Wine Quarterly Q4 2020: What the Wine Industry Can Learn From Concha y Toro (and Constellation Brands)
While the Covid-19 crisis has weighed on results of most wineries, Chile’s Vina Concha y Toro posted outsized growth in its most recent earnings call. While some external factors have moved in its favor, we argue that the growth is mainly driven by its recent efforts to adjust its strategy. We see numerous similarities with changes implemented by Constellation Brands ten years ago that also drove improved results. In this report, we explore four key takeaways from the change in strategy that we believe provide food-for-thought for others in the industry.
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“The first lesson is that organizational structures can become obsolete, and should be reviewed and updated to reflect changes in the market. Second, you need to measure what you want to manage. Third, remuneration incentives must be appropriately aligned with organizational goals. And lastly, learn to let go (brands, personnel… and even customers),” according to Stephen Rannekleiv, Global Strategist – Beverages.
In terms of export trends, the pandemic, coupled with geopolitical tensions and rising tariffs, has weighed on exports of most major wine producers. New Zealand was the major exception, and it continued to see solid growth.
Regarding US import trends, the value of wine imported into the US in the first half of 2020 declined 6%, but volumes rose 7%.
Volatility has been affecting the currencies of major wine exporters – and there will be more in the future.
Jane Foley, Rabobank's Head of FX Strategy, contributed to this publication.