Chile’s Concha y Toro: Successfully Selling ‘New World’ Wine Globally

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Excerpts....

Wine from “Old World” countries primarily Italy, France, and Spain, was globally held in high esteem. Each wine brand from these countries came with a long history and enjoyed brand awareness among wine drinkers. Most of the wine brands commanded a high price and were even given as valuable gifts on social occasions. Wine from Chile and a host of other nations was called ‘New World’ wine, and it had a comparatively lower reputation (See Exhibit II for More Information on ‘Old World’ and ‘New World’ Wine). From the mid-1980s, Chile-based wine companies began exporting wines to European countries and the US on a larger scale than earlier. The wine was priced low to compete with the lower-priced wines in those markets. This strategy resulted in Chilean wines getting a sizeable market share.

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In 2010, to further improve its brand image globally, Concha became the official sponsor of MU. Through this three-year agreement, the company aimed to create brand awareness worldwide, especially in the markets of Northern Europe, Asia, Latin America, and Eastern Europe. Rodrigo Maturana, Foreign Offices Marketing Manager at Concha, added, “Football is so popular globally that it can attract a lot of new consumers who are just starting to drink wine and know about our brand. We really need three to five years to have a real impact and build up our brand recognition..........

Chile’s favorable climatic conditions such as hot summers, cool coastal breezes, irrigation from melting snow, and relatively pest free environment meant that it provided one of the finest terroirs (places) in the world to grow grapes. Across the country, there were 14 wine regions that had different soil types and climatic conditions, which were suitable for producing a range of wines. Cox believed that regional differences were an asset to the Chilean wine industry.........

An important component of Concha’s growth strategy was its practice of closely managing its distribution network in its key markets. This strategy also provided greater visibility for the company’s brands worldwide, apart from bringing business objectives in key countries in line with those of the parent company in Chile. In other markets, the company invested in building the brand image in collaboration with distributors and sales agents..........

In April 2011, in a US$ 238 million deal, Concha acquired US-based Fetzer from alcoholic beverages giant Brown-Forman Corporation . The deal, financed through a mix of capital and debt, enabled Concha to gain possession of a bottling facility and brands Fetzer, Bonterra, Five Rivers, Jekel, Sanctuary, and Little Black Dress, apart from 1,060 acres of vineyards. ........

Over the years, Concha produced consistently good financial results. That was a testimony to the success of the company’s strategy of prioritizing growth in value over increase in sales volume by focusing on growing the premium segment. Moreover, to offset the rising production costs and the stronger Peso, the company increased its focus on producing premium wines that had the ability to provide higher returns.........

In 2013, Concha launched a new TV ad campaign for the ‘Casillero del Diablo’ brand that was intended to reach 4.1 million consumers, across the world. The campaign was a two-minute brand movie called ‘The Casillero del Diablo Wine Legend’. It was spread globally on major cable television channels, in addition to cinemas and other media. This ad made the ‘Casillero del Diablo’ the first wine brand in the world to have a TV spot in cinema format. .........

Exhibit I:Concha’s Distribution Network
Exhibit II:‘Old World’ and ‘New World’ Wine
Exhibit III:Overview of the Global Wine Market
Exhibit IV:Sales Volume by Geographical Zones