Chilean wine beverages essay

9-503-044 REV: NOVEMBER seventeen, 2005 DAVID ARNOLD HOWARD STEVENSON ALEXANDRA DE ROYERE MontGras Foreign trade Strategy for a Chilean Winery In The fall of 2001, Aristócrata Middleton, CEO of Vina MontGras, a $7 , 000, 000 Chilean winery, was driving through the Colchagua Valley to meet American journalists from Wines Enthusiast publication. Looking at the endless vines that encircled him, he wondered just how those newly planted vineyard would look for a market.

Republic of chile, the planet’s 10th-largest wine beverages producer, acquired enjoyed an export growth in the nineties and had expanded to become the fourth-largest wine beverage exporter, it is wines positioned mainly in the lower end of the fine-wines price range. (See Show 1 for world wines production and exports, and Exhibit two for selling prices. ) MontGras, an early 1990s winery given birth to into this kind of boom, tackled its business entirely through the perspective of export expansion. However , the international circumstance looked gloomy”there was projected worldwide and domestic excessive generation, intensifying global competition, and ongoing consolidation in the syndication channels.

Middleton had been incurred with showing to the next table meeting a five-year export strategy, consistent with the overall web marketing strategy of setting MontGras being a producer of high-quality excellent wines (see Exhibit several for the MontGras portfolio). The winery had already achieved significant market share in Ireland plus the United Kingdom, but it was focused on the United States since the key industry to reaching the sales growth required by the increases in production organized by june 2006. After two disappointing experiences with U. S. istributors, Middleton had little time left to close a fresh distribution contract for 2002. He had started conversations with two potential distributors that had diverging views regarding the positioning of MontGras, which raised critical strategic problems. Should they focus on volume and stick to the “value for money proposition that had underpinned the success of Chilean wines overseas, or if he or she advocate a margin approach, based on the fact that MontGras was making high-quality wines? The picture was complicated simply by an unanticipated offer to participate in a U.

E. supermarket advertising that would undoubtedly boost volumes of prints, but by reduced margins. In addition , he previously the opportunity to buy a joint-marketing effort undertaken by the whole Chilean wine sector designed to up grade the image with the country as well as its wines in another country. What might MontGras gain from these kinds of a advertising campaign? How will it possibly impact the marketing strategy and budget? All those were some of the questions that had to be clarified before the company formulated the export technique. ____________________________________________________________ ___________________________________________________ Professors David Arnold and Howard Stevenson and Latin American Exploration Center Elderly Researcher Alexandra de Royere prepared this case with the assistance of Teachers Matko Koljatic and Andres Ibanez of Pontificia Universidad Catolica para Chile. HBS cases happen to be developed exclusively as the basis for class discussion. Certain data have been concealed. Cases are generally not intended to act as endorsements, options for primary data, or drawings of powerful or ineffective management. Copyright 2002 President and Fellows of Harvard College or university.

To purchase copies or perhaps request authorization to duplicate materials, call up 1-800-545-7685, compose Harvard Organization School Submitting, Boston, MA 02163, or go to http://www. hbsp. harvard. edu. No part of this publication may be reproduced, trapped in a retrieval system, used in a chart, or sent in any kind or simply by any means”electronic, mechanical, copying, recording, or otherwise”without the permission of Harvard Business School. Copying or posting is an infringement of copyright. [emailprotected] harvard. edu or 617-783-7860. 503-044

MontGras The Global Wines Industry The global wine sector had been transformed in the eighties by the entry of new makers from exterior Europe. Many large “New World suppliers had questioned traditional Western practices in both creation and marketing and had liked considerable success. Nevertheless, the industry remained fragmented, while using largest person, Californian EJ Gallo, accounting for 1 . 5% throughout the world market share. you The market was likewise in changeover at the buyer and distribution levels. Older World versus New World

The Old World wine industry, centered on France, Italy, Spain, Italy, and Germany, was seen as a long-standing customs of wines production, market fragmentation, excessive levels of regulation from production to labeling and marketing, and solid domestic markets. Most Old Universe wines were made from different different vineyard and had been named after the growing regions themselves, such as Bordeaux, Chianti, or Rioja, which led to considerable difficulty of designation”for example, the French regulatory program included 450 different apellations d’origine controlees (AOCs, or perhaps registered origins names).

The Old World beliefs of wine beverage production was based on the importance of terroir (terrain), which usually assumed that every vineyard was unique because of differences which include soil, microclimate, topography, plus the skill and practices in the winemaker. The newest World wine industry, centered by Quotes, the United States, South Africa, Chile, and Argentina, was more targeted and more centered on exports. In addition , the lack of stringent regulation in the New World got spurred creativity in production processes and a more scientific approach to businesses.

Compared to the Euro wine locations, these makers were located in hotter and fewer variable weather and so liked more standard harvests that produced more consistent vintages. New World wine beverages were usually single grape rather than mixes and so were often selected by grape variety (“varietals,  including cabernet sauvignon or merlot) rather than by place of origin. The New Universe wine market also differed in its approach to marketing, with several huge players assisting varietals with substantial advertising budgets to produce international brands. We’ve transformed from like a cottage market into a competitive consumer luxury goods market,  mentioned Californian Ur. Michael Mondavi, chairman of Robert Mondavi Corp., the world’s ninth-largest winemaker using more than $500 million in twelve-monthly sales. two Drink Fewer, Drink Better At the consumer level, usage of table wine (below $5 selling price) was at decline, whilst consumption of fine wines (above $5) was raising.

There was also a relative shift in world wine consumption from traditional wine-producing countries to import-dependent countries, driven simply by both declining per household consumption in traditional maker countries just like France, Italy, and Argentina and elevating per household consumption in markets such as the United Kingdom, the usa, Scandinavia, and emerging wine markets such as Japan (see Exhibit some for primary consumers and 1 Exclusive presentation coming from Vina Father christmas Rita on the wine market, slide quantity 9, 2001 ( data in table provided by Rabobank International). William Echikson in Bordeaux, with Frederik Balfour in Sydney, Kerry Capell in London, Linda Himelstein in San Mateo, and Gerry Khermouch in New York, “Wine war. Smart New World Online marketers are disastrous the French wine beverages industry,  BusinessWeek On the web, p. a couple of, http://www. businessweek. com/magazine/content/01_36/b3747001. htm, October 22, 2002. two Copying or perhaps posting is usually an violation of copyright laws. [emailprotected] harvard. edu or 617-783-7860. MontGras 503-044 Demonstrate 5 to get main importers). In addition , the publicity accorded the “French Paradox3 sparked a change in consumer choice toward red wine (70% of worldwide consumption in 2000).

The world wine beverage business was valued in $150 billion dollars in customer value and at $60 billion dollars in low cost value. 5 International wines trade got grown for a some. 3% chemical substance annual level between 95 and 1999. However , through the same period, trade quantity growth through the New World countries reached an 18. 3% compounded annual rate, a few as the spread of fine-wine consuming beyond the top class a new market pertaining to American, Aussie, and Chilean wines mainly focused on lumination, fruity flavors of low-price fine wine beverage. World Industry Scenario in 2001

Your wine industry was entering a time of grape oversupply. The World Wine Survey projected a yearly enhance of intake of less than 1% up to 2006. 6 Despite a reduction in planted areas in the Aged World, improves in the New World countries could generate around worldwide excessive generation of 2, 080 million gallons7 by 2006. 8 David Combe, an ex Australian operate commissioner and wine industry executive, forecasted that the wine beverages industry will be marked by fierce competition, leading to a drop in overall rates.

Combe also quoted a winemaker by NeibaumCoppola, certainly one of California’s reputation wineries, while saying, Guys who utilized to sell wine beverage easily to get $50 a bottle will discover things going sour…. Eventually, I am certain that you’ll see wine beverages that used to sell for $40 going for $30. 9 One more trend was your growing focus in syndication. According to the Wine beverage Institute (the Californian wine trade organization), the number of wine wholesalers in america had shrunk by near to 75% among 1963 and 2000, 15 and about a third of all wines were sold through only five of them. 1 Circulation concentration was even greater in the uk, where many wines were no longer bought in specialty liquor shops but in grocery stores, which today accounted for 60% of wine beverages volume. Superstore purchasing management favored suppliers that could provide large amounts and play a role in marketing finances, and they recommended to deal with hardly any 3 “The French Paradox refers to the coincidence in France of lower-than-average fatality rates via cardiovascular disease and higher-than-average intake of unhealthy fats, such as butter and cheese.

In 1991, ahead of 35 mil American TV SET viewers, Doctors Curt Ellison and Serge Renaud offered research findings that attributed this to the beneficial effects from the higher-than-average intake of red wine. Red wine product sales jumped drastically after the dialectic. 4 “Wine Business. Drivers are reshaping the sector,  Meals and Gardening Review, Rabobank International, Oct 2002, s. 3. your five Private demonstration from Vina Santa Rita on the wine beverage industry, slip number on the lookout for, 2001 (information in stand provided by Office International entre ma Vigne ou du Vin, 2001). six “Strategic

Eyesight of the Chilean Viticulture Industry and Ideal Plan for Pampre of Republic of chile 2002″2006,  Interbrand, March 2001, g. 10. six 1 gallon = several. 85 l = 5 bottles of 750 cubic centimeters = 0. 43 circumstances ( of 12 bottles of 750 ml). 8 “Strategic Perspective of the Chilean Viticulture Sector and Proper Plan for Vines of Chile 2002″2006,  Interbrand, August 2001, g. 10. being unfaithful John Schreiner, “The Barbarians are at the gates,  http://www. newssgurus. com/index. cfm? do=display_articles stories=4722, article quantity 5043, March 10, 2001. 10Matt Kramer, “Wines Changing Landscape,  http://www. winespectator. om/Wine/Main/Feature_Basic_Template/ 0, 1197, 1078, 99. html code, November 1, 2001. 10 Barry Bedwell, “Wines Vines: Grapes Supply Trends Has got the Tide Converted?  http://www. findarticles. com/cf_dls/ m3488/3-81/60904325/p1/article, August 23, 2002. 3 Burning or posting is a great infringement of copyright. [emailprotected] harvard. edu or 617-783-7860. 503-044 MontGras wholesalers giving a comprehensive choice of wines coming from around the world. The consequent difficulty experienced by simply small and medium-sized wineries in accessing syndication had triggered a number of units with larger players.

There were, however , different opinions upon where these kinds of trends will lead. The Australian wine beverages industry, within a document known as “Strategy 2025,  forecast: Global merchandise branding with multi-variety and multi-country finding will develop, although on a micro-scale there will be a paradoxical desire for premium wine drinks with a particular regional and sub-regional personality. Globalization also will see the popular extension of wine organization alliances and joint endeavors across countrywide boundaries… The expectation is that while the volume of wine revenue will drop (by 2025), the value of the earth wine marketplace will surge as buyers demonstrate a willingness to pay more to get consistently high quality wines. doze The Aussie wine sector was frequently cited within the trade because the role model to get transforming a great agricultural product into a quality, branded-image merchandise. In order to protect a growing share of the international wine marketplace, the Australian wine industry, which appreciated considerable authorities support in the export drive, undertook a five-year strategic-planning process.

The latest statement concluded that the Australian industry’s future put in branded wine items, reflecting the distinctiveness of variety, place, and producer and targeted at maximizing the advantages of wine beverages in recording complementary organization growth in tourism, meals, and lifestyle products. Republic of chile Government and Economy Stretching out 2, 666 miles north to to the south between the Pacific coast of South America and the Andes Mountain range, Chile was colonized by the Spanish in 1536 and formed its first 3rd party government in 1810.

Inside the mid-1970s, the military plan of Augusto Pinochet pioneered trade liberalization in Latina America, getting rid of non-tariff boundaries and simplifying Chile’s contract price structure into a single importance tariff price. Successive democratic governments, refurbished in 1990 after of sixteen years of armed service dictatorship, taken care of these liberal economic plans in view of all their success to promote economic expansion. In 2000, goods and services exports accounted for 32% of low domestic product (GDP).

The greatest copper, fresh fruit, and farmed-salmon exporter on the globe and a growing player in the international wine trade, Chile was discussing with the United states of america and the European Union free-trade deals that it wished to conclude by 2002″2003. The citizenry of Republic of chile in 2001 was around 15 million (see Exhibit 6 pertaining to country macroeconomic data). The Chilean Wine beverage Industry Republic of chile was the most well-known wine producer in the ” new world “. Through four centuries their optimal natural conditions intended for grapevine development had fascinated many migrant European winemakers.

Because of the organic barriers encircling the country (the Pacific Ocean towards the west, the Atacama Wilderness to the north, the Andes to the east, and Antarctica to the south), Chile had been the only region not to 12 Wine Games Web page, http://www. winetitles. com. au/strategy2025/2025-6. code, November 8, 2001, l. 1 . 4 Copying or posting is an infringement of copyright. [emailprotected] harvard. edu or perhaps 617-783-7860. MontGras 503-044 endure the phylloxera epidemic that swept the vineyards worldwide in the mid-1800s. 3 Three main wine-growing regions of Chile, shown in Exhibit six, enjoyed a temperate Mediterranean climate of warm days, cold times, and clear seasons. For many of the twentieth century, Republic of chile had developed low-quality wines of merged grapes, while using planting of recent vines and the building of recent wineries inhibited by protectionist laws. Deregulation in the mid-1970s soon led to new plantings and to a technical improving led by the Spanish businessman Miguel Torres. Soon, various other vintners implemented him, bettering planting and irrigation and incorporating stainless-steel tanks and French walnut barrels.

Creation volumes jumped until the problems year of 1983, the moment overproduction and a significant reduction in domestic consumption produced a pointy decline in prices. 18 Middleton recalled: The turmoil led to industry consolidation. Before the crisis, there have been 60 to 80 wineries. Most of the tiny players accustomed to sell bulk wine to larger wineries that bottled it, brand it, and distributed that under their own labels. The quantity of wineries fell to 15 in 1990, because the large players bought small ones and more went broke. This as well led to harvest replacement and a drop in vine acreage.

The Export Increase of the 1990s By the mid-1980s, Chilean wineries, many at this point under international ownership or management, began to produce high quality varietal wine beverages for export. Middleton explained: At that time, concentrating on exports was a matter of success because of domestic overproduction. Offering wine in Chile has not been profitable anymore”the price of the liter of water was higher than the buying price of a liters of large wine. In contrast to the local customer, who was mainly buying inexpensive low-quality wine beverage, the foreign consumer was hotter and had higher buying electricity and was therefore eating finer wines… It took around five years for the industry to upgrade their production procedure, adapt it is style of wine beverages, and increase marketing approaches such as marking, by which period it could be competitive in the export market. In 1996 to 1997, when ever many wineries were ready, there was a shortage of wine in Washington dc and in Sydney, 15 thus American and Australian wine beverage producers arrived at Chile to buy in bulk to generate up their volumes. The price tag on grapes went up 450% between 1992 and 98. This went people to continue planting in Chile.

Matias Elton, basic manager of San Pedro, the second-largest Chilean winery, recalled that other market segments also started to be attractive foreign trade destinations pertaining to Chilean wineries: In 1998, Chile benefited from your boom from the Japanese industry, where consumers were willing to pay high prices forever wine. A few Chilean wineries stopped supplying some of their existing customers in order to take advantage of this prospect. But then the Japanese market caught significantly, and those wineries had difficulties restarting their prior commercial interactions, since the trust had been misplaced. 3 A type of small bug of the genus phylloxera that spoiled grapevines. Winemakers lived in fear of phylloxera, which could quickly decimate entire wine areas, as it got done in The european countries in the 1850s. 14 Both the main reasons pertaining to the decline in local consumption had been a household recession and a significant switch from wine beverage to dark beer and sodas. 15 The Californian scarcity was because of a phylloxera outbreak. Nationwide, the change in consumer trends toward reddish colored wines acquired left wineries with a extra of light chardonnay and a shortage of red wine. Copying or posting can be an violation of copyright. [emailprotected] harvard. edu or perhaps 617-783-7860. 503-044 MontGras Elton estimated the Chilean wine beverage industry all together generated functional margins of around 15% and an excellent return on capital employed of around 7% (see Demonstrate 8 intended for estimates of total purchases of the Chilean wine industry). Chile was obviously a low-cost manufacturer, mainly because of land prices: the price of the land may vary from $2, 000 to $20, 1000 per acerbo (unplanted), several six to 60 moments cheaper as compared to California’s Napa Valley.

Middleton added: “Chile’s production price will be actually unbeatable as soon as the cost of dried goods drops to the amount of other rivalling countries. 16 Chilean wine had attained a “value for money reputation across all price points, and although it was usually situated at the low end of the fine-wine range, most commentators agreed that the quality of Chilean wines experienced improved frequently through the nineties.

This got partly come from increasing investment by simply French, Spanish, and Californian wineries in joint ventures with Chilean vintners, which usually not only elevated quality but also opened new marketing channels (see Exhibit 9 for a list of foreign assets and joint ventures). By simply 2000, Chile exported practically $600 , 000, 000 of wines (up from $51. a few million in 1990) to 90 countries on five continents (see Exhibit 12 for the breakdown of Chilean wine exports and Exhibit 14 for foreign trade destinations).

The quantity of export vintners had produced to much more than 80 in 2000, as well as the planted acreage of excellent wine got nearly tripled since 1990 (see Display 12 intended for the evolution and malfunction of planted area simply by main grape varieties). In 2000, the four best industry players accounted for 45% of exports. 17 Smaller sized “boutique wineries, such as MontGras, focused on exports of higherquality wines. The boutique wineries were symbolized by Chilevid, an industry association founded by six firms in 1992 with the singular objective of developing foreign trade promotions.

Chilevid, of which Middleton was chief in 2001, had 35 members, which represents 10% of total Chilean wine exports. The affiliation invested around $1 million each year in international fairs (e. g., The London Wine beverage Fair Transact, Vinexpo in Bordeaux), wine-tasting events, and contests. Elton, besides staying general director of Vina San Pedro, was the advertising director of Vinas sobre Chile, the bigger and old industry association with 39 wineries addressing 90% of bottled wine beverages exports and around 90% of the domestic market. Vinas de Chile also worked to promote revenue abroad, trading $1. several million 12 months in comparable efforts.

Wine Industry Issues Chile was expected to go through the same grape oversupply because the rest of the world. The Asociacion Vinas de Chile forecast a surplus of some 40 million gallons of Chilean wine by 2006, depending on new growing rates and assuming 10% annual foreign trade growth and static household consumption. Oversupply had previously caused downwards price pressure”according to Middleton, the price of fruit had reduced by forty percent between 1998 and 2001. Grape growers who had certainly not secured agreements to sell to wine makers, and wineries without a strong brand and distribution, were especially weak.

According to Vinas sobre Chile, this could generate an increase in exports of bulk wine drinks with competition based on price, which could subsequently result in Chilean wines staying perceived simply as a low-price alternative. 18 The sterling silver lining to the cloud for MontGras was that consumption of highquality brands was continuously increasing, as the consumption of more traditional low-quality brands experienced fallen considerably (see Display 13 pertaining to local intake per capita of wine beverage versus dark beer and soft drinks). of sixteen The high cost of dry products in Republic of chile was due to the limited volume of suppliers. 7 Vinas sobre Chile’s estimates. 18 “Strategic Vision of the Chilean Viticulture Industry and Strategic Arrange for Wines of Chile 2002-2006,  Interbrand, October 2001, p. 10. 6 Burning or placing is an infringement of copyright. [emailprotected] harvard. edu or 617-783-7860. MontGras 503-044 In Middleton’s view, the main element challenge facing the Chilean wine market was “to build a picture that distinguishes us from your competition.  He added that Chile had to take advantage of the quality of its grapes, developing premium wines around a wider spectrum of varieties.

Elton added: “The key question is whether the Chilean wine beverages industry should be able to achieve a 10% export quantity growth within the next five years and not having to reduce the prices.  At the effort of Elton, Vinas para Chile experienced retained Interbrand, an international advertising consulting firm, to develop a strategic plan for the entire Chilean wine industry. The stated goal was to develop 10% a year in exports and reach sales of 5. 46 gallons every capita in the domestic industry by 2006.

According to the market study that Interbrand done in some major export marketplaces, 19 the of beginning was among the key parameters in the consumer decision procedure when it came to purchasing wine. twenty The study mentioned that Chile”as a country”was barely regarded and had zero specific graphic. However , that confirmed that Chilean wine had developed a solid reputation as “good value for money.  Elton described: From a buyer standpoint, the country of origins is key in the selection process of a wine, especially a fine wine beverage. Think of the sensation that is made by having a excellent French wine beverage on your dinning table.

Meanwhile, Republic of chile does not have an attractive picture as a nation, and the only selling instrument the Chilean wine sector has which has any leverage with the client is value. Interbrand’s pitch was to produce a new positioning for the whole Chilean wine category through a “Wines of Chile marketing program built to upgrade the image of Chile and its wine beverages. The recommended brand-building effort was a great aggressive five-year promotional program in focus on markets, such as opening of promotion office buildings in the United Kingdom, Indonesia, Japan, and the United States, plus the organization of yearly occasions such as  Wines of Chile Week. The cost of the five-year campaign was approximated to be $18 million. Vinas de Republic of chile and Interbrand were looking to convince all the industry players, including Chilevid members, to mix efforts and cofinance the project. The industry prepare would be executed from a brand new organization that might replace the export campaign efforts of both Vinas de Republic of chile and Chilevid (which will continue to exist while industry associations). Discussions were in progress in the market. Luis Felipe Edwards Jr. a winery owner, mentioned, “It will be difficult to generate all the sector players concur and pay to get an industry plan unless its expense is sent out in proportion to the present export revenue of each business, so every single player might invest in compliance with its monetary capabilities.  Elton added, “I think that the small and medium-size corporations have more to gain than the significant companies just like San Pedro that are previously strongly set up in the important exports markets.  MontGras Vina MontGras was founded in 1992 by simply Hernan Gras, a third-generation winemaker with international experience, his brother Eduardo, and Cristian Hartwig.

With the objective of manufacturing export-quality wine beverages, they bought vineyards in the Colchagua Area and built a state of the art winery. Vina MontGras turned out to be one of the major winery “boutiques in Chile with creation of 234, 000 cases21 in 2001 (see Display 14 intended for financial data). It ranked 20th among the Chilean wines exporters and, as with almost all of the other shops, its goal was not to compete up against the larger nineteen Including the Us, the United Kingdom, Philippines, and The japanese. 20 The other variables included budget range, type of wines (red or white), range, terroir, and vintage year. 1 One particular case consists of 12 containers of 750 ml, corresponding to 2 . thirty four gallons. six Copying or posting can be an intrusion of copyright laws. [emailprotected] harvard. edu or 617-783-7860. 503-044 MontGras Chilean wineries but instead to produce higher-quality wine drinks that told premium prices. Table A shows how MontGras handled the mix of varietal wine drinks, priced $7″$8 a container at full, and discreción wines, inside the $12″$25 retail price range. Stand A Year MontGras Product Mix 1996 97 1998 99 2000 Varietal Reserva Origin: MontGras. 84. 6% 12-15. 4% ninety two. 4% six. 6% 1 ) 4% 18. 6% 62. 1% thirty seven. 9% 57% 45% When Hernan Gras was leader and primary winemaker of MontGras, Middleton, not relevant to the Gras family, ran the company since CEO by 1995, having joined the firm while export manager. Middleton had been working in your wine industry for 10 years, after previous promoting experience at S. C. Johnson and with a community salmon organization. His gumptiouspioneering, up-and-coming spirit fantastic passion pertaining to the wine organization were shown by the reality he great wife founded a chain of liquor retailers in Chile, which your woman continued to control.

MontGras applied 97 people, only 13 of who worked with the headquarters in Santiago, together with the remainder located at the vineyards and at the winery inside the Colchagua Area. The Grape plantations The initial MontGras grape plantations were planted in 1993 on 124 acres, employing foreign identical dwellings and clippings from the oldest wineries in the area. During the pursuing four years, additional quadrat were bought and then grown with cabernet sauvignon, sortenwein, carmernere, chardonnay, and sauvignon blanc pampre, until the vineyards reached 500 acres.

The first harvest took place in 1994. The first objective, of selling 150, 000 cases by 2006, soon turned out to be far too old-fashioned, with 220, 000 cases sold in mil novecentos e noventa e seis. New planting continued, plus the estate was expected to increase to 650, 000 situations by 2005. The vineyard manager”Alejandro Hartwig”supervised 42 persons and developed temporary labor, of which there is an adequate supply in the valley, intended for pruning and harvesting. Collection took place between February and April, and grapes were handpicked. two It took one to two years to get vines to begin producing a harvest and five years to achieve full production. As Middleton commented, “Growing grapes is founded on trial and error, and you can only operate one try things out a year.  The vineyard manager experienced decisions regarding which grape variety to plant, how you can arrange and tend the vines, and exactly when as well as how to harvest. MontGras vineyards developed 62% from the winery’s grape supply. This kind of degree of self-sufficiency was particularly important for miramiento wines in order to control quality.

For external supply, MontGras purchased vineyard from Santa Laura, a vineyard that belonged to the Hartwig family and entered three- to five-year supply agreements with 3rd party growers from your Colchagua Pit. The Ninquen flagship Through the 1990s, MontGras invested more than $3 mil in vineyards on the Ninquen hill, in the estate. This kind of hill constituted an unusual terroir, with dirt of loam and twenty-two Lower-quality wine used equipment picking. eight Copying or posting is usually an infringement of copyright laws. [emailprotected] harvard. edu or perhaps 617-783-7860. MontGras 503-044 oam clay and subsoil of decomposing rocks, and it had been expected this would develop low yields of ultra-premium-quality wine. 23 As this is the initially hilltop vineyard in Republic of chile, MontGras have been advised with a winery by California’s Napa Valley in California with expertise from this field. Many varieties of vine were planted on the hillside, and they had been expected to produce 15, 500 cases a year. The Winery and Winemaking Winemaking was capital rigorous, in terms of equally fixed property and seed money. Processing products and complexes were high priced but were utilized for just a short period in the year following the harvest.

Possessing wine inventory, which was portion of the production method, called for substantive working capital. Completed wine was stored for a minimum of 12 months, and sufficient inventory had to be kept to deliver the next a year of sales. According to Middleton, annual working capital was equivalent to one time annual sales. The more upscale fine wines MontGras produced, the more working capital it would need in order to financing aging. Cumulative investment inside the installations in the MontGras winery had surpassed $15 million, producing probably the most modern wineries in Republic of chile with a total capacity of 1. million gallons. The quality of MontGras’s products was determined by the caliber of the garden soil and the vineyard, the experience of Hernan Gras as a winemaker, as well as the collaboration of Paul Hobbs, a well known Californian consulting winemaker who was simply refining the MontGras wine drinks since 1999. Different styles of wine beverages required several fermentation and aging processes. For the lower-quality varietals, the company utilized 158 stainless-steel tanks. By comparison, oak barrel or clip aging was critical for the premium lines, and the organization owned more than 3, 600 French and American oak barrels.

These types of barrels were used no greater than four to five years, and the replacement rate was approximately twenty percent a year. The general MontGras major profit margin had increased over time due to a change in product mixture toward higher-quality wines and vineyard maturity producing better yields (see Exhibit 12-15 for expense structure of grape production and winemaking). The development and improving profitability in the winery acquired benefited the local community”as Middleton remarked, “We had to expand the winery’s parking lot since a growing number of the employees will be trading all their bicycles pertaining to cars. Foreign trade Strategy Ninety-eight percent of MontGras’s annual production was exported, into a total of 24 countries in 2150 (see Demonstrate 16 upon export vacation spot by country and product range). In 2150, MontGras placed 20th by simply value among the list of 200 Chilean wine exporters. Although the United states of america was the greatest export to get Chilean wine, MontGras’s most significant export marketplace was the Uk. Middleton mentioned: “The leading export market segments for Chilean wine will be the U. S., the U. K., Canada, and Germany, in that purchase. At the moment all of us only really do decent organization in the U. K.

We could easily dual sales if we could develop these other marketplaces.  In the early years, MontGras had relied upon selling to third parties’ personal labels for as much as 60% of shipments, nevertheless by 2k, the company managed to exit entirely the bulk-wine business and sold exclusively wine under its own labels, which had won numerous honours. 24 The typical price every case attained by MontGras acquired increased steadily (see Display 17). twenty-three Although not globally applicable, the conventional wisdom inside the wine sector was that grapevines with low yields (usually caused by poor soil) developed better fruit and therefore finer wines. four For a set of awards, go to http://www. montgras. cl. on the lookout for Copying or posting is usually an infringement of copyright. [emailprotected] harvard. edu or 617-783-7860. 503-044 MontGras MontGras’s sales office consisted of a great export administrator, Benjamin Silva, and 3 support staff. In addition , Hernan Gras and Middleton made important advantages by participating in activities such as trade shows and wine-tasting occasions. In each country that MontGras exported, distribution was managed simply by an independent community agent, generally contracted based on reciprocal comarcal exclusivity (i. e. the agent was your only MontGras distributor in the country or place, and MontGras was the only Chilean wine beverages on that distributor’s list). MontGras as well as the agent collectively developed an organized plan that covered five-year sales forecasts, product combine, positioning, costs, and the route mix among off-premise and on-premise revenue. 25 The agent then prepared and submitted intended for approval a marketing plan, which includes trade promotions, media, advertising events, wine beverages tastings, value promotions, and sales force bonuses. The advertising budget was usually financed in equal parts by agent and MontGras.

In 2000, the organization invested around $400, 000 in marketing (see Display 18 pertaining to the MontGras marketing budget). Its promoting investment per case diverse according to the form of wine (it was two times as high intended for the superior line than for the varietal line) and in accordance to each destination. Middleton assumed that the on-premise channel made up 15% of MontGras’s export sales, in contrast to 10% intended for Chilean wine drinks overall. Based on continuing fresh planting for the MontGras house, Middleton had a clear target of foreign trade sales of 350, 000 cases simply by 2005. Major would be about red wine, and 240, 000 circumstances would be objeción.

MontGras managing had prioritized penetration with the U. S. market, specially the offpremise channel, as the key to attaining this concentrate on and anticipated a minimum of 90, 000 circumstances of this total to be sold in the United States. Desks B and C offer historical data on export sales in the United Kingdom, MontGras’s largest export industry, and in the United States. Desk B 1995 4, 030 Source: MontGras. MontGras Foreign trade Sales towards the United Kingdom (cases) 1996 13, 981 1997 26, 425 1998 forty one, 611 99 88, 596 2000 70, 384 2001 est. 117, 125 Table C MontGras Export Product sales to the Usa (cases) 996 1997 104, 937 thirty-three, 985 138, 922 98 10, 011 36, 064 46, 075 1999 14, 730 32, 885 36, 970 2150 0 17, 886 17, 886 2001 est. zero 8, 394 8, 394 Private Label MontGras Label Total Source: MontGras. n. a. n. a. 37, 837 25 “On premises referred to distribution programs where the item was used on the areas, such as restaurants, hotels, and bars. “Off premises referred to direct buyer purchase to get consumption in other places, such as supermarkets, wine shops, duty-free outlets, and wine beverage clubs. 10 Copying or perhaps posting is usually an violation of copyright. [emailprotected] harvard. edu or 617-783-7860. MontGras 503-044 The U. E. Market The U. K. arket”the main export destination for MontGras”was one of the most competitive on the globe and had knowledgeable significant development in per capita ingestion, from installment payments on your 51 gallons in 81 to 5. 02 gallons in 1999. With the larger Chilean wineries such as San Pedro currently strong in the lower price runs, MontGras acquired made the strategic decision to offer just its discreción lines presently there and had grown to be one of the top Chilean wine beverage exporters for the United Kingdom by value. Middleton visited britain five to six occasions a year to meet with press and to work together with the distributor, reviewing the budget and the marketing plans.

This individual believed that MontGras’s accomplishment in this marketplace had all the to do with having built a solid relationship with this distributor as with the standard of the wine. This distributor, with who MontGras got worked successfully since 1996, loved a strong penetration in restaurants, and since restaurants did not love to see the same wine bought from supermarket chains at one-third of the selling price, he had convinced MontGras to let sales for the onpremise channel to be top quality as DeGras, with the MontGras label utilized exclusively inside the offpremise channel, which symbolized 75% of MontGras’s revenue. U. T. arkups were typically 10%”15% for the national retailer and twenty percent for a merchant. Although they were lower than in the usa, this was not mirrored in retail prices as a result of higher income taxes levied on alcoholic refreshments, which in 2001 were? 11. 50 per case. twenty six Middleton mentioned: “The substantial fixed taxes makes this a great market to get reservas. Because the tax is usually fixed in? 1 a bottle no matter retail price, lower-end wine drinks are fairly expensive, and a? six. 99 wines might be at least 2 times the quality of a? 5. 99 wine with regards to quality with the wine alone.  One of the most distinctive feature of the U. K. etail market was the dominance from the leading superstore chains, the most notable four of which accounted for 73% of all grocery and 60 per cent of all wine sales. Their particular dominance of wine revenue was recent but still growing, with specialised liquor shops closing each week, and their accomplishment was credited not only to their particular dominance of food searching but also their hostile promotional promoting of wines, Middleton estimated that 75%”80% of their wine beverage sales were created on promo. One of the foreign trade dilemmas facing Middleton was an offer he previously received from Tesbury, one of the leading supermarket organizations, to include MontGras in a forthcoming promotional software.

This presented MontGras in two two-week promotions 3 months apart. The first was based on the gold honor that MontGras had been recently awarded inside the leading U. K. wines magazine’s annual survey from the wine market. MontGras had won the rare metal medal intended for “Best Value Wine due to its Merlot Discreción 2000, which usually retailed to get? 6. seventy nine. Tesbury was planning a “Gold Medal Wines promotion through which 10 medal-winning wines will be offered at a “? you off value. In addition , 90 days later their grocer was arranging a “South American Wines promotion, featuring 6 wines (three each by Chile and Argentina) offered by 15% away regular retail.

In both equally cases, the promotion can be supported by? 100, 000 of press marketing, direct promoting to frequent store consumers, and point-ofsale materials. Middleton had conferred with the U. K. countrywide distributor along with other contacts within the market and reported: The numbers happen to be staggering. One particular export manager told me that in a related promotion a year ago they had offered 55, 000 cases inside the first three days of the promotion. That is higher than the bottling price! It was prior to a holiday weekend, and they shifted 50% of the promotion amount in individuals three days and nights. Normally we all sell about 300 instances a month through Tesbury.

In addition, it appears that they can simply take the? 1 or perhaps 15% straight off the invoice and pass all this straight dua puluh enam? 1 = $1. 60 in The fall of 2001. 11 Copying or perhaps posting is definitely an intrusion of copyright. [emailprotected] harvard. edu or perhaps 617-783-7860. 503-044 MontGras before the consumer. These times, they’re not asking all of us to contribute to the promotional campaign”I suppose they need to be incredibly keen on delivering us in, since all of us won the entire gold medal. But I assume that once we got into the device and got to feature regularly in their advertising program, we would have to stump up some of the promotion spending budget too.

Really all down to relationships and being inside the system. Whenever we developed a detailed relationship with Tesbury, we could expect to always be featured in two offers a year and also to be in or near the top of their list of Chilean suppliers. Middleton also reported that the U. K. distributor expressed blended feelings about these promotions. Although MontGras will ship direct to Tesbury, the distributor would even now receive a drop-shipment commission of 10% within the promotion quantities. While this kind of offered a windfall for the short term, he expressed concerns regarding the destroying effect on the rest of the U.

T. business, and Middleton also sensed a worry that deals made directly between MontGras and Tesbury will threaten the distributor’s situation over the long run. Middleton described: This is appealing, but dangerous business. The extra volumes could transform the business in britain, and thus our export volumes of prints this year. The promotions could also raise our consciousness, because of the press ads and in-store merchandising, and might help all of us competitively, seeing that we would become one of the best-known Chilean wines.

But all this would arrive at the price of shorting our placement strategy, because of the lower price points and the solid price message it gives towards the market. The U. E. distributor was simultaneously designing a marketing arrange for the first vintage in the flagship Ninquen wines, which usually would be found in the U. K. at the begining of 2002. He proposed a? 20, 500 contract having a public relations firm to generate insurance of the new wine and was taking pictures 5, 000 cases inside the first yr, 80% which would be inside the on-trade portion. Tesbury experienced also consented to take 40 cases using a retail cost of? five. 99. It was expected to spearhead a drive into specialised stores, including delicatessens and gift shops”DeGras had been recently stocked in Harrods’, the London variety store with good tourist visitors, at a? 12. 99 shelf cost. The U. S. Market Unlike the U. E., the U. S. industry was still fragmented at the price tag level, mostly because of regulatory restrictions that stipulated a three-tier circulation system: the producer needed to sell to a state-licensed wholesaler, who had to trade to a state-licensed retailer, who had been the only one permitted to sell straight to the consumer.

Firms could top to bottom integrate coming from production to distribution more than no more than two layers. Regarding imported wine beverage, it had to get sold to an importer who does in turn sell it to a state-licensed wholesaler. In a few states, liquor store organizations were prohibited, and in some cases grocery stores and other food stores weren’t allowed to carry alcoholic drinks. Middleton explained: Imported wine rely on 12 markets: California, New York, Connecticut, New Jersey, Massachusetts, Georgia, Texas, California, The state of illinois, and Oregon. There are 60 to 60 wholesalers altogether.

However , you should have to use two years talking with 200 people to have a fair view in the U. T. market, since there are no big retail restaurants, whereas you should only need to speak to five supermarket wine purchasers to understand the U. E. market. A large wholesaler are designed for a portfolio of approximately a couple of, 000 brands and have a sales force of 100 people. With these kinds of a broad portfolio, the sales force are mostly only order takers, so the importer’s salesperson must visit the merchant to motivate them to place orders with all the wholesaler. Find Exhibit 19 on the economics of exports to the U.

S. doze Copying or perhaps posting is usually an violation of copyright laws. [emailprotected] harvard. edu or perhaps 617-783-7860. MontGras 503-044 Prior distribution negotiating in the United States MontGras had previously experienced two unsuccessful relationships in its efforts to sink into the U. S. market. In mil novecentos e noventa e seis, MontGras joined a division agreement with a Napa Valley winery after the owner frequented Chile and proposed by itself as an importer. MontGras was excited, believing the fact that two family-owned wineries would work well jointly, both in division and in changing winemaking knowledge.

In addition , MontGras was not big enough yet to appeal into a large importer with a country wide sales force. This Californian winery had a small national circulation operation aimed at wines previously mentioned $15 retail price and was already behaving as an importer pertaining to wines by Australia, Perú, and South Africa. Although the long lasting focus to get MontGras was in the $10″$15 range, development was still mainly at lower value details, and so the admittance strategy was built about varietals in the $6. 99″ $7. 99 range.

Product sales grew quickly, and by 1998 MontGras was your distributor’s most significant brand by simply volume, justifying an invite to the entire sales force of 12 to go to Chile for more information about MontGras. However , in Summer 1998, for over two years of collaboration, the distributor changed strategy and terminated the contract easily. MontGras was never up to date of the cause of this change, but Middleton speculated that the U. S. winery experienced decided to enter these low cost points with its own wine beverages and ended MontGras to prevent conflict of interest in sales and distribution.

It happened in 1999, after speaking with several importers, Middleton create a division agreement with the fine-wine trademark one of the most significant distributors in the United States. This supplier handled a portfolio of high-volume spirits and wines through a sales organization of 100 persons, with a distinct sales force of 16 focused on selling good wines. Some time after the arrangement took push, the distributor unexpectedly merged the two individual divisions, because of which the fine-wine sales force was converted into wines consultants towards the other department.

Middleton noticed quickly that the sales weren’t moving and that the sales force would not even understand that MontGras was at their stock portfolio. MontGras after that decided to end the relationship by the end of 2k. Selecting a new U. S. partner In 2001, Middleton hired a consultant to aid the vineyard in the choice of an retailer for the U. S. market. This was a tougher challenge within 1995, because the number of Chilean wineries conveying to the United states of america had increased from 25 to sixty-five in that period, while the volume of national importers remained around 15. In 2000, imported Chilean wine beverages accounted for 11% of U.

S. wine beverage shipments by volume, but only 6% of buck sales. Middleton believed that MontGras’s give attention to the over $10 part would charm to an distributor, although it means having to take on Californian wine. The advisor spent 3 full days at the winery, understanding the company and developing potential approaches, and then together with Middleton came up a list of criteria for selecting a partner that included the standard of its brand portfolio, the high quality and scale its sales force, its dedication and capacity to build the brand name, and especially shared prevalent objectives while using winery.

By November, MontGras was in arbitration with two importers that showed genuine interest in the project. The first, Globe Wine Importers, was already representing a Chilean winery in the varietal section but was interested in working with MontGras, especially in the objeción line. That ranked among the list of fastest-growing types of premium brought in wine and spirits, advertising 200 different brands by seven diverse countries, a new 60-strong sales team, and predicted 2001 revenues of about $200 mil. It proposed a “value for money positioning to compete against Californian wine beverages, recommended selling pricing at $7. 9″$10. 99, and this basis forecast quantities of 40, 000 situations in the first year growing to one hundred twenty, 000 situations by the third year, which has a forecast mixture of 70% varietals and 30% reservas. The other distributor, Cabo Imports, had been founded in 1978 as the importer of a sole Italian wine beverages and by 2001 had produced to a profile of 50 brands, with 70% of the sales continue to coming from German imports. This sold 500, 000 situations annually of its largest brand, an Italian import, and a few, 000 circumstances of its 13 Copying or posting is a great infringement of copyright. [emailprotected] arvard. edu or 617-783-7860. 503-044 MontGras smallest company. The firm had a sales force of thirty-five and predicted 2001 profits of $112 million. It also already carried a lower-end Chilean brand, aiming at the $5. 99″$6. 99 price tag price point. Resto had a different view of MontGras’s potential in the United States, arguing that it was feasible to raise the perception in MontGras’s quality and therefore raise the price to be able to maximize the return for any parties. To that end, Cabo recommended that MontGras create the positioning of a “brand champion,  a a lot of the time

MontGras employee based in america who would be the face of the trademark for stores and buyers and would organize tastings in wine beverage shops and promotions and incentives for the sales force. This thought was described by Middleton as “creative and interesting,  and he estimated that such an initiative could cost some $120, 500 annually. Acabamiento recommended a range of selling price points from $7. 99 to $14. 99 and on this kind of basis outlook sales of 25, 1000 cases in the first yr increasing to 60, 500 cases by year three, with an expected blend 60% reservas and 40% varietals.

Additionally , Cabo was interested in Ninquen as a range topping for the queue, targeting a $24. 99 retail cost, at which it forecast product sales of 1, 500 cases simply by year two. MontGras acquired earlier in 2001 released some test wines to get review simply by U. S i9000. wine journalists, and the outcomes had just been released. In the Wine beverages Spectator, which in turn used a proprietary pointsscoring system away of 90, MontGras wines had been rated between eighty five and 87 and received favorable drafted reviews. These kinds of ratings located them very well among the larger ranks of Chilean wines and validated prices as high as $15 at retail. Promoting Challenges

The export strategy had to be created in the circumstance of the broader marketing aims of MontGras. Critical to this was the organization of Ninquen as a range topping for the brand, with the obvious objective of raising the perception of quality, and thus the price, from the whole collection. Middleton explained: Most buyers know very little about wines, to them, price is an indication of quality. I think that Chilean wines that are sold for $10 a bottle in retail are better than Californian wines bought at $15 to $25, and blind-tasting outcomes always set us over a level with wines priced quite a bit higher.

Why is the buyer ready to get a Californian wine for $15 to $25 rather than a Chilean wine beverages for only $10? My personal only solution is graphic, the better perception they have of the Californian wines in general. They know them much better than Chilean wines. We know that for the majority of consumers the sequence of criteria for choosing a wine beverage is reddish colored versus white-colored, then nation, then cost, then grape variety, and later then company. And then he added: There are two ways to advertise your wine beverage: either spent millions of dollars, like EJ Valentón, to build your manufacturer, or you choose a brand regarded through wines journalists and opinion frontrunners.

Wine ought to be promoted like cars”you promote your ultra-premium wine beverages, and it has a halo effect on the whole selection. That is why we are focusing at the moment on Ninquen. To be regarded as an ultra-premium wine, it has to be priced above $20 and has to be good in the on-premise channel. If we are able to help to make Ninquen a great wine that people will selling for $25 and have it known that it must be as good as a large number of bottles selling for $50, buyers and journalists will get excited. From this business, in the event you get great word of mouth and recommendations by wine copy writers, volumes can increase quickly”consumers are looking for advice.

We are investment lots of money to invite journalists and purchasers to Republic of chile. We invite them through Chilevid, the Vinas sobre Colchagua vineyard association, or a selected group of wineries that agreed on a unique program. 13 Copying or perhaps posting is an infringement of copyright. [emailprotected] harvard. edu or perhaps 617-783-7860. MontGras 503-044 Pricing strategy was the critical element of positioning, and there were concerns that the benefit positioning of Chilean wine beverages was undermining MontGras’s benefit proposition.

When Ninquen was a vehicle for achieving higher prices, Middleton was conscious that the worldwide and local oversupply of grapes would place pressure about prices, especially at the lower end of the fine-wine part. In addition , inside the icon and ultra-premium part, the downturn that started in 2001 in the us could travel consumers to trade to less expensive wine beverages. That could be a possibility for the labels and the MontGras reserva lines if we were holding priced aggressively. Middleton had already conducted a price firmness test in great britain.

The price of a single carmenere reserva wine was increased via? 5. 99 to? several. 49 per bottle within a chain retail outlet over several months, without impact on volume was recorded. Depending on this, Middleton estimated that MontGras could achieve a normal price of $35 free of charge on board (FOB) per case in five years. However , he was nonetheless analyzing if he could reach a better target. This individual recalled the situation of Silvestre, a Chilean boutique vineyard that liked an average BALLOON price of $44 per case. The company strategy of Montes was somewhat different.

It sold 220, 000 cases a year, with a sales team of eight people protecting 45 countries, since the potential volume per country with this price level was more modest. Placement Chilean Wine Middleton likewise had to help to make a suggestion to the panel regarding the initiative of Vinas de Chile to create an industry plan to build an image about Chile and the “Wines of Chile.  He arranged that the Chilean wine industry lacked a proper image, and he thought about how the purchase in an sector plan would add value to MontGras’s strategy.

This individual recalled the guest speaker at a recent dinner, a small business school professor who had looked into the wine market, expressed concern about building an image about “Wines of Chile,  since it raised the risk of standardizing the image coming from all Chilean wine beverages. Certainly, whilst Chilevid users exported in a average $26 per case and were enjoying 24% annual progress, Vinas de Chile associates achieved a typical $21 and were developing at only 4%. Nevertheless, they represented 85% of all exports and therefore drove the belief of Chilean wines in another country.

Once Middleton ended up his meeting with the Wine Enthusiast media, he had to work on MontGras’s export strategy. He understood that the MontGras shareholders experienced differing thoughts about the issue. Just how should they your U. T. market? Which distributor? Should they focus on a margin approach or try to find volume, or could they will achieve both simultaneously? Just how would the “Wines of Chile advertising campaign impact MontGras strategy? Middleton could not postpone the reentry to the U. S. marketplace, however , this individual wondered whether the search for a joint-venture partner should not be a priority. 12-15 Copying or posting is an infringement of copyright laws.

[emailprotected] harvard. edu or 617-783-7860. 503-044 MontGras Demonstrate 1a Community Wine Creation 1996 1, 560. 962 1, 528. 067 790. 426 490. 802 329. 706 219. 718 224. 692 a hundred seventy five. 096 246. 480 99. 416 one particular, 463. 860 7, 129. 225 1997 1, 432. 548 1, 314. 641 863. 642 680. 576 351. 008 210. 979 220. 865 160. 519 153. 768 118. 279 1, 463. 122 6, 969. 947 Year 98 1, 411. 046 one particular, 485. 650 785. 824 533. 1000 329. 508 200. 265 281. 680 192. 802 93. 080 142. 344 1, 475. 476 six, 930. 675 1999 1, 636. 310 1, 509. 893 849. 264 539. 500 413. 080 207. 179 319. 435 221. 297 204. 334 124. 969 1, 489. 783 7, 515. 044 2150 1, 553. 266 one particular, 405. sixteen 1, 086. 530 650. 000 325. 962 285. 551 262. 102 222. 405 174. 031 173. 525 one particular, 530. 438 7, 669. 526 % Share 2000 20% 18% 14% 9% 5% 4% 3% 3% 2% 2% 20% fully 1 2 3 5 5 six 7 8 9 15 Wine Creation (millions of gallons) England Italy Spain United States Spain South Africa Philippines Australia Italy Chile Others Total Resource: Adapted coming from Food and Administration Corporation of the Un (FAO). Display 1b Globe Wine Exports in Volume level 1996 336. 365 348. 787 174. 962 52. 876 33. 714 41. 982 sixty four. 092 40. 630 23. 193 32. 597 257. 567 you, 424. 765 1997 391. 682 326. 304 240. 651 83. 659 forty. 142 53. 053 57. 59 63. 689 21. 550 thirty five. 527 274. 002 you, 578. 218 Year 1998 425. 479 394. 967 266. 482 90. 909 50. 025 65. 523 57. 875 58. 440 27. 982 30. 996 237. 952 1, 706. 630 1999 412. 834 476. 317 217. 080 91. 254 56. 030 68. 223 60. 198 49. 499 21. 128 25. 213 159. 393 1, 637. 169 2k 385. 453 381. 558 202. 099 104. 611 80. 830 72. 005 62. 774 48. 763 44. two hundred 23. 951 157. 836 1, 564. 080 % Share 2k 25% 25% 13% seven percent 5% five per cent 4% 3% 2% 1% 10% 100% 1 2 3 4 5 6th 7 almost eight 9 twelve Wine Export products (millions of gallons) Portugal Italy Italy Chile Quotes United States Philippines Portugal S. africa Argentina Other folks Total Modified from FAO.

Source: Exhibit 1c Community Wine Export products in Benefit 1996 4, 824. 017 2, 135. 132 one particular, 094. 021 429. 337 293. 743 304. 491 537. 378 485. 185 186. 713 67. 678 1, 161. 044 11, 513. 739 1997 5, 143. 070 2, 098. 590 you, 130. 678 535. 808 423. 990 394. 632 523. 396 413. 807 189. 307 128. two hundred fifty 1, four twenty. 822 doze, 402. 350 Year 98 5, 890. 723 two, 365. 195 1, 286. 912 611. 429 510. 422 512. 140 528. 281 435. 238 184. 969 152. 482 1, 341. 429 13, 819. 220 1999 6, 101. 171 two, 463. 772 1, 313. 676 793. 650 523. 652 518. 921 520. 075 436. 314 121. 965 141. 007 one particular, 176. 021 14, one hundred ten. 224 2000 5, 044. 48 two, 229. 584 1, 126. 106 903. 594 576. 822 530. 596 468. 958 352. 331 244. 753 148. 771 you, 100. 856 12, 726. 719 % Share 2k 40% 17% 9% 7% 5% 4% 4% 3% 2% 1% 8% fully 1 two 3 some 5 six 7 almost eight 9 12 Wine Exports (US$ millions) France Italia Spain Australia Chile United states of america Portugal Germany South Africa Perú Others Total Adapted via FAO. Origin: 16 Replicating or publishing is an infringement of copyright. [emailprotected] harvard. edu or 617-783-7860. MontGras 503-044 Exhibit 2 Price Ranges in the United States High Icon Price range: &gt, US$50 amount market share: