Chile stands up to discounting

Chilean producers are shunning cut-price deals with the UK-off-trade in a collective concerted effort to improve their quality image.

The combination of earthquake wine loss and the recession-induced inability to sell wines with little or no margin, has also contributed to the rise in value of Chilean wine in the UK off-trade by 8.7%.

Nielsen figures demonstrate that Chile is the fastest-growing wine producing country in the UK off-trade after New Zealand, with a current increase of 14% in value to £451 million, while still retaining an increase of 12% in volume which is currently 8.9m 9-litre cases (both MAT 10.07.10).

Following the drinks business’ recent trip to Chile, a raft of producers proclaimed the industry’s determination to suppress price-slashing deals as they channel their energy into spreading the message of quality.

Speaking in reference to the country as a whole, Cristian Wylie of Santa Carolina, said: “Only as little as one year ago the three-for-ten offers could maybe break even for companies, but now they need to be careful about the price as they’re being squeezed dry [by importers and retailers].”

Felipe de la Jara, managing director of Errázuriz, explained the essential role that Chile’s larger producers have in consolidating Chilean wine’s higher quality image. He told the drinks business: “Massive companies, which are not dropping their prices, have a very important role to play right now.”

Meanwhile, Chile’s largest producer, Concha y Toro, lost 22m litres of wine in February’s earthquake. However, this has not disheartened the company’s core message for the year, as Thomas Domeyko, corporate export director, said: “The objective of the company is to develop a full range of wines and premiumise the brands. It’s a matter of a belief rather than money itself.”

To see an in-depth report on Chile, read the forthcoming September issue of the drinks business.

Jane Parkinson, 16.08.10