Concha y Toro, the largest wine producer in South America, reported a significant decline in its Asian market performance for the first half of 2024, with sales in China plummeting by 19.8%. The downturn in Asia, driven by slumping sales in China and South Korea, contrasts with the company’s overall global growth.
The Chilean wine giant disclosed its financial results for the first half and second quarter of 2024, revealing a 21.6% year-on-year increase in consolidated sales to CLP 443.5 billion (approximately USD 474 million). Earnings before interest, taxes, depreciation, and amortization (EBITDA) surged 113.1% to CLP 69.7 billion (about USD 74.6 million).
In the second quarter alone, Concha y Toro saw consolidated sales rise 17.7% year-on-year to CLP 237.3 billion (approximately USD 250 million), with EBITDA climbing 109.9% to CLP 41.3 billion (about USD 44.2 million).
CEO of Concha y Toro attributed the profit growth to the company’s focus on higher-end products. “The company’s revenues were primarily driven by premium and higher-end brands, which made up 52.8% of the total, all thanks to the implementation of our premiumization strategy launched in 2017, when these products accounted for approximately 36.0% of our sales,” he said.
Founded in 1883, Concha y Toro operates over 12,000 hectares of vineyards across Chile, Argentina, and the United States, with notable brands including Casillero del Diablo and Don Melchor. The company has a joint venture with the Rothschild family, producing wines under the Almaviva label.
The company’s export markets played a key role in its overall performance, contributing CLP 299.5 billion (approximately USD 320 million) in the first half of 2024, up 25% year-on-year, and accounting for 67.5% of total revenue. The UK, U.S., and Brazil were its top three markets, with Asia contributing just 7.3% of the company’s total revenue.
The downturn in the Asian market was most pronounced in China and South Korea. In the first half of 2024, Concha y Toro’s sales in Asia were flat year-on-year, but volumes declined 5.7%. While sales in Japan grew by 50.9%, China and South Korea saw declines of 19.8% and 23.6%, respectively. In the second quarter, sales in Asia dropped 9.9%, with China and South Korea down 23% and 38%, respectively, despite a 24.5% increase in Japan.
Concha y Toro attributed the decline in Asia to economic challenges across the region.
The company has invested heavily in the Chinese market in recent years. Since 2019, Concha y Toro has been self-importing its products into China, setting up a warehouse in Shanghai to stock inventory locally. The company has also been active in promotions, participating in major local wine exhibitions and launching localized products like a special edition Casillero del Diablo Dragon Year set. Additionally, it recruited wine enthusiasts in China to serve as brand ambassadors.
Concha y Toro has partnered with several major Chinese importers – a few on our China’s top 50 Wine importers list – including COFCO Wine & Spirits, C&D Wines, Pinshanghui, and Zhuhai Quan Da Industry & Commerce Co Ltd, as well as Saltram Wines under Chinese Baijiu giant Luzhou Laojiao. In 2024, the company also entered into a strategic partnership with Chinese baijiu producer Wuliangye.
Despite these efforts, Concha y Toro’s performance in China has been underwhelming. Industry insiders suggest that the company’s flagship brand, Casillero del Diablo, struggles to cover the mid-to-high price segment fully and faces challenges in maintaining price stability. Furthermore, Concha y Toro only began promoting its higher-end brands in China in 2019, just as the market faced a trend of consumption downgrades.
“If Concha y Toro had started promoting its mid-to-high-end brands in China back in 2015, and built a stronger brand foundation, the situation would likely be different,” one insider said.
Adding to the challenges, Australian wine made a strong comeback to China in March 2024, with sales surging, while imports of French and Chilean wines into China have declined sharply. As the market shifts towards a competition for existing stocks, weaker brands face increasing pressure as consumers turn to stronger, more established brands.
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