Chile reduces dependence on UK market

“Challenging” conditions in the UK have led a number of Chile’s producers to indicate that they are keen to reduce their dependence on this market, according to the latest report from Rabobank Wine Quarterly.

The report found that UK pricing remains “roughly 20%” below Chile’s average export price. During the first four months of 2011, the UK average price of Chilean wine bottled exports rose by 13%, although this increase resulted in a 5% volume decline.

The issue of profitability is not restricted to the UK. With the rise in production costs meeting flat prices in many of its traditional markets, the report suggests that many of Chile’s producers are shifting their focus towards the growth opportunities offered by secondary markets such as Canada, Brazil and Scandinavia.

Overall, Chile increased its bottled wine exports by 16.8% during the first four months of 2011, accompanied by an average price rise of 6.4%.

The positive picture was balanced by a 55% decline in Chilean bulk wine exports, which was attributed in part to unusually high 2010 figures in the wake of the large 2009 harvest.

As with a number of other New World countries with a wealth of mineral resources, the strength of the Chilean peso continues to present problems for the profit margins of its wine exporters. By the end of April 2011, the Chilean peso stood roughly 19% above its average over the last 10 years.

Only last month, Santiago Larraín, managing director of Carolina Wine Brands, expressed his concern about the profitability of Chile’s entry level wines as he launched icon wine Herencia, marking part of the company’s strategic shift towards bolstering its premium ranges in export markets.

In addition to encouraging Chile to focus attention on its higher-priced wines, the report concluded that the country should be “developing new markets, expanding production of higher-valued varietals, improving wine quality and improving brand-building strategies.”

It also warned Chile of “the need to show restraint in future expansion of vineyards to avoid oversupply that could undermine pricing.”

Commenting on the report’s findings, Michael Cox, UK director for Wines of Chile, observed: “The Rabobank report reflects an increasingly frustrating situation concerning the UK market – and it’s not just Chile that is being affected”

While acknowledging the attractive development opportunities offered by other markets, “where average export prices can be higher and margins more attractive,” Cox maintained: The UK remains Chile’s biggest market for bottled wine and so there is no way that producers will ‘walk away’ from this market especially as so much progress has been made to elevate the image and quality of Chile’s vinous offerings.”

While bemoaning UK wine retail margins, Cox insisted: “There is still huge opportunity for Chile – albeit at higher prices – as their ever more diverse and terroir driven wines still represent excellent value for money.”

However, he accepted, “the challenge for us is to continue to push the ‘new Chile’ image – better, more interesting, wines that have a real place in modern lists – no longer cannon fodder for the price wars!”

One Response to “Chile reduces dependence on UK market”

  1. […] quote of UK director for Wines of Chile, Michael Cox, in an article written by Gabriel Savage in The Drinks Business Online (2011-07-11) about Chile reducing dependence on UK market: “There is still huge opportunity […]

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to our newsletters

Sales Administrator

Les Caves de Pyrène
Guildford, UK

General Manager

3Cs Cider
UK

Brand Manager

Hallgarten Druitt
Luton, UK

Brand Manager

Kilchoman Distillery Co Ltd
Edinburgh, UK

Wine Bar Supervisor

Henny's
London, UK

Partner Manager - On-trade - North West

Maverick Drinks
Manchester, UK

Partner Manager - On-trade - Scotland and NE

Maverick Drinks
Edinburgh, UK

Head of Marketing

Berkmann Wine Cellars
London, UK

Business Development Manager

Harviestoun Brewery Limited
Scotland - Central Belt

Cask Buyer

Atom Brands
Tonbridge, UK

Pays d'Oc Tasting

London,United Kingdom
28th Jun 2018

CHILE: From The Very Top To The Downright Hot

Manchester,United Kingdom
2nd Jul 2018

CHILE: From The Very Top To The Downright Hot

Edinburgh,United Kingdom
3rd Jul 2018
Click to view more

Champagne Masters 2018

Deadline : 22nd June 2018

The Global Malbec Masters 2018

Deadline : 1st July 2018

Click to view more

The Global Malbec Masters 2017

the drinks business is proud to announce the inaugural Global Malbec Masters 2017

The Global Sparkling Masters 2017

the drinks business is thrilled to announce the launch of The Global Sparkling Masters.

Click to view more