CHILE ON-TRADE: Bringing to the table

Having established itself in the off-trade, Chilean wine is struggling to be seen as a premium dining option, although it works well in the gastropub market, says Chris Losh

Michael Cox, UK director of Wines of Chile, was in the middle of writing his latest three-year plan for his Santiago-based paymasters when I contacted him for this article. So it seemed as good a time as any to ask him how much wine he felt Chile would be selling in the on-trade by 2010.

“Hmmm,” he said. “What’s Australia at now? 15% of the market?” Slight pause. “I think we can get up round there in three years time.”Since Chile currently accounts for around 8% of the on-trade, and at current rates of growth (16% per year) would still be half a million cases behind Australia, even if the latter remained static, in three years time, cynics might feel that Cox would have been no less realistic in his prediction if he’d twirled a waxed moustache and said “We want to take over the world, ha ha ha…“ before disappearing in a puff of Carmenère.Certainly, growing from 1.4 million cases to 2.8m in less time than it takes for Gordon Brown to crack a smile is a tall order, but it’s not quite as tough as it might seem. For starters, during the researching of this article, it became shockingly apparent that there is a genuine weariness with Australian wine – one anonymous contributor even mentioned the words “Anything But Australia” – both among trade and consumers, and Chile is better positioned than anyone else to take advantage of that.Secondly, the growing importance of food in pubs, accelerated by factors such as the smoking ban, plays right into Chile’s hands. No other country in the world is so well  able to produce punter-friendly gastropub wine in a variety of styles that are cheap enough to make it onto a list between £10 and £20 and still be drinkable.“We have a message to get across to the on-trade, that if they want a wine list to be a bit distinctive then we believe they need to look to the likes of Chile to find some gems that will take people away from Chablis and Côtes du Rhône and offer alternatives to Marlborough Sauvignon,” says Cox.In fact, Chile’s biggest challenge at the lower level of the on-trade lies probably less in convincing the landlords than in persuading the merchants to get behind the country.

What Cox describes as a “lack of energy” in some merchants manifests itself in a definite attitude that a cheap Chilean red and white, pulled out as off-the-peg house wines, means they’ve ticked the Chilean box.

On-trade opportunity

“You can only sell what’s there,” sighs Cox, “and the biggest thing that’s holding back Chile in the on-trade is that there isn’t sufficient distribution of the sort of wines that we want to see there. There are people importing interesting wine, but are those people attacking the on-trade? The answer is, not much. It’s frustrating, but it also means that there’s all manner of serious opportunity out there.”

Steve Daniel, buying and marketing director at Novum Wines – a long-time fan of Chile – is an example of someone who agrees with the “serious opportunity” assessment. Three of the 40 wineries on his agency’s books are Chilean, and each one has a very different function, from the “reds only” Peréz Cruz, through Ventolera, Ignacio Recabarren’s latest project, to Sibarita, the specially-developed on-trade label of Cono Sur.“We never get anyone saying they don’t want to see any more Chilean wine – even price for price it’s easier to sell than Australian,” he says. “In fact, in the upmarket restaurants, people are saying they now need the next level up.”Signs, then, that Chile is starting to make an impact among the more savvy sommeliers – part of Wines of Chile’s “influencing the influencers” strategy. Nonetheless, even someone as pro-Chile as Daniel is realistic in his assessment. “We shouldn’t get too excited,” he says. “There aren’t going to be six or seven wines from Chile on a list.”Not surprising, perhaps, when the likes of Liberty Wines, who are so influential in the on-trade and so supportive of the likes of Australia, have only two Chileans in their entire (extensive) portfolio, one of which is an own-label.The lack of enthusiasm of the agency’s founder, David Gleave MW, is palpable. “There’s no great demand for diversity or regionality from Chile,” he says unequivocally. “We have a Cab Franc, a Petit Verdot/Syrah rosé and a Carmenère, but the bulk of the sales are the standard Chilean wines.“If you put Chile on a list, it’ll sell,” he concludes. “But the greater job is not so much doubling the volume, which can be done – it’s broadening the representation both in terms of regionality and variety.”Ah yes, regionality. The great hope of New World countries; the way in which they think they can move their country’s offerings from generic supermarket promo-fodder to credible darling of white tablecloth wine list. Only, of course, it’s much easier to put such a transition onto a Powerpoint presentation than to effect it in reality. Just ask the Australians, who have found it really tough to get their “regionality” message to stick.

There are, though, key differences between Chile and Australia. For starters, Australia spent the 1990s creating Brand Australia; reversing that thinking was never going to be easy. Secondly, Australia’s big producers are very much multi-regional players – even Grange is a pan-Australian blend, whereas more of Chile’s wines carry a distinct geographical indicator.

New regions

Thirdly, Australia’s big regions have been around for a lot longer than Chile’s, which makes their sudden trumpeting more obviously a marketing exercise. Chile wasn’t talking about the likes of Leyda, San Antonio, Limarí and Elqui ten years ago because nobody was making wine in these places.

The appearance of these cooler-climate regions could make a huge difference to the country’s on-trade credibility. The wines are lighter, better-structured and more inherently interesting than most of those that come from the Central Valley. And they have real commercial potential.

“We’ve got a Sauvignon Blanc from three-year-old vines in Limarí that is just brilliant,” enthuses Matthew Cooper, wine buyer at Ellis of Richmond. “It’s got all the grassy, pungent character that you’d expect from New Zealand, and we’ll be selling that to a restaurant at a fiver… That’s where Chile can do even better; taking away someone else’s premium price business. Their influence there is only going to grow.”The growth of cooler areas has also opened up opportunities for different varietals beyond the standard Chilean fare. And although both merchants and restaurants admit that demand for these is, as yet, fairly light, a top group of sommeliers was most impressed with a flight of 20 Chilean Syrahs at a recent tasting for Imbibe.Trading up

Chile’s big problem, in fact, is less likely to be in convincing people of its ability to make good (and interesting) wines, than in persuading them that it can do it at a higher price level. Historically, Chile has always fulfilled the “house wine and/or slightly above” slot on a menu. And though there are beacons of hope at forward-thinking establishments like Hakkasan and Ransome’s Dock, for the most part, that attitude isn’t changing.“It’s very difficult to get iconic Chilean wines on a wine list,” sighs Cooper. “Take Montes Alpha. By the time their wines are on a list they’re £50, and people don’t perceive a value that high in Chilean wines. At £12-15 in a retail environment it’s less of an investment.”They will, of course, do it for Bordeaux, Burgundy, Chianti etc – even for wines from places like Napa or Central Otago. But that’s because these areas have a number of producers who are recognised as making genuinely excellent wine. Critical mass is key to establishing reputation. And Chile doesn’t have that. Yet…Nonetheless, while customers might generally see the country’s wines as “affordable” rather than “status-conferring”, Chile’s ability to over-deliver and its reliability mean that it has highly positive associations – and trading-up can be achieved with relatively little effort.

Earlier this year, the Geronimo Inns group of gastropubs ran a Chilean promotion in 13 of its 17 outlets that consisted of upping their Chilean presence from two wines to eight (three whites, a rosé and four reds) and putting tent cards out explaining the country and its wines.

Beyond gastro
The response was 450 cases of wine sold in five weeks – or a case of Chilean wine per outlet every day. And one of the biggest sellers? A Cabernet Sauvignon at £28 a bottle – right at the top of the company’s price range.

“People were drinking it like it was going out of fashion with the Sunday lunch because it was a tremendous wine,” says Ed Turner of Geronimo Inns. “The exoticism of Chile definitely contributed to the success of the promotion. You have to take people out of their normal areas.” The company has since upped its Chilean presence to four wines out of a list of 40.Gastropub, it would seem, is the perfect level for Chile. People don’t want to spend big money, but they are in the right mind to trade up, particularly if given a reason to do so. With the best will in the world, significant Chilean growth is not likely to come purely from the rocket and polenta brigade, however. No doubt when Cox talks of doubling the country’s volume sales, he is thinking of big brands in big pubcos. And here Chile remains firmly positioned just above entry level. Whitbread, for instance, uses the country’s ability to deliver excellent bang for buck as a means of trading people up above house wine. On the plus side, it means Chile accounts for an impressive 11% of all their sales. On the downside, they aren’t planning to add to their range, or stretch its role beyond reliable workhorse. Growth is just going to be from punters drinking more of the same thing.“Chile will be interesting to the more discerning,” says a pragmatic Eileen Ginger, wine buyer at Whitbread, “but I don’t think the average consumer understands regionality in Australia yet, so Chile is much longer-term.”The challenge in the white tablecloth arena, however, remains even tougher. The fact that Chile (unlike, say, France) has built its presence here in the supermarkets means that it’s not really seen as a premium dining option. Interestingly, the problem here often lies more with the customers than the sommeliers, who are generally pretty open to the country’s possibilities.“I judge Chilean wine with exactly the same criteria that I use for France,” says Gearoid Devaney at Tom Aikens. “The reason I don’t have that many on my list is that I know my marketplace. If I had 50 Chilean wines, they’d be dust-gatherers; a lot of my customers want nice Bordeaux, Burgundies and Rhônes.”So will Chile be selling more wine to the on-trade in three years time? Undoubtedly.

Will it be up around the hoped-for 15% of the market? Highly unlikely. Though the strategy of “talking aspirationally and letting the big-money deals take care of themselves” is as good a one as any.

© db September 2007