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Chile Hits Fast-Forward

Posted on  | April 1, 2011   Bookmark and Share
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Wine producers from this diverse South American country leverage their
wine-friendly geography to capture the imagination of the American consumer.

It’s not going out on a limb to say that Chile is one of the most exciting wine regions on the planet right now. Combine some of the best terroir anywhere with a critical mass of talented winemakers, a wealth of emerging new regions, vast quality improvements and an infusion of capital and expertise from abroad, and you’ve got Chile’s recipe for getting attention. The country has increased production (up 12% over the last decade) and dollar-for-dollar, its wines rival those made in regions twice as esteemed.

Consumers have noticed: Chile is the fourth largest exporter to the U.S. in value and volume (for bottled wine). Chile performs well in economies good and bad: in 2009, when imported wines in the U.S. were down 1%, Chilean wines grew 16%—one of the only countries to show growth in the U.S. Chilean wines also increased in 2010 (source: The Gomberg-Fredrikson Report).

The image of Chile as a go-to region for simple, mass-market value wine is no longer a reflection of reality, as the number of ambitious, complex wines from boutique producers continues to grow, and large established producers raise their game. For good reason, Chile has captured the imagination of the American wine drinker. In fact, sommeliers and retailers who are not giving these wines enough space on wine lists and retail shelves are simply leaving money on the table.

The Road from Mass to Quality
What seems like overnight success has been a long time in the making. Few realize that Chile is one of the oldest continually producing wine regions in the Americas. The Spaniards started making wine in Chile in the 16th century, and the commercial industry took off in the late 1800s with the introduction of French vines and techniques. Yet, vintners focused on bulk wines for nearly two centuries, and Chile was happy to consume most of its own production.

The tide turned in the late 1980s as vintners from abroad (as well as a few quality-minded, ambitious natives, like Aurelio Montes) began to recognize Chile’s potential. Miguel Torres, Baron Philippe de Rothschild, the Marnier-Lapostolles, Antinori and Robert Mondavi among others began investing in Chile and/or partnering with local wineries (there are currently more than 20 such international joint-ventures). A handful of legendary wines—many of them high-priced blends—helped spearhead the country’s quality revolution, and by the early 1990s, Chile’s profound transformation was underway. Today, Chile exports 70% of the wine it produces.

The Mixed Blessing of Diversity
It’s not difficult to understand what lured the legions of foreigners. Chile possesses that winning combination of geography, climate and soil that makes vintners all over the world green with envy. Wedged between the Andes Mountains to the east and the Pacific Coast on the west, Chile is a narrow strip of a country, roughly 3,000 miles long with an average width of approximately 100 miles. Its wine regions are blessed with cool nights and warm days, and its geographic barriers have protected its vines from the devastation of phylloxera.

Chile excels with scores of grapes and wine styles across its 14 distinct wine regions. The nation’s northern Atacama Desert is one of the hottest places on earth while Chile’s southern tip is the frozen, Patagonian ice cap. Its middle spans many micro-climates and Chilean wines reflect this diversity. Chile’s Central Valley with its famous regions of Maipo, the Curicó Valley and the Rapel Valley (which includes the Colchagua Valley and Cachapoal Valley) have fueled the nation’s international success and prestige, but now winemakers are venturing into cool-climate winemaking in regions like Leyda, Casablanca, Limarí, San Antonio and Elquí where Pinot Noir, Syrah and white grapes thrive. If there’s a hidden cost to being good at everything, it’s that Chile lacks one defining wine (the way, say, Malbec has become synonymous with Argentina).

The country’s major quality hurdles, believes Master Sommelier Fred Dexheimer, can be chalked up to a savvier region-by-region approach to viticulture: “Chile has cracked the code on where to plant. It took the better part of 20 years to figure it out, but the work has been done and vintners know where to plant each variety to get it ripe (Carmenère) or to retain great crispness and acidity (Chardonnay, Pinot Noir and Sauvignon Blanc). Because the grape quality is so much better, winemakers are backing off the oak and letting the fruit speak for itself. They are also experimenting with new varieties—like Grenache, Cabernet Franc and Carignan in the interior—which are starting to thrive.”

Moving Beyond the Value Stigma
As wines improve up and down the price spectrum, Chile’s challenge is to shed its value-only image by generating interest in top-tier bottlings. “Chile had become a victim of its own success. They followed the Australian model and marketed their lower tier wines with great results,” says Ed Chan, wine director at Fourth Wall Restaurants, which just opened Hurricane Club, where the wine list emphasizes Chile with many premium offerings. “Once you are ingrained in consumers’ minds in a particular price category, especially those in the lower end of the spectrum, it is hard work to alter their impressions.”

Dexheimer believes this battle must be fought on-premise. As an educator for Wines of Chile, Dexheimer focuses on winning over sommeliers, many of whom are skeptical or outright dismiss Chile: “When I taste sommeliers on the wines of Chile, the number one response I get is that they had no idea these wines were so good. That was my first response when I discovered them.” Chilean wineries present hard-to-beat value at their reserve tiers—sometimes only $5 or $6 above their mid-range wines, stresses Dexheimer: “Most wineries’ Estate Reserve tier offers a spectacular bump in quality that you won’t find elsewhere for the price.”

At every price point, Chilean wines are competitive with regional wines from Europe and Australia, believes Chan. “Compared to domestic wines, they are definitely a better value,” he adds. “The fact that one study on American consumers revealed that Chilean wines have a low level of penetration in the premium on-trade segment is a huge positive,” because of how much potential for growth they have in this channel. Chan continues, “From a sommelier’s perspective, I am seeing a greater familiarity with high-end Chilean brands, and with greater familiarity, hopefully more placements and exposure to the public.” Chan’s approach in his restaurants is to focus exclusively on the premium offerings in order to upend consumers’ perceptions of Chile as low-end. “Staff training is extremely important because we need to explain to our guests why the $65 bottle of Chilean red we are recommending is better than the $15 bottle they bought from Trader Joe’s,” he says.

In a Stonebridge Research Group Report on American consumers of Chilean wines, two key barriers to trying Chilean surfaced: Insufficient opportunities to taste them, and an absence or limited selection of Chilean wines in restaurants and at retail (over 60% said they would drink more Chilean wine if they had more opportunities). Dexheimer encourages restaurants to give Chilean wines a major presence on by-the-glass as well as in the $40 to $60 list range.

Secret Weapon: Social Media
Chile has managed to do what every wine region dreams of: attract the coveted Millennial consumer group. When it comes to wine consumption, Millennials are defined as curious and adventurous, and drink 40% of their wine consumption in imports (compared to 25% for the total population). “Younger drinkers like new, exotic things and Chile seems to fit that profile for Millennials,” reports Chan. “In addition, the wines are fruit-forward and bold with moderate tannins which are all characteristics that resonate with younger drinkers’ palates.”

A big key to communicating with this group has been Wines of Chile USA’s phenomenal success with Twitter, Facebook and blog posts. Wines of Chile boasts 6,000 Facebook fans and 12,000 Twitter followers, which is double most other country’s organizational sites. Twice a year, Wines of Chile hosts virtual tastings with eight winemakers in Chile and over 50 wine bloggers. There are also monthly events across the country and a growing number of opportunities for consumers to taste.

Where to Now?
Considering that the world’s third most powerful earthquake, which struck in February 2010 and caused millions of dollars of damage, did little to slow Chile’s wine industry down, it’s hard to envision anything that could stop the country’s momentum. Chilean vintners have a laser-like focus on the future with ambitious plans for expansion and quality improvements.

Vintners plan to further capitalize on the booming interest in organic wines: Chile’s near organic natural growing conditions (few bugs, no rain during harvest, dry air) enables vineyards to more easily attain organic certification. The industry has also embarked upon a significant sustainable movement, The Wines of Chile Sustainability Program, which is intended to shift wineries towards production methods that are “environmentally friendly, socially equitable, and economically viable.”

Wines of Chile has stated that their objective is for the country “to become the number one producer of premium, sustainable and diverse wines of the New World by 2020, and increasing the value of bottled wine exports over the course of the decade to $3 billion.”

Aggressive export strategies and sophisticated marketing programs only do so much—it is Chile’s wines that are leading the way. “Americans will continue to drink more and more of these wines,” says Dexheimer. “There is simply too much great wine coming out of Chile for people not to recognize it.”

Varietal Focus
SAUVIGNON BLANC: Chile’s Fastest-Growing Wine
Three-quarters of Chile’s production may be red, but the fastest-growing grape here is Sauvignon Blanc, up 16% through November 2010. The growth has everything to do with location, as vintners plant Sauvignon Blanc in cool climate vineyards in Casablanca, Limarí, San Antonia and its subregion Leyda. Although many of these areas are relatively new—most were planted within the last 20 years—they have quickly transformed Chile into one of the world’s best sources for crisp, zesty, mineral-laden Sauvignon Blanc with an unmatched quality-to-price ratio. According to Dexheimer, they have “all the citrus and grass flavors of New Zealand examples with great minerality like those from France—they offer the maximum you can get from an unoaked white.”

CARMENÈRE: Chile’s Signature Grape Finds Sure Footing
Chile’s fastest-growing red is also its most unique: Carmenère is a largely forgotten Bordeaux grape that was mistaken for Merlot for years, yet is finally coming into its own. A better understanding of how to ripen Carmenère combined with an increase in vintners who are taking it seriously in the winery helped boost Carmenère sales 16% last year. Historically, most wineries used the grape only in blends, but producers are letting the grape go it alone in wines across the price spectrum. Carmenère performs particularly well in the warm Colchagua Valley, as well as in Rapel’s Cachapoal zone.

SYRAH: Chile’s Next Great Red
While the American Syrah category continues to suffer, the grape in Chile is generating tremendous buzz. “Chile has taken to Syrah like few other places, and there is tremendous diversity in styles,” reports Dexheimer. Peppery and floral from cool climate regions and full-bodied and juicy from warmer inland areas, Syrah is a relative newcomer to Chile and has quickly shown great promise. “I’m seeing a lot of younger consumers gravitating to Côtes du Rhône and Languedoc wines and I think Chilean Syrah can be nicely positioned in that mix,” believes Dexheimer. It tends to show its greatest potential thus far in Limarí, Casablanca and Elqui and with new plantings on target to mature in the next few years, many see it poised to become one of Chile’s most important reds.

CABERNET SAUVIGNON: The King of Red Wines
Chile earned its reputation as the “Bordeaux of South America” thanks to its success with Cabernet. The varietal put Chile on the world stage, fetched its highest scores and praise and remains the basis of most top-tier bottlings. Not to mention, it’s still growing. The grape thrives throughout the warm inland Central Valley and its five main subregions: Maipo, Cachapoal, Colchagua, Curicó and Maule.

CHARDONNAY: Better and Brighter than Ever
Much like with Sauvignon Blanc, vintners now know which regions are best for Chardonnay and the resulting wines have never been tastier. Historically criticized for being flabby, hot and over-oaked, an increasing number today are zippy and fresh. The long coastal stretch of Casablanca has emerged as a premier region for the grape, and Chardonnay imports to the U.S. have risen 9% over the last year.


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