Undurraga CEO: "There is room to grow, but at the expense of others"

It's nothing new to say that wine consumption has been falling globally in recent years, and that this has hit the wine industry like few times before. What is new is that among the wineries there are certain glimmers that raise hope for better times. Adolfo Hurtado, an agronomist and enologist from the Catholic University, took over as CEO of Undurraga Wine Group in April. And he knows this world well. He previously headed Viñedos Familia Chadwick and Viña MontGras. And he is among those who are starting to see the glass as a bit fuller. "Consumption peaked during the pandemic and, starting in October 2023, it entered a somewhat steeper decline, which is already stabilizing," he asserts. "It will continue to fall in small percentages, but no longer in the abrupt drop that caused this crisis," he adds. Now, this slowdown does not imply a rebound. For this reason, the wineries are assuming they must adjust to compete in better conditions and be among those that can sustain themselves. Because there is no room for growth for everyone. Hurtado explains this by recalling that the Chilean wine industry has always been driven by some foreign market. First it was the United States that was the great engine of growth for national wine exports, then the United Kingdom, then China, and now Brazil is playing that role, but to a lesser extent. So, in the absence of a country driving growth strongly, the remaining option is to grow by taking market share from the rest. "Wine consumption is going to continue to exist. Now, how you do, how you achieve your growth, will probably be at the expense of another," he states bluntly. "To the extent that you have a good commercial team, attractive products, and good distributors, there is indeed room for some wineries to grow, but that growth will come at the expense of others," he emphasizes. And in Undurraga's case, how is that structure? -We have our production reality quite well aligned with our commercial reality, which is not at all obvious in every company. That is why we have had good results recently. We are at an average export price of almost US$29 per case, above the industry, which is at US$24.5. However, Hurtado explains that to achieve that structural alignment they had to make adjustments at the beginning of this year. They cut the company's workforce by 14%, operating today with 250 people, and changed executives. And operationally, at their San Cayetano field in San Javier, in Maule—290 hectares—they uprooted old red vines (cabernet sauvignon, carmenere, and merlot) to replace them with white chardonnay vines, with the aim of better supplying their grape base for sparkling wine. "What we have been doing is replacing low-production, high-cost reds with good-production, low-cost whites," he explains. Undurraga has a total of 1,200 hectares of vines. In addition to San Cayetano, it has fields in Santa Ana, in Talagante (44 hectares); Lomas de Leyda, in San Antonio (200 hectares); Codigua, in Melipilla (204 hectares); and Cauquenes (388 hectares). The decision to change vines in the Maule Region aligns with its projection that in the short or medium term, white grapes will be scarcer in Chile than red ones. In fact, the price per kilo of white grapes is considerably more expensive than red grapes of equivalent quality. According to various specialized publications, the kilo of red wine grapes fluctuates between 200 and 250 pesos, and white grapes between 350 and 400 pesos. "Red is more versatile in terms of where you can plant it. Whites require more specific zones, with certain ideal conditions," Hurtado explains. And Undurraga's land balance bets on white: 60% versus 40% red. The company, which currently incorporates the brands Undurraga, Bouchon, Volcanes, Bisquertt, VFC, and Talagante International Brands, does not disclose financial figures. It only said last year to DF that its Ebitda margin was on the order of 13%-14% and that they projected profits for 2025 and 2026. This time, Hurtado only limited himself to noting that so far its export revenue has risen 6% year to date compared to the previous year, and 5% in the domestic market. In dismissal letters from this year, Undurraga Wine Group justified the layoffs by the state of the industry, which exported 692 million liters in 2025, 10.9% less than the previous year, for a value of US$1,523 million, an annual drop of 4.3%. "During the last period (it does not specify the period), the company has recorded a 16.3% drop in exported volume and a 13% decrease in value, which has seriously affected our profitability despite all the financial efforts we have made," several of those letters repeat. In one of those lawsuits, Undurraga submitted its consolidated financial statements, but for fiscal years 2023 and 2024: in the latter year, it had revenues of $45,850 million, with 56.7% corresponding to export sales. In 2023, Undurraga lost $646 million, and in 2024, another $3,291 million. The sector consolidation that Undurraga predicts has already been pushed by the company itself. In July 2024, Undurraga acquired the social rights of the VFC wine group, which included the Bouchon and Bisquertt wineries. For 100% of the shares, Undurraga paid 110,247 UF (about $4,100 million at the time), an amount for which it paid 40,000 UF and committed to paying the balance in installments through 2028. In addition, it assumed debts that those companies held with their former controllers, for another $4,000 million. In 2026, the winery—whose ownership is shared by the Picciotto family, with 56.4%, and businessman José Yuraszeck, with 42.8%—celebrated the gold medals won last month at the International Wine Challenge in London by its Extinto Carmenere 2024 as the best Chilean wine of the year, and the nomination of its head winemaker, Rafael Urrejola, as Red Winemaker of the Year, an award he already won in 2023. For the coming years, the board designed a strategic plan that considers that in 2027 and 2028 the company must consolidate operations, improve its teams and product portfolio, and then open up to potential alliances or new businesses, such as the launch of a white icon wine. The weight of bubbles The Undurraga brand has increasingly become more associated with sparkling wines. In fact, it shows in the weight of its sales. While in the Chilean industry, on average, the balance is 70% exports and 30% domestic market, at Undurraga that proportion is 50% and 50%. This is due to the weight of sparkling wines, 90% of which are sold in Chile and only 10% go abroad. Undurraga sells almost 2 million cases, and 650,000 are sparkling wines, where they lead in market share with 36%, followed by Valdivieso, Viñamar, and Concha y Toro. Although they compete in Chile with imports, it is difficult for foreign brands to enter directly to produce. "The sparkling wine market is complex: it requires investing in a double fermentation process, special tanks, special bottling lines, so you ensure that the entry door for competitors is a bit harder," he explains. "It is a category where we can continue to grow, because we have less competition than with wine in Chile," he adds. Although he acknowledges that exporting sparkling wines has been harder for the country. "We have a debt with sparkling wine exports; in most countries we are number one in sparkling wine exports, but the volume is still not significant," he admits. There is an atypical business that Hurtado highlights because it is bringing good returns: wine tourism. They are the second winery, after Concha y Toro, that receives the most visitors, with 90,000 people per year at their Talagante cellar, which allows them to move 350,000 bottles per year between tastings and store sales. "There were peaks in August when we received 1,000 people a day, especially Brazilians," says the manager. The impact of the rains As an agricultural business, wineries are also watching climate developments, marked in this second half of the year by the phenomenon called "Super Niño." The intense and, in some cases, untimely rains that have affected the central zone, according to Hurtado, can affect the grapes with fungi, although if they continue, they could impact them much more severely. "Today the only effect is fungal diseases, especially powdery mildew. But if there is much more water, another fungus that is scarcely present in Chile starts to affect you, which is downy mildew. You have to apply preventive programs to keep those fungi out of combat," he comments. However, at least for now, Hurtado believes the grape is holding up better than fruit, such as cherries. "If it stops raining before flowering, it will be perfect. But if the rain continues on November 15, it can affect flowering. If flowers fall: less grain, less production. And if this persists until December or January, it can get complicated for us," he adds. Could it affect the quality or quantity of the fruit, or both? -It depends on how long it rains. If it stops raining in January and we have a dry January and February, with good temperatures, the quality will be impeccable. If it keeps raining in February or March, the berry will be bigger, with less concentration, and one would expect a somewhat less attractive harvest in terms of quality. But not quantity, unless the grapes start to rot. Are you already a subscriber? Log in This article is exclusive to subscribers Subscribe to read it in full and access all our journalism. See plans