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Concha y Toro Company Analysis
Concha y Toro Company Analysis
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Table of Contents
General Overview................................................................................................................ 3
Information at a glance ................................................................................................................ 3 History Of Concha Y Toro .......................................................................................................... 5 The Company Today ................................................................................................................... 6 Properties....................................................................................................................................... 6 Production Plants And Equipment............................................................................................ 6 Brand Names................................................................................................................................. 7
Concha y Toros branding strategy ................................................................................. 11 Concha y Toros Corporate Social Responsibility ......................................................... 13
Environmental Performance ..................................................................................................... 13 People ........................................................................................................................................... 17 Workforce ................................................................................................................................ 17 Talent Management ............................................................................................................... 18 Well-being ............................................................................................................................... 18 Healty & Safety ....................................................................................................................... 20 Society & Community................................................................................................................ 21 Education ................................................................................................................................. 21 Pirque Wine Tourist Center .................................................................................................. 22
Conclusion .......................................................................................................................... 23
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General Overview
Information at a glance
Industry Founded Products Employees Headquarters Key People Alfonso Larrain Santa Maria Eduardo Guilisasti Gana Market Capitalization (US$ MM) 2012 Sales (US$ MM) 2012 Volume (Cases MM) Domestic Volume (Cases MM) Market Share Export Volume (Cases MM) Market Share Beverage 1883 Wine 2,848 Santiago de Chile
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Properties
The companys main properties in Chile are its vineyards, cellars and bottling plants. It owns 16,257 hectares distributed throughout the countrys nine main vine growing valleys, and also holds long-term leases on another 816 hectares. Of this total, 10,497 are cultivatable, with 9,133 hectares planted. The company owns 1,288 hectares in Argentina, 1,154 hectares of which are planted. In the United States, Fetzer Vineyards has 466 hectares of land (including own and long-leased vineyards) with a planted area of 463 hectares.
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winemaking and keeping capacity in Chile was 361million litres and 45 thousand casks. The company has four modern bottling plants, located at Pirque, Vespucio and Lo Espejo in the Metropolitan Region, and Lontu in Chiles VII Region. In the Mendoza region of Argentina, Trivento Bodegas y Viedos owns two winemaking and cellar facilities with a total capacity of 31 million litres, and a bottling plant. In California, USA, Fetzer Vineyards has two cellars with a capacity for 46 million litres and a bottling plant. The subsidiary Transportes Viconto Ltda. possesses a fleet of trucks used for hauling part of the grapes, bulk wine and finished products.
Brand Names
Concha y Toro markets its products under several company-owned registered and fully operative brand names. Some of the most prominent are Concha y Toro and its sub-brands Don Melchor, Amelia, Terrunyo, Trio, Casillero del Diablo, Sunrise, Sendero, Frontera, Tocornal, Maipo, Tempus and Tenta. The subsidiaries have registered their brands Cono Sur, Isla Negra, Ocio, 20 Barrels, Palo Alto, Maycas del Limar, Los Robles, La Trilla, Canelo, Trivento, Eolo, Pampas del Sur, La Chamiza, Fetzer, Bonterra, Jekel, Coldwater Creek, Eagle Peak, Sunctuary, Sundial, Valley Oaks, Bel Arbor, Stony Brook, Five Rivers and Pacific Bay, plus others.
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Management Practices
Vineyard Management
Included in Concha y Toros work philosophy is understanding winemaking as an integral process, to generate the best-quality vines and to improve the practices that have an environmental impact. Concha y Toros project has eight sequential steps: 1. Selection of products of low environmental impact and controlled use of them Through rigorous and regular monitoring, the appearance of diseases is detected in good time and the excessive use of products is avoided. The ecosystem is thus protected, being freed of waste. 2. Respect for the natural geography Concha y Toro is constantly concerned to plant autochthonous trees in zones where its vineyards are located. 3. Sowing of vegetal cover With the sowing of grass between rows on certain estates, Concha y Toro has managed to reduce erosion and increase organic matter and microbial flora on its soils, thus significantly reducing the use of herbicides. The zones natural coverage is preserved on the new plantations. 4. Constant search for and planning of grape varieties Their central objective is to find the appropriate terroir. Therefore they make an exhaustive selection of varieties in the search for the best expression according to the climate and soil. 5. Drip irrigation This technological innovation, together with the use of systems for determining the content of water, has enabled Concha y Toro to rationalize the use of this vital element and achieve high efficiency in its use. 6. Recycling of used packaging Environmental policies include the recycling of plastic, metal and cardboard packaging. 7. Use of compost in the vineyards
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Through bacterial processes, the vineyard becomes the compost of organic matter, which is re-utilized and incorporated in the estates as natural fertilizer. 8. Training In the agricultural area, individual improvement provides a unique work value. With an extensive annual program of internal improvement, visits to other producing countries and site visits, Concha y Toro offers its personnel tools that have considerably improved the working environment, safety and selection of qualified human capital in the company.
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Ranked among the most important vineyards in the world, and nominated for second consecutive year as the Worlds Most Admired Wine Brand, Concha y Toro took new steps in 2012 to strengthen its leadership. The company and its subsidiaries strengthened their production and trade structure, targeting the premium segment, incorporating new origins and opening new sales offices in strategic markets. Via Concha y Toro has developed a wide portfolio of internationally recognized wines. The company has also promoted innovative projects through its subsidiaries Cono Sur, Via Maipo, Palo Alto, Maycas del Limar, Trivento in Argentina, and Fetzer Vineyards in California. Additionally, along with Baron Philippe de Rothschild it produces Almaviva, a Primer Orden wine. Each one has contributed with its own character to building a global company that in 130 years has achieved a privileged position in the world. Ranked among the most important vineyards in the world, and nominated for second consecutive year as the Worlds Most Admired Wine Brand, Concha y Toro took new steps in 2012 to strengthen its leadership. The company and its subsidiaries strengthened their production and trade structure, targeting the premium segment, incorporating new origins and opening new sales offices in strategic markets. Via Concha y Toro has developed a wide portfolio of internationally recognized wines. The company has also promoted innovative projects through its subsidiaries Cono Sur, Via Maipo, Palo Alto, Maycas del Limar, Trivento in Argentina, and Fetzer Vineyards in California. Additionally, along with Baron Philippe de Rothschild it produces Almaviva, a Primer Orden wine. Each one has contributed with its own character to building a global company that in 130 years has achieved a privileged position in the world.
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They invested a lot of money in the production of wines in the premium-and-above segment. The company gained numerous distinctions from international specialized critics. The distinctions endorsed the companys strategy and led to steady growth in sales. The famous wine Casillero del Diablo won for example the award as the best value wine in the premium category (Casanova). Beside product and pricing decisions the development of a strong international distribution network was a key success factor for international growth. Concha y Toro opened sales offices all over the world which are autonomously responsible for the distribution of the products and marketing issues. Sales subsidiaries are Comercial Peumo for the Chilean market, Concha y Toro UK for the market in Great Britain, Concha y Toro Nordics for Norway, Sweden and Finland, VCT Brazil for the Brazilian market, VCT Asia for Asia, VCT&DG for Mexico, Excelsior Wine Company for the U.S. market, VCT Africa & Middle East for the Arabian and African market and Concha y Toro Canada for Canada (Concha y Toro, 2012). Promotion plays an important role in order to increase brand value. In the wake of the twentieth century the brand had a traditional and romantic image. Promotion efforts changed the perception of the brand totally in the new millennium. Nowadays the brand is perceived as modern, close and leading brand with great international exposure and reflecting the tastes of the customers (Concha y Toro, 2013). The success story of the wine Casillero del Diablo shows the transformation from a local brand to a global brand and the new promotional strategy. It played an important role as an entry brand to Concha y Toros portfolio of premium wines and is most famous Chilean wine brand in the world. The wine was first launched in the market in 1966. It was first initiative for the production of more complex wines. In 2001 the brand was relaunched in the market in order to achieve a strong position in the attractive premium wine-segment worldwide. Concha y Toro updated Casillero del Diablos image with a renewed and more sophisticated presentation, retaining its distinctive aspects while iconizing the image of the devil (Concha y Toro, 2013). Communication efforts focused on the Wine Legend and the usage of fire elements. This was supported by investments
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in various markets. Another important step in this success story is the strategic alliance with the football club Manchester United in the year 2010. This partnership opened great opportunities in terms of brand exposure and visibility for Casillero del Diablo. Concha y Toro uses brand displays in digital boards during games at Old Trafford stadium, joint participation in promotional activities, advertisement at points of sale and many other things. This branding strategy was successful from the start and resulted in a leading brand positioning in the premium segment. It also helped Concha y Toro to achieve strong sales growth: volumes increased from 620,000 cases in 2001 to 3.4 million cases in 2012, while sales rose from US$15.8 million in 2001 to US$150 million in 2012, increasing 9.5 times in value in 10 years (Concha y Toro, 2013).
Environmental Performance
In times of global warming and changing climate conditions, companies have to adjust to those changes. Especially agricultural companies tend to suffer under increasing dryness or other extreme weather conditions, such as very strong storms or heavy hail, caused by the ongoing climate change. Via Concha y Toro is no exception. They also have to consider the changes which will eventually effect their vine production all over the world. Especially hail is an increasing problem for vine production. Those reasons led the management of Concha y Toro
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to a constantly increasing effort on environmental sustainability to help prevent the effects of global warming and the worsening of the production conditions for vine. Via Concha y Toro is constantly investing in different aspects that are connected to the concept of a sustainable production and operation, and therefore caring for the environment and minimizing their environmental impact. They developed a sustainable strategy which is based on the following points: Environment, Community, People, Customers, Products and Supply Chain. Their main efforts have been on the environment which they not only wanted to improve but get an exact idea of how their impact on the environment looks like. They therefore made analysis and improvement plans on factors like their carbon footprint, the conservation of natural forests and their water and waste management. Those points shall be displayed a little closer in the following.
The Carbon Footprint The Carbon Footprint is a measure of the total amount of carbon dioxide (CO 2) and methane (CH4) which is, in this case, emitted by a company or organization, not only during production but all the way from the very beginning of the product to the end customer. One of Via Concha y Toros projects in this matter was producing a serie s of vines called Sunrise with a neutral carbon footprint. This vine was created for the Scandinavian market. Obviously there is no way to produce any product without emitting greenhouse gases, but the calculation took carbon bonds into account which were purchasable from the Santiago Climatic Exchange. The company bought, equivalent to the emission during production, carbon bonds from a hydroelectric power plant, which, in terms of CO2 emissions neutralized the emissions for the vine production. Through this project the company saves about 4300 tons CO2 emissions a year.
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Another change Via Concha y Toro did to improve their carbon footprint, was a change in their vine bottles. To reduce the amount of glass used, which led to lighter bottles and therefore, not only to a reduction of emission due to less material use, but also due to lighter transportation. In detail they managed to reduce the emission from 2,2kg CO2 per kg glass in 2011 to 1,0kg CO2 per kg glass in 2012. Their efforts in reducing the footprint led to the result of 32,7% less emission comparing the years 2011 and 2012. Hereby could the reduction achieved in the areas of product purchase and direct greenhouse gases even compensate an increase in emissions in the area of traveling. Product purchase hereby includes tartaric acid, bentonite and gape, which are substances needed for the vine production. Direct greenhouse gases are emitted by bottling processes and packaging. The higher traveling emissions were due to an expansion in international relations and the growth of the company, which needed the management to be present on international production sites and in customer areas. The positive results of Concha y Toros efforts are not only stated by the company itself, but also reviewed and confirmed by external independent auditors, who evaluate the company regularly.
Conservation of Native Forests Via Concha y Toro invested into a program to protect and enlarge the native forests on company owned land. Of course the company owns a large area of land in order to grow their grapes. But also the areas not directly used for the vine are used to realize the company goals. The company plants trees and therefore reforests those areas to increase biodiversity in the area. Those forests now offer habitants for several, partly very endangered species of animals and also gives growing ground to seldom plants. The biodiversity close to the vine yards also help prevent erosion and helps reduce the amount of pesticides needed on the yards.
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Water Management Just like the carbon footprint for CO2 emissions Via Concha y Toro also estimates their water footprint. Hereby they consider the amount of fresh water used for the process of production. Their efforts led to a reduction of water consumption in their bottling plants by 17%. To display their water management in comparison to the general vine industry a Conchy y Toro vine needs 540 liters per bottle, whereas the average needs 720 liters per bottle, which leaves 25% fewer consumption. Waste Management While water management includes fresh water use, waste management talks, next to others, about waste water. Via Concha y Toro uses 5 plants for waste water treatment. But not only waste water is managed very well, but every waste that is produced is processed in the best possible ways. If waste is not directly handled in the plants, it is forwarded to contractors which are specialists in waste managements. For example special wastes like oils, inks and chemicals are handled by a company which recycles them as good as possible. The highest amount of waste which a vine manufacturing company has to account for is organic waste. Organic waste is mostly used as fertilizer for the own vine yards, but is also sold for recycling purposes. In total 100% of the organic waste is valued and none is actually thrown away. Finally the packaging material waste is also recycled to 100%. To sum up Via Concha y Toro can be said to be totally aware of their environmental responsibility as Chiles biggest vine manufacturer. Most of all they do not just fulfill given requirements but operate in far greater dimensions when it comes to prevent worsening of the environment and therefore worsening of their own company. Of course they act in their own interest, but they connect their interests with the interests of their surrounding and therefore everybody can benefit from their efforts.
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People
Concha y Toro tries to foster employees commitment in order to create a long term relationship with them. Therefore, the company is aware of the importance of attracting and retaining talented and committed people. Thats why they seek to improve training programs and education for employees as the contribution of every worker as well as the collaboration between them is essential for the companys success. Moreover, the winery is also willing to bring more benefit programs and also taking even more care of the working environment, the health and safety aspects and the work-life balance of its workers. Workforce Concerning the workforce, Concha y Toro had a total of 2542 employees at the end of 2012. This number is stable compared to the employment in 2011 with a slight increase of 0,6%. It is distributed quite unequally, with 77% of men and 23% of women, which is obviously linked to the type of industry. It is also important to mention that the total workforce does not include employees with temporary contracts, which are quite important due to the changing seasonal workload in the wine industry. However, it is worth saying that the majority of the employees have permanent contracts (89% against 11% for fixed term contracts). The workforce is more or less equally divided between operators (38%), sales and administrative (32%), and professionals and technicians (27%). The last 3% are managers, assistant managers and executives. Concerning the geographic location of the workforce, most of the people are working in the Metropolitan zone. This can be surprising as the company has cellars, bottling plans and estates throughout the country. Most of the companys collaborators are young people between 31 and 50 years old and this is equally distributed between women and men. Between 2011 and 2012, the number of sales and administrative employees grew a lot (from 517 employees to 825) at the expense of professionals and technicians (from 1069 employees to 673).
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The turnover rate was 11% in 2012, from 5% in 2011. This can be explained because seasonal personnel has been internalized and a lot of jobs were created. The salary for Concha y Toro employees is always defined in terms of the relevance of their position within the organization. This calculation is done based on skills, problem-solving abilities and on the responsibility linked to the position. The wages are equal between men and women, with some variations depending on the position. As a conclusion, it seems that the wage calculation is quite effective and does not disadvantage women compared to men. More than a quarter of Concha y Toros employees (28%) are unionized. Freedom of unionization and of association is guaranteed by the company. The employees are grouped in different unions in order to encourage an open dialogue between the parties and the senior management. The company made some commitments with unions, in order to bring supplemental health insurances for health and dental expenses, as well as a coverage for cancer treatments for employees and their families. The pillar People of Concha y Toros sustainability strategy defined three areas in which it focused its efforts: Talent Management, Well-being and Safety. Talent Management First of all, talent management aims to help and assist employees in their personal and professional growth. This will require performance evaluations to foster continuous improvement. A formal review will be done by the direct boss to the employee in order to facilitate peoples management and their development as a way to achieve the companys strategic objectives. Well-being The second strategic topic is about promoting well-being through healthy living and wellness among the companys employees. Concha y Toro built the platform Red Social Concha y Toro to support its employees with psychological, legal, social and financial assistance. The company is also promoting health through sports with the organization of sports championships in bowling soccer and tennis in which
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more than 500 employees participated. In 2009, the program Concha & Toro Runners was created and the most motivated runners had the opportunity to participate in the New York Marathon but also in other charitable activities like Blind Running. Concha y Toro also wants to achieve for its employees is the education and the continuous training. This is essential for both the employee and the company. Thats why the Department of Personnel Development and Training created programs to strengthen the technical skills and the knowledge of specific employees. The programs also offer support and preparation for future responsibilities and challenges. In 2012, 56140 hours of training were offered to some 1366 employees. For example, some English courses were given to employees in order to execute their job properly and to foster their relationship with internal and external clients. In addition to that, technical workshops and courses were also dispensed to specific employees according to their needs.
The company also conducts internal campaigns. During the whole year (2012), the company insisted on saving resources by reducing the consumption of energy water and paper. This was used to raise awareness among employees and that everyone could contribute to the preservation of natural resources in the company but also in their own homes. As the well-being for the employees is essential for Concha y Toro, the company decided to offer a benefit package to them. Moreover, a retirement plan is also in development. Some of the benefits are, for example, health insurance, bonuses for vacation/holiday/Christmas, scholarship, birth and marriage bonuses. The workers also have access to special deals with gym centers, cell phones companies and dental clinics. An online platform (Concha y Toro Online Platform PeopleCare) was also developed in order to offer various discounts and benefits in wellness, beauty shops, food, services, education, leisure, travel and housing, among others. Concha y Toro also has a return to work policy in order to make employees re-join the company after a maternity leave. For example, in 2012, 30 women took a maternity leave and 23 came back after their leave.
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Healty & Safety The last strategic topic is about occupational health and safety. Concha y Toros Risk Prevention Department aims to ensure the safety of its workers in their work places and production sites. They focus on reducing the injury and accident rates in the workplace, and in order to achieve this, the Risk Prevention Department relies on prevention work and training. Over the last six years, work accident were reduced by 20,8% and the number of days lost was reduced by 24,5%. Moreover, truck and fork-lifts operations have been trained in work safety matters. Training was also dispensed to temporary workers before their entry in the cellars. This has definitely contributed to the reduction of the accident rate in the winemaking area. Here is a chart showing the accident rate between 2003 and 2009:
Moreover, Concha y Toro signed an agreement in 2009 with the Chilean Safety Association to implement a management system for reducing the working accident rates in the agricultural work. Work has already begun with three farms and will be extended to cover all of them. The objective is to ensure an efficient management in all aspects concerning the prevention of accident risks and occupational illnesses in this work.
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Here, the foundations mission is to support the winerys personnel in the education of their children while also supporting and accompanying them in their family development. The objective of the foundation is to provide a complete tertiary education scholarship for children of workers who have a social-economic need and who qualify following an evaluation. It also aims to support students fully by supplying study and computer rooms, by providing psychological support and arranging cultural and social activities for scholarship students. This foundation has benefited a total of 104 students to date. Concha y Toro alone has granted 45 scholarships of which 21 have graduated in a wide variety of subjects and regions of the country. There are currently 24 students enrolled in tertiary education with foundation scholarships. Pirque Wine Tourist Center At last, the Pirque Wine Tourist Center is the main oenological attraction in Santiago de Chile. The place consists in different parts, such as La Casona, which is the estate house of the founder, Don Eduardo, and the Pirque Viejo, which is a vineyard with a garden of grape varieties. Moreover, people can also enter the famous cellar of Casillero Del Diablo as well as a Tasting Room and a Wine Bar to try wine and international cuisine together. At a result, more than 120.000 people visit the Tourist Center every year. This is a real opportunity for foreign visitors as they can learn more about Chile and its wine industry.
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Conclusion
Concha y Toro has show consistent growth since its beginnings. Being now one of the biggest vineyards worldwide they show us Chile can compete internationally. Their branding strategy became a success factor for their international growth, as it ranks third most famous wine brand. Their goal was to have a well-positioned brand in each segment of their brand portfolio, this way they could reach every type of wine consumer. As we revised earlier, Concha y Toro has a great passion for environment because their production depends on the sustainability of their natural resources, weather, and earth. This is the reason why they work so enthusiastically to prevent environment damage and to recycle as much waste as possible. The companys employee management works with 2,542 employees equally divided between sales, operations and technicians. The employees have several well being platforms as well as training and benefits. Overall Concha y Toro demonstrates management in Latin America can be very efficient and well implemented.
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