CHILE: Did Chile breeze it?

Chile has made sales success look easy since its quiet revolution of 2000 but was it really as effortless as it appeared? As part of the drinks business‘ in-depth focus on Chile, Graham Holter went in search of the secrets behind Chile’s off-trade success in the UK.

Michael Cox laughs ironically when it’s suggested to him that Chile’s crowd-pleasing wines ultimately sell themselves, regardless of whatever marketing hoopla surrounds them.

“Yeah, all we had to do was turn up,” he deadpans, a quizzical eyebrow arching skywards. It’s a dumb thing to suggest to the Wines of Chile UK director; unfair on all those who have worked tirelessly to create a  foothold for the country’s wines in this country; offensive to the importers and buyers who’ve unearthed a succession of flavour-packed, stunning value gems from Colchagua, Bío-Bío, Casablanca and elsewhere.

And yet… beneath such a crass and insensitive assertion there is a tiny grain of truth. In the UK market, Chilean wines did find themselves in the right place at the right time. More specifically, they had the right flavour profile (fruity and silky smooth) and sold at the right price.

But there was more to Chile’s success than mere luck. Cox is not prone to wistful reminiscence but he’s happy to reprise the events of a decade ago, simply because he suspects that, eventually, the period around 2000 will be regarded as important a time for Chilean winemaking as 1554, when the conquistadors planted the first vines.

“Wines of Chile was reformed in 2002 in Chile and got around to opening here in 2003,” he says. “That was a time when the Chilean wine trade was certainly starting to reap the benefits of serious investment that went into the industry in the late 1990s and the turn of the century.

“There was quite clearly a change of thinking in the wineries themselves. A realisation that they were sitting on an opportunity that wasn’t being fully realised.

“The 1990s were full of great growth in terms of exports. Australia was struggling to keep up with red wine demand and the world fell in love with Chilean Merlot.

“From 2000 onwards, with investment coming into the trade, swanky new wineries, the winemakers themselves were thinking: actually we can do more. The owners and accountants were saying, actually you have to do more and sell better quality wine to justify all this investment.”

Errázuriz, Montes and Concha y Toro were among the frontrunners and “really started to crank up and realise they could steal a march on other countries and other companies by being innovative and progressive”, Cox says.

Their focus inevitably fell on the UK, where the Chileans were impressed by the way the trade had bestowed superstar status on Australia. But there was an important difference. Chile had no Geoff Merrills, no Phil Laffers, no Len Evanses. Instead, it had some rather quiet men in suits.

Neither did it have an Olympic games, Neighbours, Crocodile Dundee, Shane Warne or Dame Edna Everage. If Chile was known for anything at all, it was the Pinochet regime of 1973-90 and perhaps its underwhelming performances in a number of World Cups.

So how was progress achieved? Wines of Chile is widely acclaimed for the work it has done, in the UK and at home, in unifying the industry, oiling the machinery of communication and giving confidence to anyone involved in the distribution chain, from vineyard to sales floor. But at no stage of its progress has Chile resorted to unsustainable price strategies, marketing hyperbole, or gimmicks.

Affordable quality

Says Sainsbury’s winemaker Clem Yates: “In the UK Chile has managed to drive South American wine sales mainly by providing the best price/quality ratio from the Southern Hemisphere, something that Australia no longer does well.

“Over the last five years the wine styles have been consistently consumer-focused with pure fruit-driven, easy-to-drink wines. The UK consumer has recognised that they get value for money when buying Chilean wine. “I also think that Wines of Chile is one of the best generic bodies we have currently and is doing what the Australian Wine & Brandy Corporation did for Australian wines about 10 years ago.

At a commercial level, the impact of no Common Customs Tariff gives Chile a big competitive advantage in the sub-£5 market. “Chile is also well placed to bulk ship, closer than Australia, but still with robust wine styles that can withstand the bulk shipping contract pack process and still retain their inherent characters and quality.”

Tesco product development manager James Griswood agrees that Chile’s success has centred on “consistency, value for money and a supply of wines tailored towards current customer needs and tastes”.

He adds: “To perform well in the UK market and gain market share, a country needs to be able to offer key varietals – Cabernet, Merlot, Sauvignon, Chardonnay – and a good quality-value balance, at a commercial price level, between £3.49 and £5.

“Chile is one of the best placed countries to fulfil these criteria, and combining these with consistent quality year on year, customers have begun to see Chile as a safe, everyday choice for their wine purchases. This has given Chile a critical mass of repeat customers that has driven its market share performance over the last five years.”

At the risk of making more cruel generalisations, it’s indisputable that Chile hasn’t always set pulses racing. It has evangelists scattered throughout the trade and critical community, but equally there are plenty of people who still regard Chile as a little dull. Writers such as Jamie Goode and Anthony Rose have admitted to boredom, even if they’ve been kinder in their more recent assessments.

The thing is, plenty of consumers seem quite happy with the less racy stuff: wines which haven’t needed books written about them or winemaker-hosted dinners to sell them. Wines with which consumers trust their own judgement.

“In the current climate of financial uncertainty, some consumers are more comfortable with the grape varieties and styles they are familiar with,” says Joan Torrents, group wine buyer at Mitchells & Butler. “We are introducing new wines without being too different from existing ones. As an example, we now have Fairtrade Chilean Sauvignon Blanc in Browns restaurants.”

Among independents, an area Cox is increasingly excited about, there is no mystery to Chile’s success. “The price is right for the quality of the wine, that’s why they seem to do so well,” says Rachel Philips, of Hay Wines in Ledbury.

“They can do cheaper, everyday wines that are still really good quality. It’s as simple as that.” The store is looking to source some “more exclusive” Chilean wines above £10 and describes most of those who buy Chile as “knowledgeable customers”.

Page & Son in Ramsgate was an early adopter of Chile. Manager Robyn Moores says: “They’re quite good wines and the price is competitive. I think that’s pretty much it.”

She adds that recent sales growth has come at the expense of Australia and France, aided by price increases in  both countries.

“They’re growing in popularity and we can’t get enough at the moment. With the earthquake it did disrupt supplies quite a bit but they have come back. We buy through a buying group so we have ship loads coming over.

“We tend to stick fairly much to the popular ones – Sauvignon Blanc, Chardonnay and Merlot, that kind of thing, but we do a Carmenère as well which not many people know about. It’s becoming really popular as a house wine as well. French wines are pricing themselves slightly higher and quite a lot of our customers have switched to Chile.”

House bound

Cox is irritated by Chile’s default house wine positioning in many establishments, accusing much of the on-trade of being “lazy” and “antediluvian” and failing to keep up with consumer habits by restricting Chile’s prominence on lists. Independent wine merchants, by contrast, “are recognising more and more what opportunities Chile can offer in terms of wine to excite their customers”.

The next phase of Chile’s UK growth, Cox hopes and believes, will be driven by the richness and diversity of its offering, rather than merely safe, familiar varietals at market-beating prices. He wants Chile as a whole to raise its image and for UK consumers to grow more familiar with its geography and expanding DOs.

“There are some new regions that haven’t got an official DO that will come on stream before long – further north, further south, higher up – you name it. There are many more medium and small wineries that one can call boutique wineries than ever before. That’s a side of Chile that people haven’t seen much of,” he says.

Yates at Sainsbury’s is launching two new Chilean wines in the Taste the Difference range and is tentatively optimistic about Chile’s chances of doing well in the upper end of the market. “I consider Taste the Difference to be at the start of the premium end, so yes, it is succeeding, but in a finer wine sense I think it will be tough. Chile does have premium wines; I would guess that red wines would have more initial success at the premium end and would need a hand-selling environment.”

Griswood at Tesco is more unequivocal. “Any country can succeed at the premium end; they just need to give the consumer the reasons to buy at the premium end,” he says. “Easier said than done, but Chile already has the consumer’s confidence at entry- and mid-level pricing, so it does make it easier for them to then convince the customer it is worth their while trading up into the premium tier.”

To succeed, Chile will have to do more than simply turn up. But now that the quiet men in suits are walking tall, with a confidence borne of 10 years of sustained success, don’t bet against it happening.

Graham Holter, September 2010