Concha y Toro grew off-trade sales by 18.3% in the 12 weeks to January 5, 2019, to cap a strong year for the South American wine supplier.

It vastly outstripped the performance it delivered during the same period in 2017, with core brands Casillero del Diablo, Trivento and Cono Sur leading the charge.

That amounted to an extra £14.4 million in sales during the 12-week trading period, leaving it ahead of Kingsland, Casella and Gallo as the supplier contributing the most value growth (Nielsen).

Concha y Toro UK general manager Simon Doyle said: “These excellent figures are very much a result of having a consistent business strategy. We are completely focused on adding value to the category by having brands that appeal to consumer needs and occasions.”

The overall off-trade still wine category grew 2.2% during the 12-week period, according to Nielsen, meaning that the supplier outperformed the market considerably.

Commercial Director Clare Griffiths added: “I’m so proud of this result for this key period, which we’ve achieved through our market-leading brands, driven by substantial and continued investment in them.”

Doyle is heading into the New Year full of positivity in spite of the challenges the wine trade faces. A duty hike will come into effect on February 1 and Brexit is scheduled for the following month, presenting the industry with a number of headaches. But Doyle is impressed by retail standards and the offering consumers are presented with, arguing that this can offset any negatives the category faces.

“Although there are challenges out there, like Brexit and duty, there’s real reason for the wine category to be optimistic,” he said. “The offering in supermarkets is as good as it has ever been, if not better. It’s still difficult to navigate, but it’s becoming better. Signage is becoming clearer and private label is much more complementary to brands. It’s helping consumers navigate varietals and origins in a very positive way. Things are looking coordinated. People just need to be encouraged to trade up.”

Encouraging consumers to trade up is a key pillar of CyT’s UK strategy and flagship brand Casillero del Diablo commands the highest price point in the top 10 off-trade wine labels. Before the strong Christmas trading period, it had grown value sales by 10% and volumes by 7.6% in the past year (Nielsen, year to November 2018), retaining an average price of £6.43 despite being caught up in retailer promotions that offer 25% off six bottle deals. For example, in the build-up to Christmas, Asda was selling six bottles of wine for £27 and the deal included Casillero del Diablo along with the likes of Yellow Tail and Campo Viejo.

“There’s a general battle going on between the grocers at these times of year,” said Doyle. “It’s the nature of the retail scene. From a brand owner’s point of view, we are not enthusiastic about it, but it’s the reality. Those are low prices when you buy six, but Casillero del Diablo is getting an average of £6.43, so that captures all those sort of deals.

“It’s a retailer’s prerogative on price and we can’t get involved in that. We make very clear with our retail partners what activities we are investing in and hope our plans are aligned with theirs. Anything lower than £6 is not sustainable, even for the medium-term.

“Casillero del Diablo is up 10% and the average retail price is holding up. We have seen a real change in the order. Yellow Tail, Barefoot and Casillero del Diablo are taking significant share from Blossom Hill and Echo Falls and Gallo. The slightly higher value wines are doing well. Flavour profiles are changing and people are prepared to pay a bit more if they know what they are going to get. Yellow Tail and Barefoot do a fantastic job, with a varietally led portfolio offering. Casillero de Diablo is seen as a more mature, slightly older profile. They complement each other quite well.

“I think it’s pretty positive, because we need to add value to this category. There’s not a lot of room for growth below £5, so it’s really important to explain to consumers that if they pay more they get more for it. With tax increases, there’s no way retailers can continue to sustain those low price points for much longer.”

Isla Negra is a major brand, with sales of £98.4 million in the past year, and CyT recently launched Californian brand 1000 Stories and a flavoured wine range called Jacked, but its focus is on Casillero del Diablo, Cono Sur and Argentinean Malbec brand Trivento. All three are showing strong growth, accounting for the UK’s number one Cabernet Sauvignon, Pinot Noir, Viognier and Malbec.

Doyle said the strategy going forwards is to concentrate on the off-trade. “We see a big opportunity to activate more effectively in grocery, but there’s also a massive distribution opportunity with the convenience channel,” he said. “We have a big campaign about being the number one brands in Chile and Argentina, and the number varietals in Cabernet Sauvignon, Malbec and Pinot Noir.

“Retailers with limited shelf space have to make decisions about how many SKUs they can stock. Sometimes you see a couple of hundred SKUs with only one facing. There’s a real category job to be done there, advising independent retailers how to merchandise the fixture. They are crying out for more category knowledge. It won’t be an immediate change. It requires a partnership over time. We have a good base, but we need to give them confidence to make the changes they need to make. If they have the bestselling Australian Shiraz, Yellow Tail, why only one facing? They should have three facings. Those are the areas we need to work with them on.

“It’s their livelihoods, so they are very open to case studies. It’s a long-term commitment. We can’t just dip in and out. Rather than being distracted by the other channels, we will keep putting activations in place with the grocers and really working with the impulse channels.”

Regarding Brexit, he added: “We have to be pragmatic and agile and anticipate different scenarios. Brexit is a challenge, but there’s a limit to what we can do in practice. We just have to make sure we have a good inventory. We are bringing a lot more inventory into the UK to help offset any challenges around the March-April period.

“The duty rise is coming into play at the end of February, which is a huge frustration for wine, to be called out for very special, negative treatment by the Treasury. We have to work on that.

“The WSTA do a good job. As an industry we need to do more to demonstrate the benefits we give to UK manufacturers. We pack up a lot of wine in the Northeast of England, a region that needs a lot of investment. We need to be a bit more proactive as wine producers, working alongside the WSTA, to get these messages out more assertively than we have in the past.”