CHILE: FINE WINE: Crossing the fine wine line

While many UK consumers will readily pick up a cheap bottle of Chilean wine at the supermarket, many are unaware of its higher-priced offerings. Fionnuala Synnott investigates Chile’s potential in the premium sector

Chile is fast gaining ground in the UK, recently beating Spain to sixth position in the off-trade. Although its wine has become a regular staple of British shopping baskets, consumers are less aware of what it has to offer at the premium end.

Chile has grown its sales over £7 by 70% but this part of the category is still small, accounting for less than 2% of its offer. This is largely due to promotional activity beneath £5, as well as a lack of distribution. “Chile has succeeded in the off-trade but at commercial price points and much of it promotionally driven,” says Colin J Cameron, marketing manager at Percy Fox.

Chile faces even more of a challenge higher up the price scale. When it comes to spending £10 or more on a bottle of Chilean wine, UK consumers have to be coaxed. Simon Taylor, owner of independent retailer Stone, Vine and Sun, explains: “There is still some resistance among customers. This is a category that is fine for everyday but, when they want to entertain or show off, customers will often go for a wine from another country because Chile is associated with value.” Steve Moody, sales and marketing director for JE Fells, UK agent for Torres, agrees: “Until recently, Chile has been known as an ‘affordable’ wine region by the consumer with some branded and generic wines regularly filling gondola ends within the multiple grocers and specialists. These wines are often heavily discounted and have established wines from Chile as being very affordable and suitable for easy, everyday consumption.”

But Wines of Chile’s UK director Michael Cox thinks a certain amount of resistance is normal at this price point. “There is bound to be reluctance as Chile is a New World country. Australia found British consumers quite conservative at first, they needed a lot of persuading. But, with the help of retailers, attitudes are changing.” Moody, meanwhile, believes that initiatives by Wines of Chile, such as the annual wine awards, and new product development by quality producers have “really highlighted the quality and innovation that exists further up the scale”.

Hand sell
When it comes to spending this kind of money, people are looking for reassurance, particularly if the wine is from a relatively new wine-producing country. In Chile’s case, telling customers the story behind the wine is often not enough – consumers have to taste it before they buy it. Americo Hernández, export manager at Viña Ventisquero, observes: “It is really hard to persuade consumers to buy wines at this price point if you don’t have the opportunity to present the wine and convince them.”

Mark Hughes, owner of Chilean Wine Club, also believes that Chilean wines need to be talked about. “When I do talks and tastings I include wines between £9 and £10, particularly Sauvignon Blanc and Pinot Noir from Casablanca. When people taste them, they love them and have no hesitation in buying them.”

Getting consumers to taste premium Chilean wine is, in fact, a key focus for Wines of Chile. “From a generic point of view, a large slice of the budget is spent on consumer shows up and down the country introducing people to wines around £6-7,” says Cox.

Taylor thinks one of Chile’s strengths is the consistency of its wine. “The Chileans are very good at tannin management and produce wines that are smooth, lush and rounded. You can drink them young or aged. You don’t have to wait as they don’t go through an awkward phase.” He says the wines over £10 really deliver, especially when compared to French and Old World wines, which “are sometimes not that exciting and don’t always offer concentration or aromatics”.

Opportunity
Although Chile may not yet be an established fine wine category, some believe it has the potential to grow into one. Patrick McGrath, managing director of Hatch Mansfield, comments: “Chile hasn’t yet got the reputation that Australia has but there is huge opportunity between £10 and £20. It is increasingly gaining reputation in the market. It produces fantastic quality and is the most consistent New World producer. It just needs time.” Cox agrees: “Consistency almost encapsulates Chile at every price point.” In particular, he thinks that Chilean Pinot Noir is excellent value at £8-9. “Burgundian Pinot Noir is a bit of a minefield. What people love about it is the inconsistency and the thrill of the chase. This is nice and romantic but it can be a waste of money. Gradually, we will help consumers to recognise that New World wine does not have to mean fruit bombs.”

In fact, it is Chile’s cool climate wines that are increasingly attracting attention, particularly at this higher price point. “We are seeing cool climate varieties becoming more and more popular, like Syrah (cool climate planted), Pinot Noir, Sauvignon Blanc and rosé,” says Jaime Valderrama, commercial director at Viña Leyda. Chilean cool climate wines are also competitively priced. “New Zealand is known for its cool climate Pinot Noir and Sauvignon Blanc but Chile can do it almost as well and quite a bit cheaper,” says Taylor.

At the Chilean Wine Club, Hughes makes a point of introducing customers to cool climate wines, in particular Sauvignon Blanc and Pinot Noir, whenever he does a tasting. “People are interested in Chile’s different climates but I don’t think anyone knows Chile’s regions without being prompted.” But, according to Cox, Chile’s climactic differences are caused by regional differences. “When you talk about cooler and warmer regions you are intrinsically talking about regionality.”

Regionality
Cox believes that getting consumers to understand Chile’s many different regions is key to getting them to trade up. But this opinion is not shared by all, particularly in the retail sector.

“Regionality is difficult to sell,” says Taylor. He thinks it is important that the trade does not get carried away with consumers’ levels of knowledge. “In a recent poll, even sophisticated customers,  committed and engaged enough to spend more than £10 on a bottle of wine, did not know where Malborough was.” Instead, he believes it is more important for certain wineries to build their profile than it is to talk about the country’s regions. “In the short to medium term, estate names are more important than regionality. It takes a long time for consumers to build the knowledge to distinguish between regions. Even customers focused on this price point don’t care about the difference between Aconcagua and Conchagua.”

McGrath thinks the important thing is to get the reputation of the country right first: “Chile is in danger of running before it can walk. Australia has only just started talking about regionality.”

But Cox says he “vehemently refutes” this view. “I’m not bored of saying it: you have to bang on about regionality. It is a fundamental part of Chile’s development. It doesn’t matter if consumers don’t know Chile’s regions, they need to be told there is more to Chile than a standard offering.” According to Cox, it is  about allowing consumers to immerse themselves in something complex and mysterious: “France is the ultimate in image. Part of that is because it is a complex wine-producing country – ergo it must be good.”

Hernandez says: “I’m not sure how important regionality is to Chile as, in my experience, no one asks where the wine is from.” In fact, at this price point, Viña Ventisquero puts the region on the back label as consumers spending this kind of money tend to take the bottle from the shelf and read the back label.

He continues: “There are too many areas. It is more to do with the quality that the wine delivers. At this price point, it has to deliver more than expected.”

Trading up
When consumers buy a wine over £10, they are looking for something with character and personality. Cox thinks this is something that Chile can deliver. “What sets Chile apart is the breadth of its styles. It already produces good whites, rosés and reds, while sparkling wine will start to emerge from next year onwards.” Winemakers are now matching different varieties to different regions – this has been a turning point for Chile. “This leads to complex, interesting and mature wines, which justify their price.”

“Chile can compete but does it compete in the minds of consumers?” asks Paul Dunn, UK and Europe director at Viña Valdevieso. “Over £10, Chile has to compete against the perception that Italy and France are better quality. Chile can offer sophistication but you have to pick your wine regions. Chile can produce fruit with concentration and elegance in Casablanca, Leyda, Palta, Maipo and Colchagua. We have to work harder to show what Chile can do.”

Crucially, Chile is not dependent on one trend to increase its fine wine sales. Hernandez explains: “Although Chile has been growing its premium wine sales for the past two years, it hasn’t been around one sole grape variety.” Hopefully, this will make the foundations of its fine wine sales more solid.

Getting consumers to pay £10 or more on wine will always be a challenge, particularly in a price-driven market like the UK. It will take time before people consider Chile as an alternative to Old World staples like France and Italy, but attitudes are changing. As Taylor explains: “Chile has the climate, the land and the right spirit of entrepreneurship. It is still an incredibly young industry with limitless potential.” 

db © September 2008