Mister
The Chilean wine industry: new international strategies for 2020
Christian Felzensztein
Christian Felzensztein is a Professor of International Marketing in the School of Business at Universidad Adolfo Ibanez, Santiago, Chile.
1. Introduction
The Chilean wine industry has undergone numerous and profound transformations over the past 30 years – its quality revolution led by the complete technological renovation during the 1980s, the export boom of the 1990s, and the new terroir developments during the 2000 decade. This transformation has allowed a new generation of talented viticulturists and winemakers to capitalize on Chile’s viticultural paradise and to produce World Class Wines of unique character and personality. Chile is the world’s eighth largest wine producer and the fifth largest exporter, reaching a market share of 8 per cent by volume of the global international wine market at the close of 2010. However, and most importantly, Chile exports 70 per cent of its wine production, making it the world’s most globalized wine industry, with great flexibility, innovation and a long-term commitment to quality and service second to none. With 150 destination countries and 1.5 billion consumers per year, Chilean wines are positioned as the country’s most emblematic and best known world ambassador. Despite this undeniable success, Chilean wines face very high levels of competition in the different world markets from many appellations and brands, and its average prices are substantially lower than those of its competitors. As a consequence, the industry’s present profitability levels are low, and there is an urgent need to elevate the premium positioning and average prices to achieve a sustainable return in the long term. Making decisive progress toward positioning Chile as a world-class appellation for the production of premium and superior wines, gaining additional image and value is the only possible response to the competitive challenges the industry face today.
Christian Felzensztein
Christian Felzensztein is a Professor of International Marketing in the School of Business at Universidad Adolfo Ibanez, Santiago, Chile.
1. Introduction
The Chilean wine industry has undergone numerous and profound transformations over the past 30 years – its quality revolution led by the complete technological renovation during the 1980s, the export boom of the 1990s, and the new terroir developments during the 2000 decade. This transformation has allowed a new generation of talented viticulturists and winemakers to capitalize on Chile’s viticultural paradise and to produce World Class Wines of unique character and personality. Chile is the world’s eighth largest wine producer and the fifth largest exporter, reaching a market share of 8 per cent by volume of the global international wine market at the close of 2010. However, and most importantly, Chile exports 70 per cent of its wine production, making it the world’s most globalized wine industry, with great flexibility, innovation and a long-term commitment to quality and service second to none. With 150 destination countries and 1.5 billion consumers per year, Chilean wines are positioned as the country’s most emblematic and best known world ambassador. Despite this undeniable success, Chilean wines face very high levels of competition in the different world markets from many appellations and brands, and its average prices are substantially lower than those of its competitors. As a consequence, the industry’s present profitability levels are low, and there is an urgent need to elevate the premium positioning and average prices to achieve a sustainable return in the long term. Making decisive progress toward positioning Chile as a world-class appellation for the production of premium and superior wines, gaining additional image and value is the only possible response to the competitive challenges the industry face today.
References: Felzensztein, C. and Dinnie, K. (2005), ‘‘The effects of country origin on UK consumers perception of imported wine’’, Journal of Food Products Marketing, Vol. 11 No. 4, pp. 109-17. Felzensztein, C., Hibbert, S. and Vong, G. (2004), ‘‘Is the country of origin the fifth element in the marketing mix of imported wine’’, Journal of Food Products Marketing, Vol. 10 No. 4, pp. 73-84. Felzensztein, C., Echecopar, G. and Deans, K. (2011), ‘‘Marketing strategy, innovation and externalities: the case of the Chilean wine cluster’’, Journal of Business & Industrial Marketing (forthcoming). Wines of Chile (2010), Several industry reports. Corresponding author Christian Felzensztein can be contacted at: c.felzensztein@uai.cl PAGE 12 EMERALD EMERGING MARKETS CASE STUDIES VOL. 1 NO. 1 2011 j j