Wines of Chile unveils 2020 strategy to double sales to $3bn

Wines of Chile has developed a new strategy that it hopes will make it the number one producer of sustainable and diverse premium wine in the New World by 2020.

By doing so it anticipates doubling sales to US $3billion by growing, on average, 9.5% in value every year for the next 10 years driven by an average increase in price of 3% compared to only 1% price increase in the last 10 years. It also predicts a 6% increase in volume growth by 2020.

The 2020 strategy was unveiled by Eduardo Chadwick, president of Errazuriz, during the inauguration of the producer's new icon winery, Don Maximiano in Chile's Aconcagua Valley on November 6.

He confirmed the 2020 strategy, the first time Chilean wineries had agreed a shared vision, would look to capitalise on Chile's reliability, diversity and sustainability record and will be promoted around the world with the central marketing message of "Chile the natural choice".

A new accreditation system is to be rolled out through 2011 that will assess Chilean wineries for their sustainable, environmental and business credentials.

As part of the development plan Michael Cox, currently Wines of Chile's UK director, will take on a wider European role with particular emphasis on promoting Chile in its key Scandinavian markets as well as other key European countries.

It will be the first time the generic has spent promotional money in Europe. The budget for the UK for 2011 has also been maintained, if not increased, said Cox.

He told Harpers the fact Chilean wineries had come together to agree a shared business and marketing strategy was a fundamental shift for the industry and an indication of the new-found confidence in the country.

"Confidence is arguably the most important word in all this. Confidence in Chile as a nation and as a wine country. As Chile becomes more focused it creates the momentum which sharpens that confidence," he explained.

"The strategic approach is spot on," he said. "In all of our key markets, the three prongs of the trident are the trade - the buyers and the gatekeepers - the consumers and the press. We need to attack all three to make things happen. If we do it will help consumers purchase with more knowledge."

Cox added: "The end game is to improve the image of Chile with the consumer in its wider sense, both as a nation and as a nation of winemakers. By doing that we can then hopefully persuade them to spend more on premium wine."

He also stressed that much of what had been agreed had already proved successful in markets such as the UK and the US. "The most important thing is that we know it works. So for the UK it is really more of the same. We are not re-inventing anything."

Hitting targets
Chadwick said he was sure Chile would succeed if not exceed in hitting the 2020 targets. "This is not a crazy dream, but a very clear strategic plan for how we can achieve 9% plus growth every year," he said.

"Chile is arguably better positioned than any other New World country." Its style of wines sit between the fruitiness and easy drinking qualities of the New World and yet have the elegance and complexity of the Old World, he claimed.

Its wines, he said were achieving record sales in markets such as the UK even when the country as a whole was still not widely recognised or understood by consumers. "The key opinion formers in wine understand Chile, but there are billions of consumers around the world who don't understand us yet."

The new 2020 marketing strategy would, he said, look to build on the global feel good factor there was for Chile following the dramatic rescue of the Chilean miners last month. It has also been agreed with the input and support of the new Chilean government. "The time has come for Chile. I firmly believe that," said Chadwick.

"The government understands that we need to take Chile to the next stage of its development. The image of Chile and the wines of Chile go hand in hand. Wine is a great ambassador for our country."

The 2020 strategy, he said, would be rolled out in parallel with a government strategy to improve the economy, take average incomes from US $12,000 to US$20,000 and raise health and education standards.

Cox suggested Chile's position was unique in Latin America. "It is maturing as a country and providing the social change, cultural development and political stability that will help it be a world player."

He added: "The event with the miners' will, I think, prove to be a catalytic time in Chile's history."

Promoting Chile as a premium wine producer was the only way forward, stressed Chadwick. With only 120,000 hectares under vine, the equivalent of Bordeaux, Chile has to concentrate on driving up prices and developing niche wines. "Chile also needs to upgrade out of necessity," he stressed.

Up to half, he added, of Chilean wineries were in the red and driving value growth was key to the 2020 strategy. "We have to move up the ladder on price points. We have to certainly at Errazuriz move as fast as possible to position our wines as super premium."

The 2020 strategy would see average Chilean case sales move from US$27 FOB to $37 FOB. "Chilean wineries cannot make a living by making cheap wine. The natural forces are such that there is no other way," said Chadwick.