The Pernod Ricard team were in London today (February 18) to flesh on the bones for their half year interim results which were announced last week.
THERE USED TO BE a sensitivity that, while millions of hectolitres of Chilean wine were drunk annually, hardly anybody seemed to know where the place was. Well, possibly due to the miraculous rescue of those miners then the devastating earthquake in February 2010, that is now far less the case. Possibly its world class wines have contributed to that increasing awareness of the long thin country that sits between the Andes and the Pacific Ocean.
Chilean wines have always been well made, offering great value, generally at the lower spectrum of price banding. Along with Australia, Chile virtually invented soft, fruity easy-to-drink wines. A wine drinker is rarely disappointed with a bottle of Chilean wine.
It is a journalistic cliché to talk of a wine-producing country ‘coming of age’‚ but Chile is undisputedly doing just that. From great value-for-money Cabernet Sauvignons and Merlots from Chile’s central valley, wine drinkers are now confronted by cool-climate Syrahs, old vine Carignans, great value Pinot Noirs and Chile’s ‘own’ Carmenère. On the white shades, there are no pale expressions with cool-climate Chardonnays, Sauvignon Blancs and Rieslings, to name but a few.
Although everything seems extremely rosy in the Chile garden, that is not totally the case. Michael Cox, a well-known figure in the UK wine trade and European director of Wines of Chile, sees a few thorny issues.
Chile is one of the world’s foremost exporters of precious copper, which makes for a strong balance of payments and therefore a robust peso. Coupled with a weak US dollar, that puts Chilean wine at a price disadvantage, Cox tells Drinks International. Fortunately, Australia, its major rival, has the same problem with its dollar.
“Nevertheless, I see significant optimism,” says Cox. “Chilean wines have been undergoing fundamental changes and continental Europe is adopting the concept of the new-look Chile. We are seeing better wines from more diverse regions and places.”
The downside of that, from a consumer perspective, is that better quality means higher prices. At a recent seminar in London on South American wines, sponsored by Chilean wine company Santa Rita Estates, Peter Richards MW, who has become an expert on Chilean wine, pronounced that there was a “seismic shift in the Chilean wine industry” and that it would not be a “low-cost producer forever”.
The Chilean wine trade is the most consolidated in the world and it is second only to Australia in exports. While the US and UK vie for which imports most Chilean wine, increasingly it is Brazil, China and Canada that its producers are looking towards.
Cox, with his European hat on, says all is not lost in the traditional western European markets. The Benelux countries, particularly the Netherlands, and the Nordic Scandinavian countries continue to drink a great deal of Chilean wine.
It is the dear old UK market which is the problem child, not just for Chile but for most wine producers. The sheer strength and muscle of the UK multiple retailers, combined with the UK government’s perceived vote-getting policies of increasing taxes and duties to try to stem the flow of excessive drinking and unruly social behaviour, have combined to make it difficult to make a profit on mainstream, supermarket wines.
As one whose family is steeped in the UK wine and spirits trade, Cox describes it as “a bit of a personal crusade” trying to get the UK wine trade to wake up to the fact that the world’s wine exporters are more than a little disenchanted with the UK market.
He is right. The UK remains a huge, strategically important market for wine. The British drinks trade almost invented‚ and certainly developed, the likes of Bordeaux, cognac, port and sherry, depending on who the British Empire was at war with. Perceived as having knowledgeable wine consumers (knowledgeable wine buyers more like) and being a gloriously open market with no serious domestic wine producers until recently, exporters have beat a path to the UK. Not any more.
“The creeping concern is that, yes, the UK is a very important market – number one or two – but if you can get 20% more in most other markets…” Cox’s sentence tails off. “So, profitability is poor and investment opportunity is restricted.”
On a more positive note, Cox says: “I am absolutely convinced that the journey Chile is on has a long way to go. There is great diversity, innovation and quality. It is also eco-friendly and the Scandinavians love the sustainability message.”
With a hint of warning, he adds: “There is a sea change in attitude. In the old days, whatever the question was, the (Chilean) answer was ‘yes’. The Chileans are very pragmatic and they want to experiment. They are now more dynamic and are very focused overseas (meaning not the UK).”
Brian Croser was a major speaker at the Santa Rita seminar. Croser is one of the seminal figures in the Australian wine trade who was forced to sell up his beloved Petaluma wine brand after a hostile takeover.
Croser opened his presentation by stating that he had been a consultant to Santa Rita for three years. It was the only consultancy he had accepted since leaving Petaluma seven years ago.
“It is not a chore to go to Chile,” said Croser. “The geography is spectacular and immensely varied, the people are gentle, happy and intellectually inquisitive and the food and wine just get better.
“They are some of the ingredients that have kept me going back to Chile. What got me there in the first place was a fascination to find out why Chilean wines are so different and distinctive. Chilean wines and those of the Cabernet family in particular are distinctive on the global fine wine stage,” said Croser.
Describing Chilean Cabernet Sauvignon and its Bordeaux relatives (Cabernet Franc, Carmenère, Merlot and Malbec), to the seminar, Croser said: “Nearly always with a glass-staining vibrant curtain of colour opening to fresh aromas of spicy, slightly briary, essence of Cabernet fruit, tinged with an exotic edge of mulberry and cassis. The plump ripe fruit sweetness of the middle palate graduates to a plane of definite and savoury tannins.
“This is serious terroir-driven red wine of a style that can’t be produced anywhere else,” This is a serious endorsement of Chilean wine. Croser then went on to talk about ‘pre-veraison lag phase’ and the effects on the formation of tannins and pyrazines, plus Chile’s climate in relation to heat summation and its diurnal range of temperatures.
Moving on to the producers, Viña Ventisquero sales director Giancarlo Papa says: “For us at Viña Ventisquero it is a priority to build brands in all our markets. The markets where we are focusing our major efforts in terms of resources and team are the US, UK, Brazil, China, Japan, Chile, Canada, Finland and Poland. These markets have a big potential in high-end wines and are also important because they help us showcase our wines to other markets.”
Of Asia, he says: “Viña Ventisquero opened a commercial office in Shanghai in August 2011. We have a mature team with a long-standing knowledge and understanding of the Asian markets. Our strategy is founded on choosing the best business partners to develop our long-term plans. China is a global market where different business opportunities exist for those who look for them. Our strategy is to cover the businesses with higher average prices and take a long-term view on the development of our brands.
“Chinese consumers are used to their locally produced wine, which is characterised by low fruit expression and high alcohol levels. They are not frequent consumers. The high class society has been long exposed to French wines. Chinese wine drinkers are not used to the Chilean wine style, which is why education is so important as well as the promotion of our country and our wines,” adds Papa.
As to new regions, Ventisquero has two new vineyard projects. The first is a vineyard in Leyda, close to the coast, planted on a hillside, with three terraces looking directly to the Pacific Ocean; mainly Pinot Noir, then Chardonnay and Sauvignon Blanc, but also a little Riesling, Gewürztraminer, Pinot Gris and Syrah. The second is an experimental vineyard of 4ha in the Huasco Valley area, 670km north of Santiago and 130km north of the Elqui Valley. This vineyard is planted on the second terrace of the Huasco River. It has stony soil with some red clay and is very high in carbonate calcium. It’s only 20km from the coast, so a cool-climate area.
Referring to the crucial UK versus US markets, Felipe Bravo Olivares, regional director Europe of the VSPT wine group (which comprises San Pedro, Tarapaca, Santa Helena, Misiones de Rengo, Altair, Vina Mar and Casa Rivas in Chile), says: “The US is like a continent that still has a lot of opportunities for Chile. We have not yet discovered all the potential that this can bring us.
“The UK is very mature for Chile and the situation of growing taxes and less wine available in the market is stressing the relations between the producers and the retailers,” says Olivares. “Chilean producers now have more opportunities to allocate wine in countries that are able to pay more,” he concludes. Speaking of other countries, Olivares says: “China: Very important. All of the Chilean industry is taking close care of the Chinese market, although they have not yet developed a taste (for Chilean wine).” The Dutch are “paying a lot of attention” to Chardonnay from Chile and the Brazilians – who like their Chilean wines – are buying a “better mix”.
On going forward, Olivares says: “Diversification is the world. The more niches we find the more we can expand our offer, the better solution we will be for the world.” There speaks an entrepreneur. Santa Rita Estates (SRE) commercial director Salvador Domenech says the main challenge with the UK is to convince consumers that South America can produce, while the US needs brands and better distribution.
Jaime De la Barra, SRE export manager in the Nordic markets, says: “We’ve seen, in general terms, that the Nordic wine consumer is moving towards a much lighter, fresher style of wines that go well with food. This means that the trend is for wines with lower alcohol and a fresh character being preferred on each price segment.”
Diego Edwards, SRE’s Asia export manager, acknowledges that the Chinese have yet to acquire the taste for Chilean wine. “There is much to do in consumer education. It is clear that the Chinese consumer prefers red wine, especially Cabernet Sauvignon and Bordeaux blends,” he says.
In conclusion, Santa Rita Estates’ technical director of wines, Andrés Ilabaca, says: “I think that exploring new regions such as Elqui and Bío-Bío and developing new styles such as cool-climate and old-vine Carignan is the correct direction, especially the development of new terroirs and trialling of varieties that adapt to and expresses that particular environment.
“We continue to search for terroir and climatic conditions that allow us to obtain fruit with great expression and elegance, as we believe these will be the terroirs that mark the future of Chilean wine,” says Ilabaca.
Hear, hear to that. Let the journey continue.