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Chile Food and Drink Report Q1 2010
Business Monitor International, Dec 2009, Pages: 74
Chile Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Chile food and drink industry.
Chile’s alcoholic drinks industry has proved to be relatively resilient during the economic downturn, with the country’s leading beer producer Compañía Cervecerías Unidas (CCU) reporting continued growth and the country’s leading wine producer Concha y Toro actually thriving. CCU has benefitted from the resilience of the Chilean consumer, particularly in the alcoholic drinks sector, while Concha y Toro has benefitted from increased demand for Chilean wine in many of its most important export markets. CCU has interests in wine and soft drinks but derives nearly 60% of its revenues from the Chilean and Argentine beer sectors. In a trading update, CCU reported a 4% rise in volume sales for the first half of 2009, which was largely attributable to an upturn in its domestic beer market in the second quarter. The resilient performance in Chile is in line with our forecasts for the country’s beer sector; large fiscal reserves making the country relatively well placed to cope with the global economic downturn and although consumer spending has retracted in line with a drop in confidence, spending on alcohol is not expected to drop significantly by end-2009.
Meanwhile, Concha y Toro reported healthy figures for the first nine months of 2009. Despite global demand for wine stagnating on the back of the economic downturn, the firm reports that, in the nine months to September, its net sales increased by 14.8% to reach CLP222.89mn.
With an emphasis on branding coupled with value, Concha y Toro is in a strong position to make progress during the economic downturn. Like other New World wine producers, investment in the most modern production techniques and improving economies of scale mean that Concha y Toro can make a product that is lower-priced and often more consistent than its Old World alternatives. In addition the reputation of Chilean wine is among the best of all New World producers, with a history of quality that started with wine industry reforms in the 1980s.
The CEO of Constellation Brands, one of the world’s largest wine companies, recently suggested that the economic downturn had led to a ‘trend towards … better-known and trusted brands that represent good value for money’. As one of the world’s best known New World wine brands, Concha y Toro certainly fits this description, with the label described in May 2009 as the ‘third most powerful wine brand in the world’ by the British consultancy Intangible Business.
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