2014 Brandcameo Product Placement Awards

The Grapes Of Wrath: Chilean Wine Brands Taking A Beating

Posted by Russ Josephs on February 16, 2010 05:58 PM

Similar to how dollar and discount stores are thriving in the ongoing recessionary climate, people are drinking just as much as ever – if not more – only, they’re selecting cheaper varieties.

And these varieties are not limited to domestic sources. Foreigners are actually drinking more Chilean wine than ever, with shipments up nearly 18 percent in 2009, as opposed to California wineries, whose 2009 shipments dropped by 4 million cases, according to consulting firm Gomberg, Fredrikson & Associates.

The problem is that people are choosing cheaper vintages, preventing Chile's wine brands from being able to "break out of the $10- to $20-per-bottle price point," said Bill Crowley, professor emeritus at Sonoma State University.

A few years back, the Chilean wine industry decided to simultaneously curb supply and fund a global campaign aimed at promoting their wares, all in the name of achieving higher prices.

But the recession destroyed this goal, and currently the industry is in something of a holding pattern. Making matters worse are the vinters who are selling in bulk to compete with countries like Argentina, Australia, and South Africa – all of whom are fighting for a share of the low-end wine trade.

This means that when the recession finally lifts, the quality that Chilean wineries were hoping to embody may be tarnished. Sounds like these guys could use a drink.

Comments

James Welsh Canada says:

So let me understand the thesis of this article.

The poor global economy has made it difficult for Chilean wine producers to reposition their "regional brand" in order to trade up to a higher price point? Isn't it true though, that just about ALL products and services have had their long-term objectives put through the wringer over the last couple of years. No?

As soon as the economy picks up again, wine drinkers will be back to their old habits of splurging on the odd $35 bottle of wine. And if that happens, all the dreams of Chilean wine producers will come true.  

In the mean-time Chilean wine makers should congratulate themselves with the fact that their brand has shown enough resilience to help them weather a pretty horrific global economy.

February 17, 2010 02:21 PM #

Ron McFarland United States says:

I believe these doom and gloom reports are really missing the big picture of what is happening with wine sales. Yes, average price per bottle has declined, yes, there are many major producers that have discounted deeply to move inventory and yes there are several major wine growing regions that are moving on to the next chapter in their history.

Chile, New Zealand etc are much like California, France, Italy, Spain etc are now producing a full range of wines from everyday bulk wines to true luxury wines. When Two Buck Chuck was released I do not recall predictions about the death of the California wine industry - it is a different category of wine - a different consumer - a different story to tell. For some reason, this is missing from your article.

The real story is the continued evolution of these wine regions and consumers who seek out unique and fun wines are in for some exciting discoveries from around the world

February 18, 2010 10:15 AM #

Chris Canning New Zealand says:

The wine industry has seen supply and price imbalances many times over the decades. It is inevitable that planning, planting and bringing vineyards to maturity in free markets will periodically produce inapproriate production levels for the economic environment at any one time. These things correct themselves, albeit with real pain for some. However, Ron McFarland has it right. The gloomy stories can only have traction for so long. Soon the spotlight will fall on those like "The Specialist Winegrowers of New Zealand" who are dedicated to making the very best artisan wines possible and exciting their customers with personal stories and product attributes that do not rely on the cutting of price for attention. If you think wine prices should stay down permanently, you don't know what it costs to make fine wine - and shouldn't be drinking it.

February 19, 2010 06:15 PM #

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