Chilean Wine

9872 Words Aug 23rd, 2010 40 Pages
9-503-044
REV: NOVEMBER 17, 2005

DAVID ARNOLD HOWARD STEVENSON ALEXANDRA DE ROYERE

MontGras
Export Strategy for a Chilean Winery
In November 2001, Patricio Middleton, CEO of Viña MontGras, a $7 million Chilean winery, was driving through the Colchagua Valley to meet American journalists from Wine Enthusiast magazine. Looking at the endless vines that surrounded him, he wondered how those newly planted grapes would find a market. Chile, the world’s 10th-largest wine producer, had enjoyed an export boom in the 1990s and had grown to become the fourth-largest wine exporter, its wines positioned mainly in the lower end of the fine-wines price range. (See Exhibit 1 for world wine production and exports, and Exhibit 2 for price ranges.)
…show more content…
Nevertheless, the industry remained fragmented, with the largest player, Californian E&J Gallo, accounting for 1.5% worldwide market share.1 The industry was also in transition at the consumer and distribution levels.

Old World versus New World
The Old World wine industry, centered on France, Italy, Spain, Portugal, and Germany, was characterized by long-standing traditions of wine production, industry fragmentation, high levels of regulation from production to labeling and marketing, and strong domestic markets. Most Old World wines were made from a blend of different grapes and were named after the growing regions themselves, such as Bordeaux, Chianti, or Rioja, which resulted in considerable complexity of designation—for example, the French regulatory system included 450 different apellations d’origine controlées (AOCs, or registered origin names). The Old World philosophy of wine production was based on the importance of terroir (terrain), which assumed that every vineyard was unique because of differences including soil, microclimate, topography, and the skill and practices of the winemaker. The New World wine industry, dominated by Australia, the United States, South Africa, Chile, and Argentina, was more concentrated and more focused on exports. In addition, the lack of stringent regulation in the New World had spurred innovation in production processes and a more scientific
Open Document