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Chile Winemaker Concha Y Toro Heads Further Upmarket, Helped by a French Château

Among the French premiers crus and top bottles from California and Italy, Bordeaux’s historic fine wine market La Place traded no less than six wines last season from Chile, a country formerly associated with easy-drinking, good-value tipple. One of the six was Almaviva, the Chilean Cabernet Sauvignon-led blend which first broke open the traditionally French-only marketplace to foreign wines in 1998 and now retails for as much as $200 a bottle.

Named after a character in The Marriage of Figaro, Almaviva is a symbol of its maker’s determination to grow by moving upmarket. Concha y Toro is Latin America’s biggest winery, with sales of about $1bn and an empire stretching beyond its native Chile to organic vineyards in California and vines in Argentina. Almost half of the company’s revenue in 2022 came from premium wines and Eduardo Guilisasti, chief executive, is redoubling efforts on the push upmarket despite net profit slipping 2.9 per cent in the first nine months of 2022 to 66.1bn pesos ($82.6mn).

“Chile has a lot of space to grow in the [fine wine] category because it’s only just becoming known,” Guilisasti told the FT in a rare interview at the 19th century Concha y Toro mansion and vineyard outside Santiago. “Our business segments with the greatest resilience [last year] were the most premium ones, showing that the strategy adopted by the company five years ago was correct . . . the tendency towards premiumisation will continue.

” Over a lunch of Chilean abalone, mushroom risotto and slow-cooked pork ribs, paired with different wines from the family portfolio, the Guilisastis discussed Concha y Toro’s biggest challenge: how to build a new global premium wine brand positioned above Casillero del Diablo as part of the push upmarket. The group’s Trivento brand from Argentina could be a template, because Argentina’s wine has historically sold at a premium to Chile’s.

A marketing deal with Manchester United in 2010 helped to bring Casillero del Diablo to a worldwide audience At the top of the Concha y Toro range sits the prized Almaviva wine. A joint venture with France’s legendary Château Mouton Rothschild, it was conceived after a trip by Guilisasti’s father to the top Bordeaux vineyards in the 1990s in search of fine winemaking expertise. One château owner stood out for her willingness to help: Baroness Philippine de Rothschild, then the proprietor of Mouton Rothschild.

Before signing any deal, De Rothschild sent her chief oenologist Patrick Léon to sample Chile’s wines. “He must have tried 50 of our wines and those of the competition . . . and he went back very excited,” Guilisasti recalled. Concha y Toro had started to make fine wine in the 1980s with Don Melchor, the first Chilean bottle to win a top accolade from international critics. The partnership with Rothschild brought Old World expertise and the prestige of a top château, helping to fuel international growth.

“Much like Penfolds in Australia, Concha y Toro is a company that produces both large volumes of reliable, well-priced branded wines — Casillero del Diablo and Cono Sur — plus a smaller number of top fine wines such as Don Melchor,” said Julie Sheppard, regional editor for South America at Decanter magazine. “That’s the secret of its success. As Chile’s largest producer it controls a large supply of grapes . . . meaning it can monitor quality carefully. That high quality, combined with top winemakers, plus savvy branding and marketing, is a winning formula.” The Rothschild partnership was not the only successful international alliance Concha y Toro has formed. A marketing deal with Manchester United in 2010 brought the brand’s bigger-volume Casillero del Diablo wines to a worldwide audience. The group now sells in 130 countries. The football club was drawn by the logo of the winery, which means “Devil’s Cellar” in Spanish after a legend invented by its founder to scare away thieves. “Because of the connection of Casillero del Diablo with the red devil and their red devil, something clicked,” recalled Isabel Guilisasti, the firm’s vice-president of fine wine and corporate image.

“The devil connected us”. Concha y Toro negotiated for its wine to be advertised on the digital screens at the club’s Old Trafford stadium, lifting sales in the UK and elsewhere. “In Asia, Korea was very important because at that time there was a Korean who played with Manchester,” Isabel recalled. Sir Alex Ferguson, the team’s legendary former manager, also became a fan.

“He’s the most passionate person we’ve ever known about wine,” Isabel said. Eduardo Guilisasti: ‘The tendency towards premiumisation will continue’ Despite Concha y Toro’s best efforts — its fine wines obtained more than 150 scores of 90+ in the leading wine publications in 2022 — and the help of the Rothschilds, Chilean wine has not completely shed its low-budget image.

“Chilean wine has been getting better and better, with Concha y Toro and its many brands very much moving with the times,” said Jancis Robinson, the FT’s wine critic. “The problem with all Chilean wine is that the obvious export market, the US, has been slow to recognise the improvement in quality and still sees Chile . . . as a source of cheap wine.” Concha y Toro’s sales in the US fell 18.6 per cent by volume in the first nine months of last year, making it the company’s worst-performing division, although the push upmarket saw sales by value rise by 2.3 per cent. The company “has for long failed to deliver on its growth expectations in the [US], suggesting that the competitive landscape is proving fiercer than expected”, analysts at BTG Pactual said in a report. Listed on the Chilean bourse, Concha y Toro is still controlled by the Guilisasti family, with 27.9 per cent of the shares, and one other Chilean family, the Larraín Santa Marías, with 9.3 per cent.

The 140-year-old winemaker is constantly innovating. It runs a research centre which has developed new irrigation techniques to cut water use and the company is trying out new premium brands, such as Diablo, a Syrah/ Malbec darker blend targeted at younger drinkers which has been piloted in Chile and sold in the UK.

The group also owns the organic Bonterra vineyard in California but most of its 12,500 hectares of vines are in Chile. Among the most prized are those descended from Carménère stock imported in the 19th century from France. One of the six original Bordeaux grapes, Carménère was devastated in France by the phylloxera insect pest but survived in Chile, where it is a staple red grape. “What we have in Concha y Toro [portfolio] . . . can compare with . . . the best American [wines],” Eduardo said. “I wouldn’t say the French or the Italians, because that is another story. But for New World wines, Concha y Toro has absolutely nothing to fear in a head-to-head comparison”.

Source : Financial Times