Reseach Analysis

Topics: Wine, Chilean wine, Marketing Pages: 12 (4139 words) Published: March 6, 2013
Research Analysis
INBU 451 Fall 2012
Milena Carrizo


I have attempted to identify in this research analysis what I would have to do in order to manufacture and export wine from either a small or medium sized winery in Chile and what needs to be done to increase my share of the U.S. wine market. Over 784,000,000 gallons of wine where sold in the United States in 2010, representing over 13% of all wine produced world-wide. California, a major producer, accounted for 70% percent of all U.S. sales. That didn’t leave much room for foreign imports or other U.S. states that also produce wine. Only approximately 50% of the 62 wine producing countries in the world had access to the U.S. market and of those countries, Italy, France and Australia accounted for 78% of foreign sales. Chile, however, has had success in penetrating the U.S. market. In fact they represent 10% of the U.S. import market. I found, however, that this represented the major wineries, not the smaller vineyards. I also found that Chile needs to increase their promotional activities in the United States. With the high number of producers and with the market dominated by a few major wineries, competition in the U.S. wine market is extremely high. And making it even more difficult is the fact that major retailers continued to consolidate their stores and businesses. This has had a direct effect on the wholesale and distribution networks, which have also had to consolidate because of the narrowing focus of retail outlets. The end result is that the distribution networks are jam packed and the ability of smaller wineries to find distributors is becoming increasingly difficult. While Chile’s has 10% of the US market it has taken a cut due to the crisis in 2009 and the earthquake in 2010 it has caused the Chilean wine industry to decline. Wineries are becoming more creative and aggressive in their marketing and promotional activities. One promotional activity above all others continued to come up in my research and that was direct selling by representatives of the wineries to the Distributors. This was one of the factors that Distributors considered when choosing a wine to represent. I found in many cases, that Australia, one of the major competitors for Chile, had many reps calling on the distributor network. And their reps were described as professional but fun to deal with. Not one of the distributors mentioned having been called on by a Chilean representative. Having representatives in the U.S. is an important technique that a smaller winery can employ, but it’s not the only one. Chile’s U.S. offices can also contribute to the success of their wineries by conducting on-going events for the distributors. But these promotional activities will only be successful if the quality of the wine is good and the right consumer markets have been chosen. I found, that with hard work and a little creativity, the wineries in Chile can be successful in entering and growing their markets in the U.S.

U.S. wine consumers still depend on imports to fully satisfy their demand for wines. Imports of table and sparkling wines account for more than 30% of U.S. domestic consumption. Between 2005 and 2010, U.S. wine imports grew 13% in value and 32% in quantity. Between 2009 and 2010, the value of U.S. wine imports rose 6% to $4.2 billion; quantity of imports grew a modest 1% to 9.32 million hectoliters.

In 2010, U.S. wine imports from the top six countries accounted for 87% of the total value of wines imported into the United States. • Italy (30%)
• France (24%)
• Australia (14%)
• Chile (7%)
• Argentina (6%)
• Spain (6%)

Many of the non-U.S. exporting countries, as well as individual wineries in the countries currently exporting to the U.S. would like to increase their share and/or gain entry into this lucrative market. Doing so, however, is not easy. Larger wineries, with large...
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