Espíritu de Chile: With an Eye on the World

By Angela Arrese

La CAV, October 2008

Pp: 38-46

Espíritu de Chile is a joint venture formed two years ago by the German wine group Racke and Chile’s Viña Aresti. In a very short period of time they have successfully gained presence in nearly 40 countries and produce close to 330,000 cases. A year ago they began to look across the border and are now releasing Espíritu de Argentina in Chile through La CAV. This is just one of the winery’s new international projects.

The Espíritu de Chile brand began with a rigorous 18-month market research plan that included Chile as well as the United States, England, and Germany, three of the primary destinations for Chilean wine in the world. The project has been consumer-focused from the beginning, and therefore the first task at hand was to poll the public about the images they associated with Chile. They found, among other things, the Andes Mountains, Andean culture, gold, and the sun. The next step was to create names and iconographies to test their credibility, and, despite the initial long list, Espíritu always came out on top. The label was designed in conjunction with the German agency Reiss, specialists in developing products for the wine industry. Meanwhile, they studied consumer taste profiles with respect to levels of fruitiness, residual sugar, and oak and created the business plan for a profitable project.

Because Espíritu de Chile is focused on consumers and makes its wines based on what they want, the enological definition process takes place in conjunction with the commercial department. In some cases, such as that of England, for example, importers are also included in the process. “Fortunately, our chief winemaker, Jon Usabiaga, is commercially oriented. When the management team asks him for a wine with specific characteristics, Jon proposes three or five samples and then we work them together,” explains General Manager Ernest Müller.

Usabiaga says that his work is to interpret the needs of the consumer precisely. “I need to be sensitive to what they say in order to translate it into the language of liquids, volumes, color intensities, concentration, tannin softness, oak and alcohol levels, grape yields, irrigation, foliage management, and costs, then crystallize all that and put it into a bottle that people will enjoy.”

The process seems to have borne its fruits, because they have won a number awards and medals in some of the world’s most important national and international competitions, such as the 2007 Challenge Internacional du Vin, the 2007 Wines of Chile Annual Awards, and the 2008 Concours Mondial de Bruxelles. They are now launching the brand in markets such as Asia, Latin America, and North America and aiming for the same success they have had in Germany, where AC Nielsen reports it as number 1 in foreign wine sales in grocery stores.

They also have a number of new products that they will soon release on the national market: an organic wine, a late harvest, and a new Reserva Privada line.

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ESPÍRITU DE ARGENTINA

Espíritu de Chile was so well received that the expansion process took place naturally. Importers soon made it clear that Argentina was the coming thing from Latin America, and since the project had always included plans to expand beyond Chile, they immediately began to look across the Andes, develop concepts, and look for a potential partner. “For us, Argentina is not competition. If Latin America does well as a region, we will all have a larger market share,” Ernesto affirms.

They began with the same process they had used with Espíritu de Chile. They employed market studies to discover the images that consumers in Brazil, United States, England, and Germany associated with Argentina. They tested a number of concepts, such as gauchos and Argentine women, and then wondered what would happen if they continued with the same Espíritu brand. At first there was no consensus among the team; they weren’t sure whether a second winery with the same name was a good idea. But the study results were impressive; the brand had a 40% greater acceptance level than any of the other concepts.

Again they worked with the German agency Reiss to create the brand. Of all the concepts that had appeared in the studies, they chose three: freedom, pleasure, and temperament, and associated them with images such as the pampas, Argentine beef, and its people. Then they turned to the color scheme, and the first that came to mind was the national sky blue and silver. They launched a model of the winery at Prowein 2008 and the positive reaction was extraordinary. Eighteen of twenty importers opted to begin with the brand immediately, and they have already sold 10,000 of the first 30,000 cases produced.

At the same time that they developed the commercial side, they were also looking for the right winery in Mendoza that could comply with their levels of quality. It had to be large enough to be efficient, have its own distribution in Argentina, and be a family winery. The Chilean winemaker Jon Usabiaga and representatives of Racke made five exploratory trips to Mendoza before they came to Monte Real and found their ideal partner. “They had very good productive capacity, vineyards throughout Mendoza, from the eastern zone to the Uco Valley, and it was a family company. They had been waiting for the right moment to begin bottling wine and we came along with an interesting proposition, knowledge of how to develop an international brand from the ground up, and a broad distribution platform,” which is ceratinly no minor issue as Espíritu de Argentina will be in nearly 20 countries in less than a year. The first shipments have already been sent to Germany, Ireland, Poland, Canada, United States, the Czech Republic, Korea, Mexico, and Chile.

Espíritu de Argentina has two lines of wines made with Argentina’s typical varieties. The Clásica line includes malbec, bonarda, syrah, torrontés, chardonnay, and rosé, and the Reserva category is exclusively dedicated to one malbec. The Argentine project’s chief winemaker Luis Villarreal works with Jon Usabiaga and the German winemaker to make the final blends. “The path these wines take runs opposite the traditional route. The usual position of ‘This is my wine, do you like it? Drink it’ shifts to a very different ‘What would you like to drink? I want to make a wine the way you want it.’ This requires a very dynamic attitude because people change, societies change, and the markets can be global or very local. We have to be open enough to be able to read and understand what the world wants.”

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In-store Activities

Based on the premise that a large part of the decision to buy is made at the point of sale, the company has developed innovative activities in supermarkets, where they place special emphasis on attractive gondola design and on providing the bottle with added value. As Ernesto explains, “Our marketing team creates at least two theme-based campaigns per year. What we want to achieve is to create a sense of added value associated with the possibilities of consumption, which is very important.”

In Chile they promote the wine at points of sale through tastings, special offers, and added value actions. “Espíritu de Chile’s proposition of value is very attractive. This is a product with striking packaging; it is a friendly wine in line with Chilean consumer tastes and has a competitive price. Our strategic partner in this task is Cencosud, which owns the large Jumbo and Santa Isabel supermarket chains. The idea is that people try the wine and fall in love with it, and the results have been excellent so far,” comments Brand Manager Trinidad Silva, who is responsible for the national market.

The same thing is happening in other markets, such as the United States, where the brand is being introduced with great success. Commercial Manager Sebastián Wilson is convinced that the Espíritu de Chile and Espíritu de Argentina brands are right for the North American market, where marketing, brand strength, and packaging are all very important. They recently entered Wal-Mart, the primary retail chain in the U.S. “These are very friendly wines made for the price segment that we want to reach. We have achieved an emotional connection with the brand through the iconography and the way in which we communicate at the points of sale. This is key in the United States; if you can make this connection, the consumer feels involved and the possibility of success is considerably greater.

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Espíritu de Chile is available in Canada, United States, Mexico, Brazil, Chile, Paraguay, Uruguay, Germany, the Netherlands, United Kingdom, Ireland, Spain, France, Switzerland, Poland, the Czech Republic, Denmark, Finland, Austria, Sweden, Latvia, Russia, Ukraine, Slovakia, Croatia, Serbia, Macedonia, Romania, Greece, Turkey, Cypress, Japan, China, Korea, Hong Kong, Viet Nam, Costa Rica, Indonesia, Singapore, and Australia.

Expanding around the world

In addition to Espíritu de Chile and Argentina, Racke is associated with other brands in South Africa, Italy, and United States. Golden Kaan is a joint venture with KWV, the second largest winery in South Africa, which produces 500,000 cases per year for sale in 50 countries. The Italian winery Vitae is a joint venture with Torrevento in the Puglia region and will be launched in December with the most typical varieties of southern Italy. Donum Estate is a Californian winery that produces $80-dollar bottles of pinot noir that annually earn more than 90 points in Wine Spectator, one of the most important wine magazines on the international level.

Ernesto Müller describes the scope of the project by explaining that “the group is generating a portfolio of fine wines from complementary and independent wineries in the most important wine regions in the world. This is not a large corporation such as Constellation or Pernod Ricard, which own of all of their brands; our wineries are independently managed in association with prestigious local producers. Our way of thinking is global but based on local knowledge. We know that together we are much more attractive for the distribution channels, and we can also face challenges together that we could not take on separately. In the United States, for example, we are now developing the brands in conjunction with an importer in which we participate. If we were dispersed among four or five different importers we would have very little influence managing our brands and very little power within the distribution channel.”

Another advantage is that by sharing information among the entire group, they are able to continually expand their knowledge of markets and distribution, and therefore develop a much more attractive portfolio of products. “Today our export manager not only offers Espíritu de Chile, but is also able to offer wine from South Africa, Italy, California, and now from Argentina as well.”

Working with the Racke group has allowed Aresti to develop Espíritu de Chile and Espíritu de Argentina in record time, and they have launched two international brands in 40 countries over the course of just two and a half years. Ernesto concludes that “We are developing a business model that is very innovative in the wine industry. Instead of spending our time looking for terroir, we focus on what the consumers want and develop brands that generate an emotional connection and strengthen the country’s image, history, and spirit of place. Furthermore, we are not looking for vertical integrations, but rather alliances with complementary partners where we can combine production, marketing and distribution knowledge. Our objective is to redefine the category of wines for Chile and Argentina.”

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The wines, according to their winemakers

Jon Usabiaga of Espíritu de Chile and Luis Villarreal of Espíritu de Argentina

How would you describe the Espíritu wines?

J.U.: The fundamental pillars of the philosophy behind the Espíritu de Chile wines are typicity, clean aromas, concentration in accordance with the level of quality, ripe tannins, and balanced acidity. In short, they are pleasing wines that faithfully represent what the combination of soils, plants, and climate can produce in our country.

L.V.: The Espíritu de Argentina wines respond to what we believe consumers look for and need: intense, bright visual sensations plus clean, clear aromatic and taste sensations of sweet fruits that quickly provide pleasure. Each variety shows its personality in a refined and attractive way; they are soft but well-defined and have bright colors and intense original aromas that blend nicely with balanced notes of oak, soft tannins, and sweet flavors.

Do you actively seek out new terroirs?

J.U.: Espíritu de Chile looks for grapes and wines from different parts of the country. In that sense we try to pair up the attributes of each valley, so the Denomination of Origin (D.O.) for many of our wines is the Central Valley. We look for the fresh fruit and crisp acidity of the coolest valleys (Curicó, Maule, Itata), and the soft, ripe tannins of the warmer areas (Maipo, Colchagua, Cachapoal). Together they make really good blends, and we are continuously exploring the terroirs that deliver the “seasoning” for the upper level blends and for an icon blend that will be launched in the medium term.

L.V.: The technical team behind Espíritu de Argentina has many years of experience seeking out and studying the best terroirs for each variety. Mendoza in particular and Argentina in general, due to its vast geographical extension, present a broad selection of terroirs. We have planted vineyards and formed close relationships with growers in very different regions, and each has different conditions for working the land, irrigation, trellising systems, etc. The grapes come from the upper valley of the Tunyán River (in the well-known Uco Valley), from the lower valley of the same river (in the Medrano district), and Santa Rosa, a very particular region that is nearly desert.

How does an Espíritu wine come about?

J.U.: At first Espíritu de Chile offered a small line of wines to open markets. As the work with distributors and customers developed, the line expanded, and today there are close to 18 products based on the needs of the destination markets, such as our syrah/cabernet blend for the United Kingdom or our cabernet/carménère for Finland, for example, as well as other proposals to strengthen our offer, such as a late harvest sauvignon or a cabernet rosé.

L.V.: Once the objective is clear, we select the best varieties for the purpose. We then choose the best vineyards, a process that is very much related to terroir and the age of the vineyard, etc. We look for the grapes that will best express their original identity, especially for the typical Argentine varieties. The winemaking team’s central goal is to make each wine so that it intensely displays its varietal personality with elegance, balance, and sweetness.

How do you work together?

J.U.: Luis Villarreal is a guy with the great technical ability, composure, and tremendous experience that come from years in the field. He’s a good taster, and he knows the international market. Luis and his team are open-minded and have a great desire to do things. He was able to quickly get the sense and spirit of this new alliance.

L.V.: Jon very clearly interprets and demonstrates the Espíritu style. In the first phase of the project he conveyed that to us in such a way that the group is now completely and naturally integrated in the project. He visits during the crush or is in constant contact with me and provides operational suggestions that, due to his abilities, are beyond dispute. We test and select the base products of the blend, and when the time comes, we decide on the final blend, and then tweak and discuss it until we consider that we have reached our goal. This is very professional work with intelligence, openness, and clarity of ideas, thoughts, and objectives.

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Sommelier Tasting:

ESPÍRITU DE CHILE SAUVIGNON BLANC 2008 / LIMARÍ VALLEY / 87 POINTS

Perfumed and exotic on the nose, with aromas of red apple, pear, strawberries, and a mineral touch that projects a pleasingly mild and well-balanced acidity.

Pairing Suggestions: Grilled sole with almond sauce.

ESPÍRITU DE CHILE GRAN RESERVA CARMENERE 2006 / CENTRAL VALLEY / 85 POINTS

With aromas of vanilla and oak and a touch of coconut, nuts, and earth over a layer of cherries. The oak weighs in on the medium-bodied palate, which recalls smoke, toast, pencil lead, and slight vegetal tones.

Pairing Suggestions: Duck a l'orange.

ESPÍRITU DE ARGENTINA RESERVA MALBEC 2007 / MENDOZA VALLEY / 86 POINTS

Clean and clear tones of black fruit and spice on the nose with plums, cassis, tobacco, and smoke, along with a touch of menthol. Medium-bodied with fresh acidity on the palate, the fruit carries through to the clean and well-balanced finish.

Pairing Suggestions: Beef fillet with baked potatoes.

ESPÍRITU DE ARGENTINA BONARDA 2007 / MENDOZA VALLEY / 86 POINTS

Still a bit closed on the nose, but showing aromas of cocoa and toasted nuts, cherry bonbons, and a touch of almonds on the nose. Medium-bodied, pleasing, and meaty on the palate, which recalls smoke, cocoa, and nuts and features friendly, well-integrated tannins.

Pairing Suggestions: Mushroom risotto.