The Globalisation of a Wine Brand from an Emerging Market: The Case of Casillero del Diablo

Dr. Constanza Bianchi, QUT

The legend...In the year 1891, Don Melchor, discovered that his vineyard workers were sampling his greatest
wines. To discourage this action, Don Melchor spread the rumour that his deepest, darkest cellar was the Casillero
del Diablo (Cellar of the Devil), so that no one would dare go in there. In this way, he was able to save his finest
reserves from the intruders, and gave the name to one of the most famous wines of Concha y Toro and Chile:
Casillero del Diablo.

At the beginning of the millennium, the wine industry worldwide was experiencing a large structural
change. Large liquor and spirits multinationals were recognizing the growth potential of the wine sector
and acquiring wineries to diversify their businesses. This situation led to an increase in the level of
competition of the industry, and Via Concha y Toro, the largest winery in Chile, realised the need to
engage in more aggressive and innovative marketing strategies by developing strong global brands.
Casillero del Diablo, owned by Via Concha y Toro, is the most recognized Chilean wine brand
worldwide, with 12 varieties and presence in more than 130 countries, with an explosive growth in
exports since 2001. The global brand project for Casillero del Diablo started at the end of the year 2000,
with the goal of reaching sales up to 1 million boxes of wine within 3 years. At the end of 2003, sales of
Casillero del Diablo had grown 47% compared to the previous year, with surpassing the million boxes in
sales. The performance of Casillero del Diablo was accompanied by excellent reviews and scores from
the specialized international press.

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 Via Concha y Toro is the leading producer and exporter of wines in Chile, the 5th largest wine
exporter worldwide, and among the 10 largest and most prestigious wine companies in the world. The
company was founded in 1883 by Don Melchor Concha y Toro, a businessman of Spanish descent who
brought noble grape vines from France to Chile and hired a French oenologist to craft his wines. In 1933,
Concha y Toro started exporting wines to Holland and the following years were characterised by
expansion, increased exports, and new product development. The company incorporated advanced
technology, increased vineyards, raised production capacity and state of the art wine-making equipment.
In 1994, the company started to list their shares in the New York Exchange, and in 1996, the company
entered Argentina, and is now the second largest wine exporter in this country. The company has received
several awards, and in 2007, the Wine & Spirits Magazine acknowledged Concha y Toro as one of the
best wine producers in the world.
The well known value (quality/ price) proposition of Chilean wines, as well as the increased wine
consumption in relevant markets had made the wine exports a very attractive business. However, during
the 90s, there was a substantial change in the structure of the world wine industry. First, the level of
competition has increased worldwide due to the emergence of New World wineries from Argentina,
Australia, Chile, United States, South Africa and N. Zealand. In addition, per capita consumption of wine
has increased. Also, wine consumption patterns have moved from cheaper wines to a premium category
of wines (higher quality and price) due to more knowledgeable consumers. Further, retailers have become
more powerful in the distribution channel, and over time have expanded their assortment of wines to
incorporate higher quality varieties. Finally, the large range of wine brands available in retail stores has
pushed wineries to improve their marketing to position and provide an identity to their wines.
When competition in the wine industry grew dramatically in the new millennium, Concha y Toro was
the first Chilean winery that recognised the need to implement a marketing strategy to build strong
brands. This entailed a tremendous challenge for an industry that for decades had promoted their wine
with generic campaigns. The company chose Casillero del Diablo, with the objective of making it a
worldwide recognized brand, that would give the wine identity and a real differentiation. This decision
was made based on several factors. Casillero del Diablo was a premium wine with higher levels of
profitability which allowed for the necessary investments for building a global brand. Second, Casillero
del Diablo had a very powerful legend which provided the product with a powerful concept that was
attractive, with a real differentiation and a clear positioning. However, Casillero del Diablo also presented
certain problems for becoming a global brand. First, the brand was perceived as old fashioned and without
a clear positioning. In addition, there had been no identification of the target segment of the product.
Furthermore, the name Casillero del Diablo was difficult to remember and pronounce, especially in
non-Spanish speaking countries.
The company decided to pursue the global project and established a specific, measureable goal that
entailed team-work among the different units. This goal consisted in moving from annual sales of 500.000
boxes that had been sold during the year 2000, to 1 million boxes in 2003, a doubling of sales in only

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three years. The company recruited a professional oenologist to develop a high quality and consistent
wine. These efforts led the brand to receive good scores in magazine and wine classifications, which
revived the image of Casillero del Diablo. At the same time, the marketing group improved the product
packaging, which according to consumers, was very old fashioned and not congruent with new trends.
The presentation of the product also needed attention, since it could not only be a differentiation element,
but essential for providing a consistent image. By 2002, Casillero del Diablo brand presented a more
stylised bottle, with a bright top of a different colour according to the variety. The front label was clean,
elegant, and easy to read with clear indication of the variety, the year of harvest, and the origin of the
wine. It also incorporated the legend of Casillero del Diablo and the image of a devil in the form of a seal
in the bottle.
Furthermore, the company widened Casillero del Diablos varieties from 5 to 12, which gave the brand
the possibility of reaching a larger number of consumers by satisfying better the needs and preferences in
different markets. All of this product innovation was supported strongly by market research conducted in
different markets to support the development of the communication campaigns and the new packaging.
This global communicational campaign used a standardized message which highlighted the brand identity
and the unique concept of the legend and was launched in more than 50 countries. It used a wide variety
of media advertising and constituted one of the most important campaigns conducted internationally by a
Chilean brand. The brand also sponsored numerous events internationally, which resulted in major
exposure in wine markets.
Finally, Concha y Toro put especial care in the relationship with its distributors. This was critical for
the company considering the geographical distance from the markets with largest consumption. Concha y
Toro attracted distributors through an appealing concept and specific incentives for converting them to
partners of the company and ambassadors of the brand. Although the company already counted on good
distributor channels before starting the global campaign of Casillero del Diablo, it needed to involve
distributors in the new corporate initiative. With this objective in mind, executives from the corporation
visited each representative in each international market. In addition, a world reunion was organised and
held in Chile, where the company announced their decision of making Casillero del Diablo a top priority
brand for the company. Based on strong support from the top management team and company owners,
Concha y Toro committed resources to motivate their distributors to participate in the global brand
journey.
During this journey, Casillero del Diablo has been confronted with several different domestic and
international competitors. Within Latin-America, the main competitors for Casillero del Diablo are the
Chilean wineries Santa Rita and San Pedro. In the U.K., Casillero del Diablo competes mainly with wines
that come from other New World countries, particularly Australian wineries. However, while the Chilean
wine brand competes only in one segment of price (Premium), the Australian wineries compete with a
broader offer which includes wines of different categories. In the U.S. market, Casillero del Diablo

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competes directly with local wineries, mainly Californian wines. In Asia, the consumption is concentrated
in the wines that come from traditional markets, especially France, Spain, and Italy.
In spite of the excellent international results, the marketing team behind Casillero del Diablo is setting
new goals for the next decade. We want to reach export levels of 5 million boxes by 2013, similar to the
export levels of Australian global brands, and in the future become the largest premium wine supplier in
the world.

Questions:

1. Critically analyse the actions taken by the company to position Casillero del Diablo as a
global brand?
2. What are the main opportunities of the global wine marketplace for Casillero del Diablo?
3. What challenges may Casillero del Diablo confront in foreign markets?
4. What suggestions would you give to the global brand manager of Concha y Toro to continue
growing in the next decade?
5. What emerging wine markets are attractive for Casillero del Diablo?

References:

Brown, Greg. (2000), Lafite, Margaux, Haut-BrionConcha y Toro?, Business Week, Feb. 21.
Casillero del Diablo (2008), http:// www.casillerodeldiablo.com
Cochran, T. N. (1994), Via Concha y Toro, Barrons, October 10, 1994, p.35.
Concha y Toro Annual Report (2007), http://www.conchaytoro.cl
Concha y Toro Press Kit (2008), http://www.conchaytoro.cl
Kandell, J. (1997), Chilean Powerhouse, Wine Spectator, November 10, pp.126.
Kandell, J. (1995), The Chilean Model II, Institutional investor, October, pp.269-270.
Matthews, T. (1995), Leading the Way in Chile, Wine Spectator, June 15, p.42.
Molesworth, J. (2001), The Don of Chilean Cabernet, Wine Spectator, March 31, p.111
Sullivan, A. (1999), Chilean Winery Is Going Global, International Herald Tribune, April 2, pp. 13-14.
Winters, P. (1989), Banfi Backs Chilean Wine, Advertising Age, July 24, p. 72.