When California’s wine industry reported a 33% increase in grape production in the 1997 harvest over 1996, all of a sudden the shortage of domestic wine faced by U.S. producers for three years was turned into a flood, and dire predictions were being made that imports would instantly suffer.
Don’t be too quick to buy that prediction. Especially when you consider South America and the great values it will continue to offer.
Led by significant gains in quality of bottled wine, imports of Chilean wine continued to rise significantly in 1997, and predictions are that the increases, which reached a value of more than $100 million last year, won’t tail off any time soon. And the reasons have to do more with quality than the long-known excellent value of Chilean wine. Moreover, Argentina is establishing itself as a major production force in the world. And the large Marcus James brand is relocating from Brazil to Argentina, giving the latter country more firepower in its quest for world recognition.
Historically, South American wines gained some important visibility more than a decade ago when a branch of the Rothschild family connected to Chateau Lafite-Rothschild invested in Los Vascos of Chile. This was potentially a major connection between the Old World of France (Bordeaux), the New World of California (since Chalone Group was cross-invested with Lafite) and the Emerging World of Chile.
Though that venture made headlines, it produced little heat and only a small amount of smoke: the Los Vascos brand never developed as expected. To date, its growth since the Rothschild/Chalone investment has been minimal — though it proved that Chile was a place to look at as a possible area of the world for wine development.
That finally came to fruition in 1995 when Robert Mondavi struck a joint-venture agreement with a major Chilean producer, almost at the same time that Chilean wine sales in the U.S. began to soar, hitting $71 million in dollar volume.
Errazuriz, a winery owned by the Eduardo Chadwick family of Chile, agreed to develop, with Mondavi, not only a superpremium wine selling for $50, but Mondavi agreed to take on the Chadwick brand Caliterra as exclusive marketers.
That meant that Mondavi, which in 1997 grew to domestic sales of more than 6 million cases, would have responsibility for an additional 500,000 cases of wine — an instant increase of more than 8% in sales growth for 1998 and beyond. And Chile had a strong entrée into U.S. sales.
As if that weren’t enough, Mondavi and Chadwick orchestrated a splashy release of a new wine called Se