well as warehouses and a bottling plant.
|Viña Concha y Toro – US Wine Sales
(thousands of nine-liter case depletions)
|Excelsior Wine Co1|
|Concha y Toro||2,849||3,106||3,104||9.0%||-0.1%|
|Little Black Dress2||90||105||130||16.7%||23.8%|
|The Fetzer Vineyards Co2|
|1marketing & sales partnership between Vina Concha y Toro and Banfi Vintners, formed in July
2acquired from Brown-Forman in March
3includes Valley Oaks, Barrel Select and Reserve
4based on unrounded data
Source: IMPACT DATABANK