Interview: Aurelio Montes On Chile In TransitionDecember 27, 2022
Chilean wine is in the midst of a gradual transition in the U.S., as leading players aim to steer the market toward higher price points while leveraging the South American country’s diverse range of styles to garner traction with a new generation of consumers. Chile’s bottled wine shipments to the U.S. have fallen by roughly one-third over the past decade as Concha y Toro and others have refocused toward the premium end, but Chile remains a nearly 5-million-case category in the U.S., with Cabernet Sauvignon and Sauvignon Blanc both well-positioned for growth. SND executive editor Daniel Marsteller recently caught up with category pioneer Aurelio Montes Sr., now president of Wines of Chile, for an update.
SND: The pandemic and ensuing supply chain slowdown hampered imported wines over the past two years. How has that situation evolved more recently?
Montes: Global supply chains have shown some signs of a return to normalization over the last few months. Notably, this includes a welcome reduction in freight costs. Earlier this year, scheduling reliability for the South America-North America trade line dropped by 11 percentage points—the lowest figure on record. This inevitably had a negative impact on exports. But, as we approach the end of 2022, indications are that we are now starting to catch up.
SND: How has the category been performing lately at the consumer level?
Montes: Bottled wine shipments to the U.S. in August showed a 36% increase in value year-over-year. Chile is a wine for “discoverers,” and we’re experiencing a considerable uptick in growth in the premium-and-up segments in the U.S. as growing numbers of consumers become increasingly aware of the seriously competitive value represented by Chilean wines.
SND: What wine styles and price tiers do you see as holding particular promise?
Montes: In terms of Cabernet Sauvignon, Chile is now the leading exporter of wines to the U.S., accounting for 8% of Cab consumed in the U.S., on- and off-premise. Chilean Cabernet Sauvignon retailing for $25 and up is growing at a faster pace than that of any other country at 81% in recent SipSource data. Another example is Sauvignon Blanc, now accounting for 21% of all Chilean wine depletions in the U.S. Chile is the third-largest source of Sauvignon Blanc, after New Zealand and U.S., accounting for 11% of all Sauvignon Blanc consumed in the U.S. market.
SND: Where are you focusing efforts to bolster Chile’s position in the market?
Montes: We’re in the midst of a period of significant transition, progressing from a country once heavily anchored on varietal wines to a producer of premium terroir-driven wines. And that transformation, of course, takes a piece of the volume out of the equation. But Chile’s wine industry is definitely headed in the direction we want it to go. We’re working hard at every level of the market to improve regional performance.
SND: Currency exchange has always been a significant issue for Chilean producers marketing their wines in the U.S. (and in other overseas markets). How is the situation currently?
Montes: The currency situation is now starting to stabilize. We experienced a very sharp increase in the exchange rate, though it looks likely to drop in the coming months to a level more consistent with the average in recent years.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.