Sales grow at Viña Concha Y Toro, but profits hit

5th April, 2017 by Arabella Mileham

Viña Concha Y Toro reported overall sales up 3.5% during 2016, despite a poor fourth quarter, but profits were hit by higher production costs, higher expenses and currency fluctuations.

(Photo: Concha y Toro)

The annual turnover at the South American wine company rose 3.5% to CH$658, 448 million during 2016, offsetting a 4.6% decline in the fourth quarter which came largely as the result of exchange rate fluctuations.

However net profit fell 3.7% to 47,931 million, down from 50,362,388 last year, impacted by higher costs of wine, higher expenses and currency fluctuations. This was particularly striking in the final quarter, when net profit fell 23% compared to the previous year, and income was down 4.6%.

Sales in the UK dropped 11.3% in the final quarter, the company noted, reflecting the impact of prices increases in the multiple retailers on the back of currency fluctuations following the Brexit vote. Currency woes and depreciation were seen across Europe, causing volumes to drop 10% in Q4.

However, across the 12 month financial year, total sales rose 3.5% to CH$658,448 million, with volumes up 5.5% on the back of its premium wine portfolio, particularly Trivento and US brand Fetzer Vineyards.

Asia, which accounts for nearly 14% of total volumes, saw sales grow 15.3%, on the back of strong sales of Casillero del Diablo, and sales in China were particularly strong, rising 43%, as Casillero del Diablo grew 30% to around 400,000 cases.

Central America & the Caribbean grew 5.8%, and Canada also saw strong sales, up 14.9% driven by Don Melchor (+13.4%), Casillero del Diablo and Cono Sur Organic, while the smaller African and the Middle Eastern market rose +17%.

However sales fell 1.4% in the US during 2016, and Europe, which accounts for around 48% of the total volume, also saw volumes down 1.3% across the year. This came in spite of the strong growth that categorised the first half, when volumes rose 6.8%, as the situation was reversed in the second half with volumes falling 3.2%. However the company’s US brands grew well, rising 44% by volume.

The company reported increasing costs of producing Chilean wine on the back of a weak harvest, which contributed to a 21% drop in yield.

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