Michael Cox, European director of Wines of Chile, gives his views on how the changing global wine market is affecting marketing spend in the UK.

I think ‘managing growth’ is the expression that readily comes to mind when one examines the challenges facing Chile at the moment. Not only have exports (volume, and especially value) been growing markedly in the past few years, but the number of exciting and dynamic markets have grown too, led by China, but by no means restricted to Asia.

As average quality of Chilean wine improves year by year, and strategically as Chile adapts to being more of a premium producer rather than a volume producer, so average prices have risen commensurately. However, although Chile is still seen as a value for money choice, there is no doubt that steadily increasing export prices over the last 12 to 24 months have put a break on the volumes that headed are being exported to Chile’s two largest market – the UK and the USA. Over the last year, volumes in these competitive markets (especially the UK) have dropped some 8%, although value has only fallen some 3%, as countries with cheaper wine to sell (notably Spain and Italy with beneficial euro rates) have reaped the benefits.

So with many new export markets clamouring for attention and marketing spend, Chilean producers, and indeed its generic bureaux, have had to cut their marketing cloth as prudently as possible so as to divide it sensibly in order to take advantage of growing opportunities right across the world (especially in Asia, Brazil, eastern Europe, Scandinavia, and Benelux), whilst at the same time protecting the great work and progress Chile has made in UK and USA over the last eight years or so.

My 2012 UK budget, which had remained pretty static for six or seven years, was cut by some 20% compared to 2011. However, I maintain strongly that we are managing still to run a robust trade and consumer campaign this year especially focusing on key sectors where Chile has real growth potential – the indies are proving to be a Chile success story for instance. Our 2012 programme includes more promos with the indies, more work with the Carmenère Made for Curry campaign, a busy Annual Trade Tasting in September, events with sommeliers, and an event to promote Chile’s smaller boutique producers. My UK budget for 2013 is scheduled to be some 3% to 5% more than this year, thus keeping pace with inflation.

While I would love more, notably so that we can carry out more consumer shows as we did a few years ago, I am convinced that the budget we have can help Chile to manage its way through this period of realignment, and as it strategically moves into a more premium focused market, where at between, say, £6 to £15 it represents outstanding value across a diversity of style and region.

So, this is a very longwinded way of saying that the UK market, while still dynamic and big, comes with certain caveats and pitfalls for any producer. Wine prices – be they export prices, or especially retail prices – are still unsustainably low for most. And while three for £10 and BOGOFs still dominate the retail scene, and on-traders remain obsessed with low price house wines, the UK market will continue to slip down the pecking order of many exporters’ priority lists. Chileans are by no means turning their backs on UK – far from it, because there are substantial and exciting opportunities for making progress at higher prices, but their marketing dollars and generic support has to be tailored carefully with support needed elsewhere in the world. Managing growth...... an enviable situation!

In summary, I certainly believe that generic bureaux such as Wines of Chile can make contributions despite the UK have a somewhat tarnished reputation in the eyes of many wine producers. The UK still has a massive role to play in the world’s wine scene – but we have to make it a more profitable market in which to operate. We must loosen the noose around the neck of the goose that has lain golden eggs for so long... and that means trying harder to persuade consumers that better wine costs more!

• Last month Cox became Master of the Worshipful Company of Vintners for 2012. Given this commitment, Cox is now working part-time with Wines of Chile. Anita Jackson and Karen Sutton will continue to run the UK office in his absence. Alvaro Arriagada will run the EU and Asian operations for the next year from his Santiago base.