Chile – Jacket And Tie Required?

06 August 2004 By db staff writer

d=”standfirst”>Its fruity accessibility and great value have made Chilean wine a gastropub star, but can it cut it in the top-end on-trade, asks Patrick Schmitt

OKAY, so Chile is yet to have sommeliers quivering with excitement over its top-end wines, but it’s certainly making impressive headway where it really counts in volume terms, the mainstream on-trade. This has as much to do with the style of the wines, which are ripe, fruity and concentrated, as it does with the price – Chile represents value for money. However, these very traits, ones that have secured widespread listings for Chile in bars and pubs, are hampering its success in smarter white table-cloth outlets. Chile’s produce tends to be too punchy for food pairing, while its “value” image – not forgetting its mass market branded presence in the offtrade – has hardly helped. Nevertheless, what Chilean wine may lack in sophistication, it has certainly made up for in distribution, and, as Waverley’s Hew Dalrymple says, “I would expect on any list with more than 12 wines for there to be a couple of Chilean wines.” The question is, however, can Chile have it’s cake and eat it, or rather, appeal to the multiples, be it in the on- or off-trade, and the top-end on-trade? 

Volume gains

Chile’s extensive presence in British pubs and bars, is probably the reason why its share of the on-trade is so close to its off-trade share – 5.5% to 6% respectively – a balance both France and Australia would be pleased to attain (the former is, of course, skewed towards the on-, the latter the off-trade). It also probably explains why sales of Chilean wine in the on-trade are growing, as the most rapid increase in wine volume is coming from the pub sector. According to recent Waverley Group research, managed estate outlets are showing wine growth of 18% and leased/tenanted pubs 22%. Hotels, on the other hand, are experiencing a 2% increase. Driving this growth, mirroring the off-trade, is the New World, and as part of that, Chile. As Simon Russel, spokesman for Constellation points out, Chile’s volume sales are up 17% (ACNielsen MAT to May 2004) in the on-trade, nearly keeping up with the might of the US – whose sales have grown by 19% – and Australia, which posts a 20% increase over the same period. And all this has been achieved without, as yet, a major marketing push in the on-trade for Chile, hence Dalrymple’s belief that “growth is developing on the back of word of mouth”.

Value offer

But it’s not just recommendations that are securing listings for Chilean wine in the on-trade. It is also, a function of a good price to quality ratio. In fact, when Waverley searched the globe for the best value wines for its Oliver & Greg brand, buyers found Chile was particularly suitable, and Chile is currently contributing Merlot and Sauvignon. Also, when it comes to the largest on-trade brand, and by some margin, Constellation’s Stowells, Russel notes, “The Chilean styles are among the strongest, and when I last looked we were shipping around 500,000 cases of just Stowells Chilean wine.” Furthermore, Bibendum has developed Via from Chile, a project which involves producing tailor-made own-label wines. Presently the market-focused operation supplies Tesco’s ownlabel Chilean wine but it could just as easily supply any pub or restaurant chain. And although “such a solution could be from any country”, says Bibendum’s Michael Saunders, “Chile has huge vineyard holdings and can meet requirements.”  

Mid-range success

But while Chile is able to supply large volumes of wine at reasonable prices, its on-trade presence isn’t simply as a house wine, the on-trade equivalent of supermarket own-label. “Chile tends not be a house wine,” notes Dalrymple. “It tends to be one level up on that. Our success with Concha y Toro’s Casillero is evidence of that, it is one above entry level in the on-trade.” 

Similarly, Enotria’s MontGras has built a name for itself in the on-trade by concentrating on the “Reserva” level. “We found good acceptance of Chile at about the £10/£12 mark, where house wine is found, but we focused between £15 and £25 and found people were willing to spend on Chilean wine,” says Damian Carrington, marketing manager at Enotria. 

And while Wines of Chile’s Michael Cox is “always a bit disheartened that Chile’s often one of the least expensive New World wines on the list”, he does believe Chile will increase its offering above entry level in the same way that it has in the offtrade. He cites the fact that Mitchells & Butler “are about to launch a brand new range of wines which will include a significant increase in the number of Chilean wines and not just at entry level pricing” as evidence of this (the new range will, in fact, incorporate Bibendum’s brand Valdivieso). “That’s a commitment from a chain to say ‘I want to get behind Chile’ and we think there’ll be others as the off-trade grabs a bigger share – and this autumn sees senior off-trade members increasing their range. Asda is going to double their Chilean range, Tesco have taken on more, so have Waitrose, and Sainsbury’s are about to do a new range, taking on eight or nine new Chileans priced between £6 and £10.

“There’s quite a change of dynamics in the last quarter of this financial year, and I think the on-trade will take note of that and look more and more towards the brands, whether its Concha y Toro or Errázuriz, Cono Sur or Chileno,” he adds. 

Attempts at the top

Nevertheless, “Chile needs to establish a market and reputation above house wine and above £15 to £25,” says Carrington. “It needs to really achieve at the £35 mark. In really popular places like Zuma, £5 or £6 from us is not expensive enough, not exciting or different enough.” Similarly, Cox is keen “to kickstart Chile out of the narrow box that it’s carved for itself in the on-trade where many establishments will have a Chilean wine on the list, but it’s likely to be red and likely to be an entry point house wine or just above.” But how? Well, Carrington believes the country “needs great wines with a history and story, beyond just being made by a great Bordeaux château.” He is “excited” by MontGras’ new top-end wine called Ninquén, with which Enotria is “aiming to crack the restaurant market”. The wine will be priced at around £35 in restaurants, “not at £90, like top wines such as Alma Viva.” Having said that, Carrington believes Chile could do with “things like Grange as they do focus the sommelier’s mind”. 

Concha y Toro is also hoping to increase Chile’s presence in the top-end on-trade. It has appointed John Shine, formerly national accounts manager at Folio Wines, as a brand ambassador. Most of Shine’s success has been outside London but he reports that since February he has got 85 listings for Concha y Toro’s premium wines, the likes of Don Melchor and Amelia, in five-star restaurants and top countryhouse hotels. “The reaction has been so good,” says Shine. “The sommeliers have been saying, ‘I didn’t realise Chile made great wines like this’.”

Hatch Mansfield’s marketing controller, Lynn Murray, notes a favourable reception from the on-trade for Chile’s first real flagship wine, Don Max, while in a recent blind tasting in Berlin, Chilean icon wines Vinedo Chadwick and Seña came first and second place, above a selection of first growth Bordeaux and Super Tuscans. 

But, overall, “Chile’s idiosyncratic wines don’t get much pull from wine lists,” says Bibendum’s Saunders. This he finds surprising, considering the success of the company’s Argentinian brand, Catena, at the top-end of the on-trade. Joelle Marti, wine buyer at the Great Eastern Hotel, makes a similar comparison, noting that while Chile has failed to really perform at the icon wine level, Argentina, without making much noise, has achieved critical acclaim (with wines like Catena Alta). For her, Chilean wines like Sen?a – the result of a Mondavi and Chadwick joint venture – “never quite reached expectations and I’ve never listed”. And, although she’s “noticed a definite improvement in Chilean wine,” she has “not found anything that makes you go ‘wow’”. However, in the Great Eastern’s more brasserielike restaurants, Fish Market and Terminus, the three Chilean wines listed “are selling so well we are currently out of stock”. Chile may not have a wine with the fame of Grange or critical acclaim of Catena Alta, but it consistently attracts the punters in the mid-range. It’s a great start.