CHILE OPINION: Hot spot

UK wine importers agree that the Chilean wine market is ripe for continued growth. But opinion is divided as to which direction the category should take

The strong growth of Chilean sales in the UK has been a major boost for a number of importers. The category is performing strongly, and there is almost unanimous agreement among the trade that it is perfectly primed to sustain this momentum in the future. But when it comes to the subject of which direction is most suitable for Chile, opinion is rather more divided.

In an effort to unravel the mystery of how Chile should aim to develop itself in the future, the drinks business spoke to a host of top importers. The range of their responses is indicative of both the positive sentiments within the industry, as well as  the breadth of differing opinions.

Joy Rushton, buying manager, Ehrmanns
How important are regionally distinct wine styles for the future of Chile’s wine offer?
New World regionality is still a problem for consumers. The focus is probably on the diversity of varietals suited to particular regions rather than the regions themselves. One of the problems that our suppliers face is that there is only a certain amount of shelf space allocated to Chilean Sauvignon Blanc, for instance, regardless of the region.

Fiona Barlow, sales and marketing director, Bottle Green
What are Chile’s USPs?
The regional diversity in Chile is greater than is currently made out, although Australia is only just beginning to get traction with regionality at consumer level, and look how long they’ve been at it! There’s a purity message too – but that’s been nicked by New Zealand.

   All the Chilean vineyards were originally phylloxera free, on their own rootstocks, irrigated by the pure melt waters from the snow in the Andes, so what I see is a somewhat romantic story that should be spun by the appropriate organisations. I do feel very strongly that that card is currently underplayed… the consumer doesn’t even know where Chile is, but given a “clean”, “pure” message may buy in further, especially into the whites which Chile needs to make consumers aware of.

Simon Farr, deputy chairman, Bibendum
How key are brands to the future of Chile? And what part does own-label play?
Brands are critical for the prestige and positioning – and therefore future profitability – of Chile. Strong brands are also important for creating stronger propositions for the consumer. I am not talking about one or two dominant brands but a comprehensive spectrum of brands that fully articulate the relevant diversity – regional, stylistic and price – that Chile can contribute to overall consumer choice.
   Own-label currently plays too large a part – mostly because the retailers’ brands are, in the main, stronger than producers’ brands. Own-label has a long-term place in this, as in every category, but for the category to be healthy the branded part also needs to be strong.

John Osborne, business development manager, PLB
How has Chile’s image as a wine producer changed over the last decade?
I believe that Chile has really taken significant strides away from just being recognised by the UK consumer as a good producer of entry price value-for-money wines.

   While this sector of the market is extremely important and Chile continues to deliver at this end, extremely hard work has been done by the wineries, agents, retailers, Wines of Chile, etc, to persuade customers that Chile can also deliver fantastic quality and value for money at the higher end as well. The results of this hard work can be seen in the increasing average RSP and more premium Chilean wines reaching the shelves as well as restaurant wine lists in the UK.

Lorne Gray, marketing controller, John E Fells (UK agent for Torres)
How key are brands to the future of Chile? And what part does own-label play?
As with most categories, brand is definitely the way forward as it provides reassurance to the consumer. As Chile currently over trades in own-label, there is scope with the right proposition to convert some of these listings into brands. Concha y Toro has done a great job in developing the category but like any other category other strong brands are required to further develop a comprehensive and compelling offer.
   Own-label has played an important part in developing the Chilean off-trade category, filling a void where brands weren’t readily available. It has helped to deliver volumes and develop the Chilean category, but as about 30% of total wines are own-label I think it has probably put downward pressure on average pricing. I think it is now important for own-label and brands to start developing more premium ranges in order to try and trade consumers up and lift average prices.

Richard Leaver, commercial director for UK and Ireland, Santa Rita
How important is organic viticulture to Chile’s competitive advantage? How has Chile’s image as a wine producer changed over the last decade?
Firstly, it’s clear that organic, or at least ethical positioning of everything from carrots to chocolate makes a difference. For wine, I think that organic holds around a 0.75% share but with growth anywhere between 40% and 80%, it’s important and becoming more important.

   Chile is well loved for its “safe” credentials but, with an average value bottle price that is lower than many, any point of difference is a worthwhile one for the category.
   Consumer perception of Chile is shifting; you can see this from the growth of more premium wine. From a solid platform of reliability and value for money we are now seeing consumers paying for the excellence in diversity from Chile.

Paul Dunn, UK & Europe director, Valdivieso
Which varietals should Chile concentrate its efforts on?
Syrah, Pinot Noir, Cabernet Sauvignon and Sauvignon Blanc are the varietals that I believe Chile should concentrate its efforts on. Syrah, or should it be called Shiraz? At Valdivieso we believe in Syrah as, stylistically, our wine is more towards the Rhône than  Australia: Old World finesse with New World fruit flavours. Syrah has fantastic potential in Chile, although wineries are still experimenting when it comes to choosing the best areas to plant, which can give complexity with incredible fruit expression.
   Pinot Noir is really starting to hit its stride from the cooler coastal areas, especially Casablanca Valley, providing a true expression of the varietal. Of course Cabernet Sauvignon has to be in the mix, not only being the stable red grape of the country, but it can produce wines of great concentration and structure competing on the world stage.
   Finally pure Sauvignon Blanc, again from the cooler coastal areas, can produce wines of the most vibrant and intense flavours, easily on par with good Kiwi Sauvignons.

Carlos Serrano, export director, Montes

Which varieties do you think Chile should focus its efforts on?
Chile is a big Cabernet Sauvignon and Sauvignon Blanc producer and we should continue in that field. But we should also focus attention on new grapes such as Syrah and Carmenère. The initial problem with Carmenère was that when we rediscovered the grape we ran before we could walk, and that meant the market did not see good examples at first. But now we are starting to do much better Carmenère.
   Overall, Chile’s strength is good value. Today, Chile is providing good value at higher levels and we are trading up. Today, we can offer the same price quality ratio but at higher price brackets.

Andrew Barraclough, marketing manager, Paragon Vintners
Which varieties do you think Chile should focus its efforts on? How has Chile’s image as a wine producer changed over the last decade?
Chile has the ability to make great wine from all noble varieties. In the last decade, an immense amount of work has been invested into “regionality” – big reds from hot climates and more elegant styles from cool climates. In the same way, look at the Sauvignon Blancs coming out of Casablanca and Leyda as well as the fabulous Chardonnays from Limari. New styles and new regions that can take on all comers.
   Ten years ago, Chile was a safe option for  consumers. They knew that it would deliver value for money and they almost always got change from £5. Regionality has brought more premium wines to the market and Chile’s image is changing into that of a producing country that can compete on a global scale at all price levels.

Eduardo Chadwick, president, Viña Errázuriz
Which regions are providing the most potential for premium wines?

The highest world class potential for premium Cabernet Sauvignon in Chile is found in the Maipo Alto sub-appellation, together with the mid sections of the Aconcagua and Colchagua valleys. Basically, anywhere where there is a combination of Piedmont or alluvial/colluvial soils that give low fertility and good drainage paired with a climate that is warm enough to ripen this grape variety.
   Premium Syrah and Carmenère wines come from Colchagua, Cachapoal, and Aconcagua from a diversity of soils from gravel to clay profiles and a wider range of climates from cool to warmer and hot.
   With regards to cool climate wines, in the nineties Casablanca was highlighted as the Chilean premium region for Sauvignon Blanc, Chardonnay and Pinot Noir.
   This region is still regarded with the highest potential for these varieties, but the good news is the appearance of smaller, even cooler appellations nearer to the coast, such as Leyda, San Antonio and Coastal Aconcagua which are fast becoming the benchmark for these cool climate varieties.
   The Limarí Valley in the north is a new appellation with young vines but is already  producing some interesting and very characteristic Chardonnay and Syrah wines.

© db September 2007