The world boasts hundreds of great train journeys, but Chile could monopolise the concept of scenic travel by plane. Flying north to south across its pencil-thin terrain is a visual odyssey: to the
east ther e are the snow-capped undulating peaks of the Andes, Chile's natural boundary with Argentina, and just 110 miles across to the
west, a seemingly endless rugged coastline
flanks the Pacific's blue expanse.
It's a breathtaking introduction to the country's hugely varied form, a bird's-eye view of the landscape influencing the vineyards below.
Consumers might not be aware of Chile's natural diversity, but they are starting to appreciate the quality and variety it helps deliver to their wine glasses.
And as winemakers get to grips with the possibilities open to them, buyers are receptive to what's being unearthed.
Lindsay Tales, Thierry's buying director says: "Chile offers consistently good quality and value across all the popular grape varieties. The quality of Casillero del Diablo beats other New World big brands hands down. I'm a big fan of Chile's emblematic grape Carmenère as well as cooler region Sauvignon Blancs and Pinot Noirs. I find the diversity of wine styles which Chile produces from different regions really exciting."
plenty of praise from Jonathan Butt, head
of global sourcing at Wine Rack. "Varietal-wise there is everything available - they seem to be able to find a place that suits every grape. Wine Rack customers are happy to experiment and Chile seems able to service every
Nick Room, Waitrose buyer for Chile, agrees. "Chilean wine offers interest and diversity, modern styles and lots of fruit. Planting the right grapes in the right areas is paramount to Chile's success and they have achieved this."
It's a far cry from when Chile first sprung on to the scene, gaining a foothold through own-label, which earned it a reputation for being dependable, cheap and cheerful. While its reliance on own-label is still on the heavy side for a New World country, at 25% of its UK imports (yielding an average bottle price of £3.73, according to Nielsen), this has been steadily changing as financial factors force prices beyond the reach of bargain basement buyers.
Rising production costs, unfavourable exchange rates and duty have contributed to Chile's average bottle price rising to £4.09, bringing sales in the UK - its number one customer - to £370 million.
Volume dip follows discounts
But while value has increased by 6%, volumes have dipped by 2%, broadly in line with the market as a whole.
Nielsen's Stewart Blunt says it's no
surprise Chile has fallen back slightly
in volume after a "fantastically successful promotional year". Last year's top-selling Concha y Toro was the brand most
commonly seen riding the promotional wave, and it has come out the other
side in remarkably good shape. An aggressive campaign saw it on shelf for
£3.90 this time last year, versus £4.78
now - after a deliberate move to distance it from the promotional roster. On
the face of it, the shift in strategy has cost the brand volume, as the 23% hike caused a corresponding 23% drop in sales.
But you could argue Concha's strategy has come good, because, having doubled sales on the back of those discounts, the brand
has a bigger franchise than it had two years ago.
With those price cuts less visible, Concha's stablemate Isla Negra has stepped in to fill the gap at a credit crunch-friendly £3.62 - virtually static on where it was last year - and shot into the top spot as a result.
Concha says there are more extensions in the pipeline to continue to divert attention away from price. This year it launched a sparkler from Limarí and plans are afoot for a duo of low-alcohol wines at
9.5% abv - a Cabernet/Carmenère and a Chardonnay/Chenin.
"Chile is just managing to hold on to its value market share, but is undoubtedly finding things tough as a result of the unfavourable US dollar exchange rate," says Tales. "Chile is losing out to South Africa, notably in the grocers, as buyers switch their key gondola-end promotions to Cape wines where their margin potential is greater and deals can be sharper. This trend is reflected in the drop of bulk shipments from Chile to the UK in 2008 [down circa 10%]."
Scroll back 12 months and things were very different. In March 2008, the two countries were as close as they've been in at least five years, with South Africa on 8 million cases versus Chile's 7.6 million, leading to bullish predictions from the Chilean camp as to how the race would finish. But global economics meant it wasn't to be and now, with South Africa soaring to 10.6 million cases and Chile's volume in slight decline, Michael Cox, Wines of Chile's UK director, concedes it was premature to hang out the bunting.
But, as Tales suggests and Nielsen's Blunt confirms, much of South Africa's gain has been at the volume end of the market. "Chile will struggle to fuel the market below £4," says Cox, "but it goes further in terms of value to deliver on every pound that consumers spend."
And buyers support Cox's assertion that the favourable rand will not automatically result in a swing away from Chile to South Africa.
Tesco's wine buyer James Griswood is quick to dispel any suggestion of substitution - in the immediate future at least. "The exchange rate is affecting the whole of Europe, North and South America, so Chile isn't at a major disadvantage if you look at it globally. Poor exchange rate alone won't impact Chile's space on our shelves in the short to medium term."
The message is the same from Majestic, where buyer Camilla Bordewich says Chilean sales have been growing impressively for several years and there are no plans to tinker with the formula.
Butt is confident Chile's price compared to European wines will do it favours. "Chile will be an area of focus for us in the next 12 months. Customers will happily switch into Chile as the euro continues to strengthen. Consumers will look elsewhere for their everyday wine and Chile, like Australia, is well placed for that. Chilean Pinot Noir comes in cheaper than anywhere else and Syrah has huge potential too."
But like Bordewich, Butt is sceptical about Chile's aspirations for the £10-plus market. "Once you get above £10, it's a real struggle. I'm not sure the super-premium trust is there and I'm not sure it ever will be."
Key price range
However, retailers unanimously back Chile's potential in the £5-£10 bracket. Sales of Chilean wine over £5 are growing at 26% - ahead of France, Australia and the market average of 20%, but behind the US, which is growing at 50%.
Cox is optimistic: "We have to attack that 20%, well away from the gutter prices. Here's where the decent prices are and we need a bigger share of that. Value is something that makes consumers think 'that was so much better than I expected'. I don't think I've ever heard anyone say anything derogatory about Chilean wine and I'd defy any other country to be able to say that."
There's no doubt that retailers share this sense of possibility, but there remain big questions over how Chile realises its potential. It needs to manage buyers' expectations by unwrapping a few more surprises - as well as responding more quickly to growth trends such as sparkling wine and rosé.
Tales says: "Chile is pushing its viticultural boundaries, getting to grips with its terroirs and crafting new styles of wines from exciting cooler regions. I'd like to see more of Chile's diversity on our shelves - Concha y Toro is just so dominant with about 40% of Chilean wine sales."
Américo Hernández, export manager at Viña Ventisquero, says it's all available - at a price. "Chile can fill other gaps: Petit Verdot, Viognier, Pinot Gris, Gewürztraminer, but everything is focused on £5.99. If we're going to innovate with new grapes, we have to do it at higher price points."
But there's a sense among some independents, where suppliers can realise higher prices, that they aren't getting enough access to the diversity on offer.
Ruth Yates, owner of Corks Out in Stockton Heath, Cheshire, says the passion she puts into helping the Chilean category grow is not being stoked with enough innovation. "I think Chile has become complacent. It produces really good quality wines at all levels and it has the higher quality wines, but it's not doing enough to bring them over. They produce some fantastic upper level wines and there is a market here for them. Distributors need to be out there finding them and helping independents that can't go out there themselves.
"I sold £100,000 of Chilean wines last year, so it's a big player in my portfolio. We have six wineries and it's not enough. We need some more boutique wineries."
It's a frustration that Cox shares. "Chile does well in supermarkets and I wonder whether independents think that's Chile's strength.
I am dismayed by importers' perceived lack of enthusiasm. Importers need more than one winery in their portfolio. There are some real gems out there, but we need more importers to take a punt. It's changing, but it's slow progress."
Change is certainly something Chile's used to handling. It's
been 20 years since the fall of Pinochet and 2010 marks the bicentenary of Chile's independence. Those events could help instil a pride in Chile 's ability to compete on a global scale and give it greater confidence in pushing its strengths.
This renewal looks set to coincide with a possible revamp of its appellation system, and could combine to open the most exciting chapter in Chile's political and winemaking journey yet.
Top five brands
1 Isla Negra
2 Concha y Toro
3 Vi ña Maipo
5 San Pedro
Source: Nielsen year to March 21, 2008
Buyer's view: James Griswood, Tesco
What are Chile's main strengths?
"Image is key. The UK customer has very positive feelings towards Chilean wines. Maintaining goodwill should be the priority for Wines of Chile and Chilean brand owners. In a recession
customers take fewer risks with their money and will stay with those countries and brands they trust ."
"It's very difficult to differentiate yourself in the New World. Customers aren't loyal and happily jump from Chilean Merlot to Australian Merlot to South African Merlot depending on what's on offer. Chile isn't really doing anything different to the majority of the other New World countries, so finding a USP that secures loyalty is hard to come by. That's why branding is so important for Chile ."
What about future opportunities? What trends is Chile well placed to capitalise on?
"Recessions are all about opportunity. Chile needs to be quick off the mark
to jump into spaces left by those that don't fare so well during this period. That may sound cut-throat, but customers themselves are becoming smarter and more aware of actual value. Chile is well placed to take advantage of this."
Indie view: Ruth Yates, Corks Out, Cheshire
"Importers say to me: 'You've got lots of Chile already, you're in bed with Concha y Toro.' Yes, we do have a lot, but I always ask them to send me samples because there's room for improvement.
"Concha is good at marketing, but I've had good top-end wines
that I've then seen at the supermarket knocked down from £20 to £15 . Chile has to be careful not to try and be all things to all people.
"Independents will just de-list them if they see them in supermarkets. And the supermarkets don't have any loyalty - wines go off shelves as quickly as they go on them. Chile was seen as a supermarket wine, but independents have pushed wines at £20 for some time and should not be forgotten for what they've done.
"I've always thought of Chile as good value. Chile has always excited me, it's always offered good quality and great diversity from entry -level to the top end. There is an opportunity for Chile to continue that development."