Picking the best route to success - Chile Q&A

21 September, 2007

Chile's £5-plus wines are winning over UK consumers, but how high can prices go?

There is no question that ­Chilean wine is doing impressively well in the UK market. The latest Nielsen figures for the year to July 2007 show it grew 15 per cent by volume and value, making it the second-fastest growing country, only beaten by New Zealand.

This year Chile overtook Spain to become the sixth-biggest wine-produ­cing country in the UK off-trade.

But what does the future hold? OLN asks key figures across the trade what they think.

The generic body: Michael Cox, UK director, Wines of Chile

How are £5-plus wines from Chile doing in the UK? Is there enough diversity to support higher price points?

Chile's sales above £5 grew by 17 per cent in the off-trade in the year to July, according to Nielsen - well ahead of the market and other competitor countries such as South Africa, and this trend has been continuing apace for four years.

Diversity is a reality in Chile, not just a marketing-inspired soundbite. Chile's transition from homogenous blandness in the 90s to a canvas of many and rich colours and textures has been com­pellingly impressive. Much of this diversity has stemmed from the pursuit of better and more appropriate sites for vineyards - often in cooler and more marginal sites.

The vineyard pioneers have been busy since the turn of the millennium. Their quests have taken them nearer the ocean, further up the Andes foothills, into higher micro-climates away from the valley floors, and even further north towards the arid Atacama.

The mantras of matching site to vine and lowering yields is bearing fruit - the best is yet to come!

Some Chilean producers are developing "icon wines" at super-premium price points. What does it take for a wine to be an icon, and how much appetite is there for these wines in the UK?

I tend to flinch whenever I hear the word "icon", never knowing if it is meant as a noun or a verb! One can understand the Chileans' desire to see the fruits of their impressive labours recognised and admired around the world. But unreas­onably high price tags, complete with Parker points in the 90s are pretty blunt instruments. Reputations and respect need to be earned slowly and with modesty for best effect, at least in the UK. So while super-premium wines (ie those with price tickets over £25) have a role to play in Chile's quest to greater stature, they must take a backstage role as the real stars are those wines that are turning heads at £6-£15 - 15 years ago you could buy bottles of Grange and Hill of Grace for less than £15!

How do you see Chilean wine developing over the next few years?

The progress Chile has made, especially in the UK, over the past four years has been amazing. The momentum is contagious, and it has bred valuable confidence amongst the erstwhile conservative Chileans. Frankly, I believe the future to be very bright as a new world order takes shape.

The winemaker: Pablo Morandé, Viña Morandé

How is Chilean wine doing in the UK market?

For more than a decade, Chilean wine­makers have been trying to produce fresh and fruity wines for young consumers. We have developed new areas of production to enable innovation and generate mature phenolics for more sweet-toothed wines. New and exotic blends incorporate some white wine into red blends, mixing with Carmen­ère or blending Cabernet Sauv­­­i­gnon with Pinot Noir. This all helps to create diversity for the UK consumer.

How are £5-plus wines from Chile doing in the UK? Is there enough diversity to support higher price points?

Generally, £5-plus Chilean wines are just starting to be known in the UK and we have a consistent quality in those segments, mainly at £7-10. The Chilean industry is looking to this niche with research, winemaking knowledge, dedication and investment.

How do you see Chilean wine devel­oping over the next few years?

I see producers growing in knowledge, wisdom, experience and being more innovative. Coupled with efforts into new research, this will help us to promote Chile as one of the best countries for wines of great quality and great value for money. The UK is the best market to showcase these inno­vative styles, blends and varieties.

The multiple specialist: James Davis, buying manager for Chile, Tesco

How is Chilean wine doing in the UK market?

At Tesco, the category grew 30 per cent by value over the past 52 weeks.

How are £5-plus wines from Chile doing in the UK? Is there enough diversity to support higher price points?

We see the £5-plus wines as an increasingly important element of our Chilean range. As part of our recent category review, we introduced 21 new wines from Chile - 19 of them priced at £5.99-plus.

Our Chilean Finest range continues to perform well, and we have just introduced two new own-label wines from the Montes winery - Finest Los Nogales ­Sauvignon Blanc and Finest Los Fresnos Pinot Noir.

Increasingly customers are beginning to understand regionality in Chile, a great example being the growing demand for Leyda Sauvignon Blanc. The country is also beginning to export an increased number of aromatic wines, which are performing well at a higher price point.

Some Chilean producers are developing "icon wines" at super-premium price points. What does it take for a wine to be an icon, and how much appetite is there for these wines in the UK?

To the average customer, icon wines mean very little. Wines such as Cloudy Bay have done a great job at generating awareness of a grape variety or country - with other wineries benefiting from the increased interest.

Chile certainly has the terroir and the winemaking capacity to produce some fantastic, high quality super-premium wines, but whether these wines will demand the high prices of Grange and other such wines remains to be seen.

How do you see Chilean wine developing over the next few years?

There is an emerging popularity of more aromatic varietals, so we have introduced Riesling, Gewürztraminer and Viognier to the Tesco range.

There are some fantastic, well-priced wines from coastal regions that I believe will give Marlborough wines a run for their money.

We are looking to list approximately 12 new lines from Chile from coastal regions such as Casablanca, Leyda and Bío Bío, with the Tesco brand getting behind ­Sauvignon Blanc and Pinot Noir and other aromatic varietals such as Riesling and Viognier. We are also looking to introduce two or more organic lines later in the year.

The multiple specialist: Helen McEvoy, buyer, Thresher

What opportunities ha ve the short Australian harvest opened for Chile in the UK market?

If the problems experienced by Australia do indeed lead to price increases and volume decreases then Chile would be the natural alternative for many current Australian wine drinkers. In order to benefit from the problems faced by Australia, Chilean wineries should work together to promote Chile rather than their individual brands. One consistent message will make the greatest impact with consumers.

How are £5-plus wines from Chile doing in the UK? Is there enough diversity to support higher price points?

Chile is strongest at the £5-£7 price bracket. Certainly at this price point, Chile has enough variety and volume to meet demand. At the higher price points, Chile produces a greater range of premium red wine than white wine. Sparkling wine is also an area of weakness for Chile.

How do you see Chilean wine developing over the next few years?

I see Chile pushing its regions over the coming years. By pushing its diversity, it will appeal to a wider consumer base, which in turn should make Chilean wines increasingly more popular.

The wine writer: Peter Richards

What opportunities have the short Australian harvest opened for Chile in the UK market?

It's true that the tribulations in Oz do offer some opportunities for Chile, but this is mainly at the big volume end, and not particularly where Chile should be focusing . There will always be fluctuations in commodity wine, but this area remains fundamentally a buyers' market and Chile would do well to get beyond this as its main business driver.

How are £5-plus wines from Chile doing in the UK? Is there enough diversity to support higher price points?

It's clear from talking to retailers and wineries that even though prices of many Chilean wines - including the big brands - have risen, in most cases this has not affected overall sales significantly. This bodes very well for Chilean prospects. There is no doubt Chile offers significant and growing diversity for wine consumers. Although Chile has, in the past, focused on the big four varieties made in a relatively predict­able style, now diversity is coming from many sources. A diversification of grape varieties has been planted; Syrah, Pinot Noir, Viognier, Carmenère, Riesling, Gewürztraminer, Malbec and Petit Verdot are all starting to shine . The matrix of terroir possibi­lities in Chile is enormous. And the winemakers are actively engaged in eliciting diversity, where before their brief was homogenisation.

Some Chilean producers are developing "icon wines" at super-premium price points. What does it take for a wine to be an icon, and how much appetite is there for these wines in the UK?

The word icon means image, and essentially what defines an icon wine - a nebulous concept at best - is a high price, associated prestige and limited availability. Anecdotal evidence suggests there is a market in the UK, but it is very limited. There is also a strong feeling in the trade that too many of these wines are trying to run before they can walk - ie ambitious blends or single-vineyard wines made from young vines, experimental winemaking or new sites. I think Chile should take the time to build up the image of these wines by being less ambitious with the pricing but, as their reputation grows, pushing prices up. That way, it will win more friends than it loses and build its international reputation in a collaborative manner with its key markets.

The exporter: Am érico Hern ández, export manager, Viña Ventisquero

How are £5-plus wines from Chile doing in the UK? Is there enough diversity to support higher price points?

The wines over the £5 price point are doing very well. I think this can be put down to the fact that there is so much more diversity in the wines coming out of Chile.

Some Chilean producers are developing "icon wines" at super-premium price points. What does it take for a wine to be an icon and how much appetite is there for these wines in the UK?

Ventisquero is a good example of this. The most important thing for a wine to be an "icon" is for it to over-deliver at its price point. Chilean icon wines will deliver the same quality at a lower price, and the UK is now looking very seriously to our premium wines as it seems that the appetite for them is growing at the same time as sales.

How do you see Chilean wine developing over the next few years?

As long as the Chilean government works to improve the country's image and relate it more to wine, there is great scope for Chilean wine to develop over the next few years.

The new Viños de Chile [small and medium producers' association], a fusion of ChileVid and Wines of Chile, is working hard to make the new strategy - Chile, Always Surprising - work.

Chile also needs to keep delivering excellent quality wines at great prices while being at the forefront of innovation and NPD. Industry-leading steps like Viña Ventisquero's carbon off setting ­Climate Care work are all helping Chile to grow shelf space and drive sales.

The independent: Ruth Yates, Corks Out, Stockton Heath, Cheshire

How are £5-plus wines from Chile doing in the UK? Is there enough diversity to support higher price points?

They are doing extremely well in the independent sector, where hand-selling is an important factor, and there is a gradual increase in diversity of varieties and styles from Chile ,which is of interest to the independent merchant's customer base. However, new and diverse additions to any range can only support the higher price points if they still represent value for money.

Some Chilean producers are developing "icon wines" at super-premium price points. What does it take for a wine to be an icon, and how much appetite is there for these wines in the UK?

There is most definitely growth in this sector and a greater interest from the more discerning customers. However, these wines need to be well marketed, have provenance, and to have a real story behind them.

There is also a definite problem with selling these wines too young because the producers do not appear to be able to wait to make a return on their investment and almost all producers do not hold on to back vintages for customers to purchase in the future.

I think that this is a mistake and shows a lack of confidence in the development of the wines.

How do you see Chilean wine developing over the next few years?

I think they have a lot of potential at the mid-price range, and with the independent sector at the mid to upper level. However, I also see a number of Chilean producers cashing in on this growing market and producing inferior wine to sell at rock bottom prices. Anyone can do that, and all it does is create a price war and encourage irresponsible drinking.




Bookmark this


Site Search

COMMENT

Donald Trump: the US has much to learn from history

The reasons Donald Trump should not be left in charge of a shopping trolley, let alone the keys to the White House, are plentiful and well-documented – from his use of the word “bigly” and lamentable business legacy to his dubious post-modern feminist principles, quite astonishing lack of political acumen and, most worrying of all, his bewildering hair. 

Click for more »
Upcoming events

Polls

Is blended Scotch overshadowed by single malt in retailers?

  • Yes
  • No
  • Don't know

Facebook

Twitter