Globalisation strategies of Chilean wine exporters David E.

Hojman University of Liverpool Management School

Abstract Chilean wine exports are booming. But not all wineries are equally successful. Quality production may be easier to get right, as compared with international marketing and distribution. The best export results reflect innovation, award winning at international competitions, opportunities offered by large supermarkets and other distribution channels, good relations with the specialist press, and embracing organic production and if possible wine tourism. Failures of some very small wineries may be inevitable. Inability or unwillingness to face dramatic changes in the industry and international markets, leading to poor handling of expert winemakers, may be behind some big winery failures.

Keywords Globalisation, Exports, Innovation, Knowledge workers, International wine competitions, Chile

I.Introduction This paper examines the determinants of success of individual Chilean firms in the international wine market. Chilean wine exports are booming, but individual winery performances are uneven. Globalisation offers unique opportunities to Chilean (and other) wine producers. The promises and challenges to the wine industry presented by globalisation have been discussed by several authors. Cusmano et al (2010) examine innovation strategies and institutions. The roles of networks and cooperation have been emphasised by Bek et al (2007) and Patchell (2008). The importance of place, geographical territory or terroir, which includes both recovering old places and developing new ones, has been highlighted by Overton and Heitger (2008) and Patchell (2008). The role played by country of origin in the buying decisions of wine consumers has been analysed by Felzensztein and Dinnie (2005). Some wineries have opted for the slow but eventually rewarding process of reputation building (Macchiavello, 2010). Campbell and Guibert (2006) are particularly interested in how Old World (France, Italy, Spain) producers are responding to New World (the Americas, Australia and New Zealand, South Africa) expansion. According to Remaud and Couderc (2006), the differences in business practices between Old and New World wineries are affected by differences in products and owner-manager goals. The largest wine producers are now international and have developed sophisticated financial strategies to minimise costs and risks and maximise liquidity and capital returns (Coelho and Rastoin, 2006). Tipples (2008) has addressed the demands and pressures derived from a winerys need to have its wine sold by the larger supermarket chains in consumer countries. Ethical concerns have been discussed by Bek et al (2007).
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The Chilean wine boom, which started in the early 1990s, may be described by many aggregate indicators, all of them impressive (Richards, 2006; Decanter, 2009a; Cusmano et al, 2010; Sanchez et al, 2010; Tapia, 2011). For example, the area planted with grapes for wine production more than doubled between 1994 and 2002. The volume of Chilean wine produced increased by a factor of eight, to 360 million litres, between 1990 and 2002. The value of Chilean wine production rose to over one billion US dollars in 2007, three times its value just eleven years before. As to Chilean wine exports, they increased by 95 percent between 2003 and 2009, or by 75,000 (seventy five thousand!) percent between 1988 and 2008. Chilean wine exports climbed from less than 3 percent of wine production in the late 1970s, to over 85 percent in 2005-2007. To be included among the top ten Chilean wine exporters, a winery in 2004 had to export over USD 16 million, but the threshold had risen to USD 22 million by 2007, and to USD 30 million by 2009. This Chilean wine industry expansion is all the more remarkable since it took place in the context of a stagnant or very slowly growing world market. However, not all Chilean wineries have been equally fast or effective when identifying the promises or meeting the challenges of globalisation. It would be a mistake to assume that all Chilean wineries have been profitable during this boom period, or are profitable today. Some (and not always the very small ones) went out of business, or were taken over or sold, or felt forced to attempt to improve their results by adopting increasingly desperate measures, or just disappeared. The success of Chilean wine is the success of some, or even many individual companies, but not of all of them. This paper explores the conditions that made, or make, some individual Chilean wineries successful, and others not.

The aggregate picture is one of very favourable natural and man-made conditions: good and diverse soils and climates, stable macroeconomic rules, a mature political economy, cheap land and labour, foreign investment, a moderate amount of government support, and highly skilled local experts. But substantial heterogeneity exists among wineries. There is no such thing as a typical winery. Over 300 wineries are registered for export purposes, exporting on average about USD 4 million per year. However, the largest company exports more than 20 percent of the total, and the top ten exporters, slightly over 50 percent. The structure of supply keeps changing at a fast rate, but there is no clear, unequivocal trend towards further firm concentration or consolidation. This paper examines the globalisation strategies of Chilean wineries. We divide these strategies according to whether they were designed and implemented to face production challenges, or international marketing and distribution challenges. The paper looks first at patterns of new winery creation. Then we discuss innovation in production, and how it is reflected in factors such as vine plantings in new locations, new grape varieties and new blends, higher prices, better quality, and scale economies. Not everything is new. Sometimes the old is being creatively reinvented, including the pais grape variety and long lost grapevine plantings in unusual places. Then the key role played by the winemaking experts or oenologists is examined. The question of winery size is addressed in connection with concentration in the market for Chilean wine exports. We look at participation in international competitions, selling in supermarkets and other retailers in the consumer countries, wine tourism, and organic wine. The last section concludes. The research used secondary sources, interviews, and quantitative methods. It started with an extensive consultation of secondary sources, including a
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comprehensive review of winery websites. Semi-structured interviews were conducted with representatives of six wineries and with other key informants. Quantitative methods included the compilation of a 400-winemaker database and a 180-winery database. Statistical tests and multiple regression exercises were performed. II.The production challenges II.1.New winery creation Geographical, macroeconomic, political economy, and human capital conditions are all favourable to Chilean wine production (international conditions will be discussed in following sections). It would be surprising if new wineries were not being created in Chile all the time. The fact is that they are. The Chilean wine industry is over 400 years old (Del Pozo, 1998), but most companies are new. Out of 129 wineries studied by Richards (2006), 77 were established in the 1990s or more recently. A common pattern is that of a large group, conglomerate, diversified family business, or highly successful entrepreneur, without previous activities in the wine industry, deciding to go into wine. Either they use their own financial resources or have solid financial backing. All they need is to hire a good oenologist or maybe a team of them, which should not be difficult because not only good wages will be paid, but this is a wonderful opportunity for professional development. The total investment could amount on average to about USD 3 million (Kunc and Bas, 2009), which would be used, among other purposes, to buy 100 hectares of land (or much less or much more, depending on where the land is, and on whether it is already

planted with vines or not). Some of the most successful new wineries in Chile today have been created following this model. In a second pattern the initiative starts with a winemaker, or two or more who wish to work together. In this case getting financial support is more difficult but not impossible. It may be easier to find a venture capitalist who wants to become a partner, than borrow from a bank. A bank may be reluctant to lend, unless against collateral or the winemaker is highly experienced and prestigious. New wineries formed in this manner are likely to be smaller, but wine quality could be equally good or better. Some very small projects (garage wineries) may be of surprisingly high quality. The third pattern is that of a grape growing farmer who has been selling his grapes for a long time to a winery, but now he has decided to make and bottle his own wine. He already has some assets and know-how, and therefore is almost halfway there. Depending on where the finance for this new attempt at vertical integration comes from, this model becomes similar to either pattern one or pattern two. Pattern number four is foreign direct investment. Often, but not always, it takes the form of a joint venture between a foreign investor (or oenologist) and a Chilean partner. In theory, the foreign investor may bring innovative production techniques and its international distribution network. This model is often, but not always, successful. Some well-known international names which went to Chile since 1979 (when the first international investor, Miguel Torres, arrived) are Antinori, Bodegas y Bebidas, Dassault, Franciscan Vineyards, Guelbenzu, Kendall Jackson, Lafite-Rothschild, Lurton, Marnier-Lapostolle, Massenez, Mildara Blass, Mondavi,

Mouton-Rothschild, Pernod Ricard, and Sogrape (Vergara, 2001; Siler, 2007, www.vendimia.cl). II.2.Innovation in production Innovation in Chilean wine production comes in many different forms. It includes new plantings in coastal areas and up the first slopes of the Andes, far away north (Elqui) and south (Bio-Bio, Itata and Malleco), and experimenting to achieve the perfect match between grape variety and locality. Temperaturecontrolled stainless steel tanks, French and American oak barrels, screwtops and environmentally-friendly bottles are being used. New wines are being made by new and old wineries. New grape varieties and new blends featuring these varieties are being introduced. Among grape varieties now being used in Chilean winemaking, the Guia de Vinos de Chile 2010 mentions cabernet franc, carignan, gewrztraminer, lacrima christi, malbec, mourvedre, nebbiolo, pedro jimenez, petit verdot, pinot grigio, pinot noir, riesling, sangiovese, sauvignon gris, syrah, tempranillo and viognier (Sanchez et al, 2010). In 2001, about 400 wines were offered in the Chilean domestic market, of which 80 were single grape new varieties and 10 were nontraditional blends (the only traditional red blend was cabernet sauvignon merlot). By 2006, the number of wines in the domestic market had increased to 700, of which 230 were single grape new varieties and 80 were non-traditional blends. Four years later, by 2010, the number of wines offered in the domestic market had doubled to 1,400. Higher international prices of Chilean wines are reflecting both better quality, and international recognition of these quality improvements. For example, top recommendations were given by the British magazine Decanter to a Chilean syrah

retailing at GBP 40 (forty British pounds) and a Chilean cabernet sauvignon retailing at GBP 30 (Decanter, 2009b, 2010a). Success in international markets has led to substantial scale economies. About 160,000 cases were made of the Palo Alto Reserva 2006 Maule, a cabernet sauvignon carmenere syrah blend, retailing at GBP 8, which was given 85 points (out of 100) by the US magazine Wine Spectator. On the other hand, only 175 cases were made of the much more prestigious and expensive Cono Sur Ocio Pinot Noir 2006 Casablanca, which retailed at GBP 25 and was given 90 points by Wine Spectator. Both Palo Alto and Cono Sur are subsidiary companies in the Concha y Toro group. Ocio, which has won prizes at many international competitions, may have been part of a silver bullet strategy (suggesting high quality in your inexpensive wines, by winning awards with your top wines, Van Agtmael, 2007; Deshpande et al, 2010). The carmenere grape variety, originally French and believed to be long extinct everywhere, was rediscovered in Chile in the mid 1990s (Pszczolkowski, 2004; Richards, 2006). Some have suggested making it Chiles flagship variety. Table 1 shows all the new luxury wines, that is, retailing at USD 50 or more, made from carmenere in 2011, either as a 100 percent varietal, or as part of a blend. The total number of wines in Table 1 is large, 28 (there are also other luxury wines in Chile which are not made from carmenere). Out of these 28 wines, most of them are blends (21). Only two of these blends are with cabernet sauvignon. The rest are all more creative combinations. Ten wines in the table are made by one of the top ten exporters or an associated company. Six are made by a foreign investor or with significant foreign participation. Two (Almaviva and Altair) are made by a top ten exporter in partnership with a foreign investor. The remaining wines in Table 1, all 14 of them, are made by small or medium-size companies, with little or no foreign
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involvement. It is not necessary to be a giant, or foreign, to make these expensive and highly innovative wines. At least one of these producers (Antiyal) is a garage winery. Several of them exported less than USD 1 million in 2004. Another exciting form of innovation in Chilean wine refers to the rediscovery and rehabilitation of the pais grape variety. The pais grape was taken to Chile by the Spanish Conquistadores in the XVI century. Connoisseurs have always considered it of inferior quality, especially after Chilean wine producers started importing the traditional French varieties (cabernet sauvignon, merlot, sauvignon blanc, chardonnay) in the XIX century. However, in recent years the French winemaker Louis-Antoine Luyt has started using pais, on its own or in blends, to make modern wines in Cauquenes, in the coastal end of the Maule Valley, about 300 kilometres south of Chiles capital city Santiago. These pais-based Luyt wines have been very favourably reviewed (Tapia, 2011). The Spanish winemaker and entrepreneur Miguel Torres, who started innovation in wine in Chile back in 1979, is also using the pais variety to make a new sparkling rose wine. II.3.The winemaker or oenologist Although sometimes a good wine can be made by accident, this would be an exception, not the rule. Typically, good wines are made deliberately, by people who know what they are doing. In Chile, practically every good wine is made by a qualified winemaker or oenologist, who has a university degree, a postgraduate qualification and work experience abroad (sometimes in both Europe and New World wine producing countries), and who has passed a professional association examination. Winemakers are knowledge workers. However, until recently some Chilean wineries were reluctant to admit that their winemakers were playing that

essential role. Traditionally, relations between management and labour in Chilean agriculture have been paternalistic or authoritarian (Del Pozo, 1998). The winemaker was often seen as no different from other rural workers. In the 1980s and 1990s, relations between some wineries and their oenologists deteriorated. As wine production increased, so did the demand for winemakers. About 600 oenologists were active in Chile, with some foreign and Chilean professionals entering and leaving the country every year, and a new cohort of less than 50 graduating from several universities. Most oenologists were young. Many were women. Some wineries failed to increase their oenologists wages to the equilibrium rates. Refusing to admit the essential contribution made by the winemaker was also part of this negative attitude. Admitting this contribution publicly would have made the oenologist more attractive to other potential employers. Unhappy winemakers responded by changing jobs more often (Echecopar et al, 2004; Hojman, 2006a; Richards, 2006; Ross, 2006). Some of the most experienced and senior winemakers became consultants or independent entrepreneurs. Other wineries felt compelled to agree explicitly, at the time of hiring a winemaker, to allow him or her to make his or her own wine, using own resources or resources from a third party, in parallel to working as an employee for the winery. The most dynamic and enlightened Chilean wineries often did everything they could to give their oenologists the best development opportunities. But other wineries went as far as portraying their own winemakers as the enemy, as the following real-life statements suggest: Let us give the consumer what he wants to drink, not what our oenologist knows how to make (www.vendimia.cl).

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I have been hired to make sure that every square metre of our plantations contributes as much as possible to profits, rather than using it according to what our winemaker thinks will give the best quality (Drysdale, 2006). No matter how good you are, in this company the only way of being promoted is to marry the owners daughter (www.vendimia.cl). The picture is further complicated by three other factors (Hojman, 2006a). First, a good winemaker naturally wishes to make wine as good as he or she possibly could. This is part of a knowledge workers lifelong learning and professional development. But some employers may prefer to compromise on quality in order to increase profits. Second, a winemaker working in a local job would naturally talk to his or her neighbour, who happens to be another winemaker working for another firm. Informal chats may lead to knowledge exchanges, which the two oenologists welcome but the respective employers may interpret as lack of loyalty and disclosing company secrets. Third, many wineries may not be large enough to be able to offer their winemakers the experience of working with as many different soils, climates, grape varieties, production methods and techniques, and colleagues, as the oenologist would wish for purposes of professional development. This forces the winemaker to change jobs from time to time, again exposing himself or herself to suspicions of disloyalty and revealing corporate secrets. Only a very large winery, with diversified production activities in every region, would be immune to this difficulty. Not all of these problems are unique to Chile (Beverland and Lockshin, 2001), but they may be more serious for some wineries in Chile for historical and cultural reasons (Del Pozo, 1998; Hojman, 2002, 2006b). Empirical evidence suggests that better motivated winemakers may make positive contributions, both to Chilean award performance at international competitions, and
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to export growth (Hojman, 2007). Of the three wineries portrayed by Drysdale (2006) in her article on harmony between viticulturalist and oenologist, in only one, market leader Concha y Toro, has this relationship evolved harmoniously. The second winery lost its winemaker, who now works for another winery which allows him to make his own wine in parallel to his daytime job as winery employee (Tapia, 2011). The third winery went through a boardroom coup in which its founder family lost control (www.vendimia.cl). III.The international marketing and distribution challenges III.1.Market concentration It is not clear whether the current level of concentration in Chilean wine exports represents a particular type of equilibrium, or whether it is moving in any particular direction. Over the long term, the top exporters may have been losing ground. In 1980, 15 wineries were exporting 91 percent of the total (Echecopar et al, 2004). In 2003-2004, the top 15 wineries were exporting only 64 percent of the total (bottled wine only, see Tables 2 and 3). A slight increase in concentration may have taken place between 2003 and 2009 (see Table 2). However, the increase in export market share of the top ten exporters (from 50 to 52 percent) is entirely due to the growth in market share of the export market leader, Concha y Toro (from 19 to 21 percent). This suggests that, as a group, the top eight exporters (excluding both Concha y Toro and Maipo, for which 2003 data are not available) possibly did not enjoy or benefit from any scale economies in their exports, or in their international marketing and distribution, as compared with the rest of exporters. The improvement in Concha y Toros market share could be caused entirely by more successful marketing techniques (see Table 4). Of course, the same would apply to

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the rather substantial redistribution of market shares among the rest of the top ten during the 2003-2009 period. Ventisquero, LF Edwards, Cono Sur, Montes and Concha y Toro, in that order, increased their market shares at the expense of the rest of the top ten (or nine if we leave Maipo out). No discontinuity seems to be present between the top ten and, say, the following ten, or the following twenty, thirty, or anything else. The differences in export value between any winery and the next one in the ranking are small and smooth (Vial, 2005). This continuity only breaks down at the very top of the table, between positions one and two (or three) and to a lesser extent between positions two (or three) and four, and between four and five. After that the ranking is very smooth (see Tables 2 and 3). Positions 11 to 19 are presented in Table 3. Comparisons between these tables must be careful, since growth in Table 2 refers to the six-year period 2003-2009, whereas growth in Table 3 refers to the four-year period 2003-2007. Among wineries in Table 3, both Lapostolle and Montgras grew at faster rates than Montes in Table 2 (and faster than all the others which were growing more slowly than Montes). For some aspects of individual winery identity and international marketing initiatives by individual wineries, and their possible effects, see Tables 4 and 5. III.2.Participation in international wine competitions Regardless of how good a wine may be, quality by itself is useless in the absence of international recognition. This is one of the reasons why wineries participate in prestigious international competitions (Beverland and Lockshin, 2001; Orth and Krska, 2002). Participation by Chilean wineries is expensive. Sometimes it may cost a winery as much as USD 20,000 (www.vendimia.cl). Who wins awards

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and why, or how, needs a complex explanation. An econometric study of the determinants of award winning by Chilean wineries in Londons 2005 International Wine Challenge (IWC) identified four statistically significant explanatory variables (Hojman, 2007). They are human capital, wine exports, the number of regions of production (or geographical range), and domestic presence (the product of multiplying average domestic quality, by the number of wines in the domestic market). The impacts of both human capital and wine exports are positive as expected. However, the impact of the geographical production range is negative, and that of domestic presence is non-monotonic, negative for low values of the independent variable, and positive for high values. Chilean wineries may have been trying to produce in far too many different geographical regions, possibly in order to take advantage of some scale or scope economies, but this may have damaged quality and therefore their award-winning abilities. The non-monotonic relationship between domestic presence and IWC award winning suggests that, for many Chilean wineries, domestic growth may generate path dependencies and management inertias which may eventually affect quality and international performance negatively. In the 2009 IWC, 14 Chilean wineries won 17 gold medals for their red wines. Only four of these firms were among the top ten exporters. A small company size is no obstacle to win gold at the IWC. On the contrary (and everything else being the same), maybe it helps. One of the gold winners at the IWC 2009, Botalcura, is remarkable in several ways. It is very small, exporting only slightly over USD 1 million. Its winemaker is both French and a co-owner, making Botalcura a good example of French winemaking skills in Chile, and a joint venture between local and foreign owners. This kind of competition results tends to repeat itself year after year.
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For example, in the IWC 2010, out of 22 gold-winning Chilean wines (both red and white), 12 had been made by the top ten exporters or their associate and subsidiary companies. Then in the IWC 2011, 12 gold medals were won by 12 Chilean red wines, of which only four had been made by one of the top ten exporters or related companies. At least part of the problem of high costs to wineries associated with participating in prestigious international competitions around the world has been successfully addressed by the introduction of the Annual Wines of Chile Awards in 2004. This competition takes place in Chile, but the judges, who are different every year, are selected among the most famous and respected wine experts internationally. The show is organised by Wines of Chile, the trade association formed by the most important Chilean wineries, about ninety of them, and it is possibly one of its most successful initiatives ever. Almost inevitably the visiting judges become enthusiastic advocates and ambassadors for Chilean wine. Interestingly, this competition has highlighted examples of top quality and exciting innovation which would otherwise have remained unknown. Some examples are the Bravado (also known as Garcia Schwaderer) garage wines, or the Falernia / Mayu wine production activities in the Elqui Valley in the north of the country, or the organic and biodynamic blend Coyam from Emiliana (see Table 5). There is no doubt that award winning is in many ways good for the winners international prestige and exports. However, some negative effects may also be present. For example, if a winery which had won an award last year fails to win it again this year, some potential distributors or consumers may jump to the conclusion that quality has fallen (for some econometric evidence of this belief, see Hojman, 2007). Or, as a result of winning, demand may increase much more than the
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winerys output. Or the winery may find itself attached or married to distributors which may be acceptable for as long as no prizes are won, but which unfortunately do not have the superior logistic or managerial abilities to deal with the awardgenerated higher demand. In the UKs Decanter World Wine Awards 2010, the international trophy for the best sauvignon blanc under GBP 10 was won by Chiles Mayu (Mayu Sauvignon Blanc 2009 Elqui) . This wine was, according to the Decanter judges, one of the two best sauvignon blancs in the world, and the best among inexpensive ones (incidentally, the other winner, as the best sauvignon blanc over GBP 10, was also Chilean and also from a small producer, Casa Marin Sauvignon Blanc Cipreses Vineyard 2009 San Antonio). But the competition organisers were unable to give the details of Mayus UK distributor, because at that time the winery did not have one (it has got one now). Thus, so many things may go wrong that it possibly makes sense to talk of a winners curse. III.3.Supermarkets and other international distribution channels A central concern for a potential Chilean wine exporter is how to get its wine sold by the large supermarket chains in the consumer countries. How to get your wine on those shelves? Some important conditions for selection by a supermarket chain are a good quality to price ratio (value for money), and being able to guarantee supply continuity, by delivering large volumes of consistent quality all year round (Tipples, 2008; Macchiavello, 2010). A winery must also be prepared to be flexible on prices, meaning be ready to drop them and meet the following profit squeeze itself. The supermarket chain wants to be able to offer half-price deals, three bottles for the price of two, a free bottle as a reward for buying something else, etc. The winery may also be expected to be prepared to bottle its wine under the supermarkets own label, and be willing to participate in supermarket-organised fairs
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and other events. It also helps the winery to have a wide range of wines, so that the supermarket chain has to deal with only one agency, office or person, rather than with one for each grape variety, brand, region of origin, or price. Other considerations include cork quality (how many angry customers bring their opened bottles back?), shelf life (if the wine is selling slowly, how long before its quality starts deteriorating?), accessibility (just give us a ring anytime, and reverse the charges), or respect for the consumer (this wine is faulty, but let us bottle it anyway). A, one of the largest supermarket chains in the UK, sells Chilean wine from seven firms, six of which are among the top ten exporters, including newcomers Ventisquero and LF Edwards (the range is marginally larger for online sales). The only Chilean wines in supermarkets A which are not from the top ten are Corporas. The situation in supermarkets B is not exactly the same, but very similar. Concentration on the top ten exporters is lower in supermarket chain C, which sells wine from five out of the top ten, and also wine from six other producers, Casa Silva, Cousino Macul, Mayu, Montgras, Morande and Valdivieso. Very much the same applies to D, a British department store, which sells Chilean wine from three of the top ten or their subsidiaries and partner companies, plus wines from other producers such as De Martino, Geo, Haras de Pirque, La Rosa, and Morande. The British wine and spirits chain E sells Chilean wines from most of the top ten exporters, and about ten smaller producers including Casa Marin, De Martino, Koyle, Lapostolle, Matetic, Mayu, Perez Cruz, Undurraga, Valdivieso and Viu Manent. F, a high quality mailorder British wine club, sells Chilean wines from three of the top ten exporters or their subsidiary companies, and wines from five other Chilean firms: De Martino, Los Vascos, Undurraga, Valdivieso and Villard. Among the wineries mentioned in this paragraph (and in addition to Ventisquero and LF Edwards which are in the top ten),
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Corpora, Lapostolle, Montgras, Los Vascos and Undurraga were among the top 20 exporters in 2007. The rest were smaller. All these British retailers, from A to F, rely very heavily on the top ten Chilean exporters. Moreover, given the large roles played both by the British market in Chilean wine exports, and by A in wine sales in the UK, it is possible that the selection by A of Ventisquero and LF Edwards as suppliers of Chilean wine may have been instrumental in these two wineries having joined the top ten by 2009 (see Table 2). It is also reasonable to expect that, for as long as A retains them as suppliers, their position among the top ten will not be under threat. Many other Chilean wineries were exporting similar amounts in 2003 or 2004 (see the Tables), but they failed to increase their exports at rates as fast as the incredibly fast rates shown by Ventisquero and LF Edwards. On the other hand, there is no guarantee that being a top ten exporter makes a winery more profitable. It is perfectly possible that other wineries, applying different business models and strategies, may be more profitable than at least some of the top ten exporters, even if they export less. Market concentration favouring the top ten is much smaller in other European countries. In Finland, for example, consumers can only buy their wines from Alko, the wine retailing government agency. In 2010, Alko sold Chilean wines from 23 mostly small and medium-size wineries, in addition to wines from all ten top exporters (see Table 6). Some of these wineries are of reasonably large size, but others seem to be far too small to be able to either guarantee stable supplies of consistent quality, or offer the sort of dramatic price reductions and other assurances and advantages that British retailers rely on. Possibly Alko stores wines from these small or very small Chilean wineries, in order to offer sufficient diversity to its customers, but this is unlikely to be conventionally profitable. Also, a question
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remains as to why these wineries were chosen, as opposed to others which were not. The most likely answer is that Alko buyers made their choices on taste, perceived quality and value for money grounds, as opposed to being influenced excessively by the marketing efforts of Chilean producers. Interestingly, innovation was not a key selection criterion. Only five of these 23 mostly small and mediumsize exporters are listed in Table 1 among wineries making highly innovative and expensive (USD 50 plus a bottle) carmenere-based wines. They are Casa Silva, Chateau Los Boldos, La Rosa, Morande and Undurraga. III.4.Wine tourism, organic wine, externalities A particular form of international marketing which is only possible for some Chilean wineries is the use of wine tourism as relationship marketing (Hojman and Hunter-Jones, forthcoming). This requires not only very good quality winemaking, international recognition and a strong international distribution network, but also exceptional tourist facilities at the winery itself. The best example is likely to be Lapostolle (Politzer, 2005; www.vendimia.cl), located in Apalta in the Colchagua Valley (the US magazine Wine Enthusiasts Wine Region of the Year in 2005), and makers of Clos Apalta (the 2005 one was the US magazine Wine Spectators Wine of the Year in 2008). Clos Apalta retails at about USD 75 per bottle in international markets. Lapostolles reasoning is that anyone who likes Clos Apalta so much to pay USD 75 per bottle (60,000 bottles are sold around the world every year), is likely to wish to visit the Apalta winery, if he or she happens to be in Chile. That consumer is likely to expect top quality tourist facilities. Accordingly, Lapostolle built such facilities in 2006, not to make money out of them, but with the explicit aim of raising the companys profile and help with the sale of its wine around the world. Inspired by Lapostolle, other Chilean wineries are successfully trying to adapt this wine-tourism19

as-relationship-marketing model to their own specific characteristics. On the other hand, some Chilean wineries with poor records of quality production, international recognition or effective international distribution are also trying wine tourism, but, in the absence of other measures, this is unlikely to help the winery to survive. In most regions and individual cases, application of the wine-tourism-as-survival model would need to be heavily subsidised, and possibly it would be expensive, inefficient, and alien to Chiles political economy and culture (Hojman, 2002, 2006b). Just a few years ago, organic production was looked at with suspicion by many consumers. Non-organic produce was preferred because it was thought that organic production required quality sacrifices. Some Chilean wineries which used organic methods would not tell anyone about it (Cederberg et al, 2009). Today the picture may be precisely the opposite. International opinion is increasingly concerned with the environment, and international demand for wine has been affected accordingly. Going organic and biodynamic may be now potentially the most profitable option for many wineries (Rose, 2011). These methods have already been pioneered in Chile by expert winemakers such as Alvaro Espinoza in wineries including Antiyal and Emiliana, with extremely good results (see Table 5). Chile may have very favourable conditions to introduce organic and biodynamic winemaking. Two questions that remain to be addressed are, first, do the top Chilean wine exporters generate international marketing externalities for the rest of Chilean wine exporters or potential exporters, and, second, if yes, are these externalities positive or negative? (Macchiavello, 2010). For example, if a European consumer buys a bottle of Concha y Toro for the first time, and likes it, is he or she more likely to buy Concha y Toro again the next time, or to try another Chilean wine? What about his or her third, fourth, etc, purchases? Should a smaller Chilean exporter which is
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trying to sell its wine for the first time in a European market in which Concha y Toro is already present, see Concha y Toro as an informal strategic partner, or as the competition? IV.Back to the domestic market? The role played by the Chilean domestic market in the process of internationalisation of Chilean wine deserves a separate discussion. In other wine producing countries, strong domestic demand represented a powerful incentive to production. In New Zealand during the early stages of development of the quality wine industry, before they went searching for new markets abroad, wine producers could sell at home, without any difficulty, as much wine as they were able to make (Beverland and Lindgren, 2004). In Chile it was very different. For many decades during the XX century, both production and domestic consumption of wine had been falling (Del Pozo, 1998). Production was officially discouraged by successive governments, as wine was associated with alcoholism. Consumers increasingly tended to prefer beer or soft drinks to wine. Domestic consumption of wine fell from about 60 litres per capita in the 1960s, to 15 litres in the 1990s (Echecopar et al, 2004). When the renaissance of Chilean wine started in the 1980s and 1990s, its dynamism came almost entirely from exports. Many new producers could only survive by selling abroad (they were forced to be born globals). This was precisely the opposite from what had happened in New Zealand. However, strong domestic demand may now be presenting itself, for the first time, as a source of Chilean quality wine growth. As the economy expands, families disposable incomes also grow. Moreover, a key characteristic of Chilean national culture is that consumers

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are notorious for following foreign fashions (Hojman, 2002, 2006b). Chileans may now be prepared to consume Chilean wine, because they see that foreigners like it. That there seems to be huge potential in the domestic market is confirmed by booming wine sales from local specialist shops in Chilean cities, and by the activities of the Readers Club of the Santiago daily newspaper El Mercurio, which acts as a exclusive wine club for its members. In 2001, only four wines in the domestic market were priced at USD 50-55 or more per bottle. By 2008, 24 wines in the domestic market were priced at USD 70-75 or more. Just two years later, the number had increased to at least 35 wines (Descorchados, several numbers; Guia de Vinos de Chile, several numbers). A healthy domestic market could help Chilean wine producers deal much better with any problems in international markets in the future. However, not all wineries would benefit equally. There would be sharp differences among wineries in terms of individual domestic performance, in the same way as there are important differences today in their individual results abroad. V.Conclusions The globalisation strategies of all the successful Chilean wine exporters included quality production, international recognition, and effective international distribution. During the first decade of the XXI century, the five most successful exporters, according to export growth rate, were Ventisquero, LF Edwards, Cono Sur, Lapostolle and Montgras, in that order (among the top twenty exporters, and not considering three producers for which no data were available). There are interesting differences among these five export leaders. Each of them did it its own way. Four of them (out of five) are relative newcomers, having been established in 1998, 1976,

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1993, 1994, and 1992, respectively. Ventisquero and LF Edwards went for the opportunity of being sold by the large supermarket chains, department stores and wine clubs in the UK, and took advantage of this opportunity. Cono Sur used organic production, bottling under distributors and other labels, new grape varieties, and the prestige and silver bullet effects associated to its own brand and top wine (Ocio Pinot Noir, considered by many the best pinot noir in Chile) and, as Concha y Toros younger sister company, to wines such as the famous Don Melchor. Lapostolles Clos Apalta, made with help from flying consultant Michel Rolland, was already very popular with the specialist press long before the Clos Apalta 2005 was made Wine of the Year by the US magazine Wine Spectator in 2008, and Lapostolle itself was made New World Winery of the Year by the US magazine Wine Enthusiast the same year. Montgras was the subject of a Harvard Business School case study in 2002, the only medium-size Chilean winery ever distinguished in this way. Possibly a number of aspects, such as owners trajectories and award record, made Montgras particularly attractive to the Harvard authors. But on the other hand it is also most likely that the case study itself marked Montgras and affected positively its future development. The success of these five companies (and of many other Chilean wineries), comes a whole generation after the Spanish wine entrepreneur Miguel Torres went to Curico (in 1979) and started his now legendary, and by Chilean standards revolutionary, innovations in wine production. Success in the XXI century would not have happened without Torres. But then, it would not have happened without many other visionary winemakers and entrepreneurs. In that sense, Chilean wineries and winemakers today are standing on the shoulders of giants. It is impossible to name all of them, or to rank them. The success of Chilean wine is the success of
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individuals or individual wineries, many of them small. It is a triumph of entrepreneurship, quite a lot of it small scale entrepreneurship. There was no heavy handed planning and intervention, either from a central government bureaucracy or from local or regional producer associations, with their possibly inevitable sequels of inefficiency, waste, and accommodation of vested interests. Possibly it was good for the Chilean wine industry that there was no forced imposition of a Chile brand, or of artificial regional or valley identities (which at some stage some observers and opinion formers had advocated). How to explain those winery performances which were less successful, or indeed failures? The explanation is different according to winery size. Failure may have been inevitable for some of the very small wineries. They may have not had critical mass, or sufficient financial support to buy the best resources or hire the best oenologists, or to buy time while waiting for their wines to win important awards, or to reach an acceptable deal with a good international distribution network (Macchiavello, 2010). But the situation is completely different for large wineries, especially those with plenty of financial resources. Failure here is explained by either bad luck or bad management, inability to see or unwillingness to face fundamental changes in the domestic industry and the international market, and arrogance. The most glaring example is possibly their cavalier treatment of their own oenologists. Success for any Chilean winery requires quality production, international recognition, and effective international distribution. Good quality production is the easiest part. There is no shortage of potential investors, Chilean or foreign, with USD 3 million or more to spend, and there is no shortage of good winemakers, again Chilean or foreign, who would be tempted to accept this new challenge. Once these
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objectives of quality production and international recognition and distribution have been achieved, the next stage is to aim for further quality improvement, and sort out international recognition and distribution once again. Progress along these lines means higher prices and the possibility of top quality wine tourism. Another dimension of success is to start production abroad, typically in Argentina. Montes and Concha y Toro are already also producing in California. Prospects for the future seem to be much better for quality production, than for international recognition and distribution. Exports are more difficult than production. Innovation in production will continue. More foreign investment will reach Chile and there will be more oenologists. Wineries and winemakers will keep getting better and better. Matches between grape varieties and local conditions will keep improving. Diversity will increase. Chile may, and possibly will, keep improving the quality of its wines all the time, for a very long time, without any major problems. The big questions for the foreseeable future are not about production. The big questions are, first, how to make potential consumers all around the world aware that your wine is both good and good value, and second, how to make sure that, once they have learned that, there is a place nearby where they can buy it.

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References Alko (2010), Sommarprislista, Helsinki. Bek D, McEwan C and Bek K (2007), Ethical trading and socioeconomic transformation: critical reflections on the South African wine industry, Environment and Planning A, 39, pp. 301-319. Beverland M and Lindgreen A (2004), Relationship use and market dynamism: a model of relationship evolution, Journal of Marketing Management, 20, pp. 825-858. Beverland M and Lockshin LS (2001), Organizational life cycles in small New Zealand wineries, Journal of Small Business Management, 39, 4, pp. 354-362. Campbell G and Guibert N (2006), Introduction: Old World strategies against New World competition in a globalising wine industry, British Food Journal, 108, 4, pp. 233-242. Cederberg P, Gustafsson JG, and Martensson A (2009) Potential for organic Chilean wine, Acta Agriculturae Scandinavica, Section B, 59, pp. 19-32. Coelho AM and Rastoin J-L (2006), Financial strategies of multinational firms in the world wine industry: an assessment, Agribusiness, 22, 3, pp. 417-429. Cusmano L, Morrison A, and Rabellotti R (2010), Catching up trajectories in the wine sector: a comparative study of Chile, Italy, and South Africa, World Development, 38, 11, pp. 1588-1602. Decanter (2009a), Chile 2009. Decanter (2009b), Panel Tasting, Chilean Syrah, June, pp. 91-96. Decanter (2010 a), Panel Tasting, Chilean Cabernet Sauvignon, November, pp. 103114. Decanter (2010b), World Wine Awards, October. Decanter (2011), Panel Tasting, Chilean Carmenere, July, pp. 103-109. Del Pozo J (1998), Historia del Vino Chileno, Santiago, Universitaria. Descorchados, several numbers. Deshpande R, Herrero G and Reficco E (2010), Concha y Toro, Harvard Business School, 9-509-018. Drysdale S (2006), El vino, trabajo en equipo, El Mercurio, 16 October.
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Echecopar G, Fetters M and McDermott T (2004), Entrepreneurship, an engine for innovation, www.uai.cl/p4_centros/site/asocfile/ASOCFILE120040427104311.pdf. Felzensztein C and Dinnie K (2005), The effects of country of origin on UK consumers perceptions of imported wines, Journal of Food Products Marketing, 11, 4, pp. 109-117. Guia de Vinos de Chile, several numbers. Hojman DE (2002), The political economy of Chiles fast economic growth: an Olsonian interpretation, Public Choice, 111, 1-2, March, pp. 155-178. Hojman DE (2006a), Network learning and principal-agent conflict: winemakers in Chiles Colchagua Valley, Society and Economy, 28, 2, pp. 97-116. Hojman DE (2006b), Economic development and the evolution of national culture: the case of Chile, in Harrison LE and Berger PL, eds, Developing Cultures: Case Studies, London, Routledge, pp. 267-286. Hojman DE (2007), Who benefits from the knowledge of oenologists? Market failure in the market for winemaking experts when wine exports are booming, KMPro Journal, 4, 1, Spring, pp. 21-35. Hojman DE and Hunter-Jones P (forthcoming), Wine tourism: Chilean wine regions and routes, Journal of Business Research. Kunc M and Bas TG (2009), Innovation in the Chilean wine industry: the impact of foreign direct investments and entrepreneurship on competitiveness, AAWE Working Paper no. 46. Macchiavello R (2010), Development uncorked: reputation acquisition in the new market for Chilean wines in the UK, Warwick University. Orth UR and Krska P (2002), Quality signals in wine marketing: the role of exhibition awards, International Food and Agribusiness Management Review, 4, pp. 385-397. Overton J and Heitger J (2008), Maps, markets and Merlot: the making of an antipodean wine appellation, Journal of Rural Studies, 24, pp. 440-449. Patchell J (2008), Collectivity and differentiation: a tale of two wine territories, Environment and Planning A, 40, pp. 2364-2383. Politzer P (2005), Chile: De que Estamos Hablando?, Santiago, Sudamericana. Pszczolkowski P (2004), La invencion del cv carmenere (vitis vitifera L) en Chile, desde la mirada de uno de sus actores, Universum, 19, 2, pp. 150-165. Remaud H and Couderc J-P (2006), Wine business practices: a new versus old wine world perspective, Agribusiness, 22, 3, pp. 405-416.
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Richards P (2006), The Wines of Chile, London, Mitchell Beazley. Rose A (2011), Alvaro Espinoza, Decanter, June, pp. 70-73. Ross J (2006), Where Angels Thread: The Story of Vina Montes, Santiago, Montes SA. Sanchez F, Sanchez MS, Prieto P, and Prieto R (2010), Guia de Vinos de Chile, Santiago, Edicion Bicentenario. Siler JF (2007), The House of Mondavi, New York, Gotham Books. Spurrier S (2010), Chadwick and Chile: full steam ahead, Decanter, August, p. 19. Tapia P (2011), Descorchados, Santiago, Planeta. Tipples R (2008), Cottesbrooks New Zealand sauvignon blanc wine to Tesco, British Food Journal, 110, 4/5, pp. 444-459. Van Agtmael A (2007), The Emerging Markets Century, London, Simon and Schuster. Vergara S (2001), El mercado vitivinicola mundial y el flujo de inversion extranjera a Chile, Santiago, ECLAC, Serie Desarrollo Productivo, Number 102. Vial P (2005), Cadena de valor de la industria vitivinicola del Valle del Maipo y zonas aledanas, CORFO. Wine Enthusiast, several numbers. Wine Spectator, several numbers. www.vendimia.cl.

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Table 1 Carmenere-related innovation: new carmenere-based luxury wines (USD 50 plus per bottle), blend or 100 percent varietal, 2011 Winery (bottled exports 2004, USD million) Almaviva (1.9) Altair na Antiyal (0.1) Antiyal Lapostolle (11.3) Lapostolle Casa Silva (4.0) Ch Los Boldos (2.6) Concha y Toro (145.7) El Principal (0.2) Errazuriz (20.2) Errazuriz H Araucano na La Rosa (10.0) Montes (17.0) Morande (4.4) Neyen na Pargua (0.1) Perez Cruz (0.7) Perez Cruz Santa Carolina (20.5) Santa Rita (46.4) Sena (1.5) Terra Andina na Undurraga (20.7) Via (3.2) V Puertas na Viu Manent (3.0) na: not available. Sources: Sanchez et al (2010), Decanter (2011), Tapia (2011), winery websites. Wine Blend (B) or all carmenere (C) B (various) B (syrah) B (various) C B (various) B (various) C B (various) C B (cab sauv) B (various) B (various) C B (various) B (p verdot) B (various) B (cab sauv) B (various) B (various) B (various) C C B (various) B (various) B (various) B (c franc) B (various) C

Almaviva 2008 Puente Alto Altair 2006 Cachapoal Antiyal 2008 Maipo Antiyal 2008 Paine Borobo 2007 Rapel Clos Apalta 2008 Colchagua Microterroir Los Lingues 2006 Colchagua Amalia 2008 Cachapoal Carmin 2007 Peumo El Principal 2006 Pirque The Blend 2008 Aconcagua KAI 2008 Aconcagua Alka 2007 Lolol Ossa 6th Generation 2005 Cachapoal Purple Angel 2006 Colchagua House of Morande 2006 Maipo Espiritu de Apalta 2007 Colchagua Pargua 2006 Maipo Liguai 2007 Maipo Quelen 2006 Maipo Herencia 2007 Peumo Pehuen 2007 Colchagua Sena 2007 Aconcagua Suyai 2007 Colchagua Altazor 2007 Maipo Chilcas Las Almas 2009 Maule Parnaso 2005 Curico El Incidente 2007 Colchagua

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Table 2 Chiles top ten wine exporters, 2009, and evolution since 2003 Company Exports, 2003, million USD 110.0 23.2 68.4 37.7 13.7 17.2 3.2 na 16.1 4.4 293.9 a 589.8 19 % 50 % a Exports, 2009, million USD 246.0 75.4 73.3 49.9 32.1 31.4 31.1 30.8 30.1 27.6 627.7 1151.6 21 % 52 % a Growth rate 2003-2009, percent 124 % 225 % 7% 32 % 134 % 83 % 772 % 87 % 427 % 103 % a 95 % Growth 20032009, million USD 136.0 52.2 4.9 12.2 18.4 14.2 27.9 14.0 23.2 303.0 a 561.8

Concha y Toro Cono Sur S Pedro Tarapaca Santa Rita Montes Santa Carolina Ventisquero Maipo Errazuriz LF Edwards Top ten Total CyT / Total Top ten / Total Notes:

Bottled wine only, FOB. Both Cono Sur and Maipo are part of the Concha y Toro group. na: not available a: nine firms only. In the absence of 2003 data, Maipo (which exported USD 5.3 million in 2004) is not included in this calculation. Source: Authors calculation from www.vendimia.cl.

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Table 3 Wine exporter ranking, continued: positions 11 to 19, 2007, and evolution since 2003 Company Exports, 2003, million USD 16.3 na 16.3 15.1 15.3 8.6 na 9.7 7.1 88.4 589.8 15 % Exports, 2007, million USD 22.2 21.8 20.1 19.3 18.1 16.6 16.4 16.2 14.9 127.4 Growth rate 2003-2007, percent 36 % 23 % 28 % 18 % 93 % 67 % 110 % 44 % Growth rate 2003-2007, million USD 5.9 3.8 4.2 2.8 8.0 6.5 7.8 39

Undurraga Via Santa Helena Carmen Emiliana Montgras Corpora Los Vascos Lapostolle Subtotal 11-19 a Total 11-19 / Total Notes:

Bottled wine only, FOB. Santa Helena, Carmen and Emiliana are, respectively, member companies of the San Pedro, Santa Rita, and Concha y Toro groups. Growth in the last two columns refers to the four-year period 2003-2007. This should be borne in mind for comparison purposes with Table 2, in which growth refers to the six-year period 2003-2009. na: not available. a: seven firms only. Via and Corpora are not included. Source: Authors calculation from ChileVid A.G.

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Table 4 The top ten exporters in 2009: some examples of special international marketing efforts, and possible effects Company Specific marketing activities and some possible results

Concha y Toro The largest Chilean exporter (Deshpande et al, 2010). Silver bullet approach (van Agtmael, 2007), joint makers of Almaviva in partnership with Mouton-Rothschild, huge range, excellent international distribution network, sponsorship of Manchester United football club. They aim to hire the best winemakers, and keep them. Their top wine Don Melchor has been twice distinguished by the Wine Spectator magazine as the best in Chile and among the best in the world. UK distribution (via Marks and Spencer) of FairTrade wine Canelo, made by small producers formerly from Cooperative Los Robles. Selling of some wines linked to environment campaigns. Also producing in Argentina and buying large Californian wine company Fetzer Cono Sur Pioneers in new varieties (pinot noir, riesling) and new regions (BioBio), organic. Young and talented winemaking team. Widely available in the UK, sometimes under the distributors own label. This company is part of the Concha y Toro group Errazuriz Organising since 2004 blind tastings of its own top wines (retailing at USD 100 or more per bottle) against French, Tuscan and Californian icons such as Haut-Brion, Lafite-Rothschild, Sassicaia, Opus One and Stags Leap (Richards, 2006; Spurrier, 2010) LF Edwards Successful at getting its wines stored by Marks and Spencer, leading supermarket chains (Asda, Tesco) and leading mail order firms (Sunday Times Wine Club). No distinctive consumer marketing approach, which suggest a particularly effective business-to-business focus Montes Founder Aurelio Montes was possibly the first oenologist to start his own winery (in 1988, now among the top ten Chilean wine exporters), mostly for exports, and make it a big success. Uncompromising search for quality, its top wines retail at USD 100 plus. Pioneer in production techniques, regions, and export effort. Often present in both supermarket (Tesco) and fine wine (London and other Europe) events, but not in every prestigious international competition. Also producing in Argentina and California Ventisquero Spectacularly fast growth, founded in 1998, already among the top ten Chilean wine exporters, export growth of over 700% between 2003 and 2009, available at Tesco and Sainsburys among others. Seems to have very good industrial relations, or at least there is no evidence of winemaker-company conflicts. Gold winner in Londons International Wine Challenge 2011

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Table 5 Small and medium-size wineries: some examples of special international marketing efforts, and possible effects Company Bravado Specific marketing activities and some possible results Husband-and-wife team, very small operation, new (established 2009), winners of best sauvignon blanc and best value white in the Seventh Wines of Chile Awards (2010). Sales in the UK by highly innovative internet retailer Naked Wines Old (established 1892) medium-size company, highly publicised university-supported small-plot (micro-terroir) research. Typically participating in international competitions with a very large range of wines. Seven of their wines, all from the Colchagua Valley, were recommended by Decanters Chilean cabernet sauvignon tasting in November 2010. Gold winner in Londons International Wine Challenge 2011. Wine tourism as relationship marketing (Hojman and Hunter-Jones, forthcoming). Sold in the UK by Waitrose supermarkets among others Medium-size company, exporting USD 3.8 million in 2004. Discovering and re-developing lost, sometimes abandoned old vineyards, each with its own, field-specific mix of grape varieties, and creating unique, field-specific new blends (example: Limavida in Maule Valley, planted in 1945, 60% malbec, 30% carmenere, 10% others). Sold by Marks and Spencer, Majestic and the Wine Society in the UK Pioneers and largest producers in Chile of organic and biodynamically-made wines (Cederberg et al, 2009; Rose, 2011). Red blend Coyam won top prize in Wines of Chile Awards. Gold winner in Londons International Wine Challenge 2011. This company is also part of the Concha y Toro group Small operation, exporting USD 1.0 million in 2004. Pioneers of wine production in the Elqui Valley, in the northern Coquimbo region, 500 kilometres north of Santiago. Winners at the Second and Third (2005 and 2006) Wines of Chile Awards and highly recommended by many experts. Gold winner in Londons International Wine Challenge 2011. Available at Asda / WalMart, Waitrose and Majestic in the UK Leaders in Chile of wine tourism as long-distance relationship marketing (Hojman and Hunter-Jones, forthcoming). Their Clos Apalta (the 2005 was Wine Spectators Wine of the Year 2008) retails at about USD 75 per bottle in the UK, and at least twice as much in Chile

Casa Silva

De Martino

Emiliana

Falernia / Mayu

Lapostolle

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Table 6 Chilean wines sold by Alko in Finland in 2010, small and medium-size wineries (not among the top ten exporters in 2009) Winery Exports, 2004, million USD a 2.6 4.1 9.1 Yes 2.1 Yes 6.1 Luxury carmenere? b

Aresti BPDR Carta Vieja Casa Silva Casas del Toqui Chateau Los Boldos Corpora Cousino Macul De Martino Emiliana Indomita La Pancora La Ronciere La Rosa Matetic Miguel Torres Montgras Morande Pedro Felix de Aguirre Sagrada Familia San Esteban Undurraga Valdivieso Notes

0.3 1.1 Yes 7.9 Yes 0.4 Yes

a: Only if not in previous tables. Bottled wines only. b: Making expensive (USD 50 plus per bottle) and highly innovative carmenerebased wines, and therefore mentioned before in Table 1. Sources: Vial, 2005; Alko, 2010.

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