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28 February 2015

Chilean Update – Wine, Women and Scandal

Tag(s): Chile
Last week I published my 250th blog. I had intended to use the occasion to return to one of my favourite subjects, and one of yours too judging by my email bag, that of Chile. However, my plan to also cover a General Election issue each month leading up to the Election itself got in the way. Still, better late than never. This month my wife and I visited Chile. My wife, who is Chilean, goes back about twice a year. I, however, hadn’t been for three years and noticed quite a few changes both politically and economically. In the years 2010-13 with the right wing Sebastian Piñera as President the economy forged ahead at an average growth rate of 5.3% pa. However, last year the left wing Michelle Bachelet won the Election, heading a coalition now including the Communists, and returned to power on a promise to do something about inequality and carry out many other reforms. Since then the economy has slowed down drastically not helped by a considerable decline in the price of copper, Chile’s principal export. More of this later, but first let’s talk about the wine.

One of the reasons for my visit was to scout out possible excursions for a trip for the Marketors should I be elected their Master for 2016. It is the convention for the Master Marketor to lead an overseas trip and often this has been to a wine region. So it seems logical that with our connections we should explore some of the wine regions of Chile. When I lived there in the early 1980s I had visited Concha y Toro and greatly enjoyed the experience but few of the others arranged tours at that time. Since then it has mushroomed into a major tourist attraction with tours possible of many of Chile’s 203 vineyards. On this trip we went to six, tough work but someone has to do it.

First we went to Viña Undurraga[i], some 35 km from Santiago. About 30 years ago Viña Undurraga was the wine company my wife dealt with to become just the second importer of Chilean wine in the UK. (See my blog Fine Wines from Chile[ii].) Since that time the family has sold the business to a Colombian firm which has since merged with another Chilean firm to form Grupo Vinos Pacifico and the business has grown substantially with acquisition of land in other regions to expand the range. Although we had dealt with them that had always been in their offices in Santiago and so this was our first visit to the winery. I was surprised to learn that Undurraga was not only one of the oldest, established in 1885, but also the first to export to the United States, sending a case of Pinot Noir to each of the then 45 states in 1909. By 1960 it was exporting to 60 countries and visitors included Alain Delon, Golda Meir, Neil Armstrong and the King of Norway. Looking back it seems incredible that they would have given us the rights to the important export market of the UK with such a sophisticated operation.

The tour was a delight. Little wine is grown there now but they have a beautiful garden with impressive examples of native trees like Eucalyptus, Araucaria (monkey puzzle) and Chilean Palm. They also have a fine display of artefacts from the Mapuche tribe, the somewhat oppressed indigenous Indians who still live in the south of the country.  There is also a fascinating museum dedicated to the Mapuche, and Undurraga contributes a proportion of its profits for the benefit of the Mapuche people.

Next we followed a recommendation to go a bit further south and stay in Santa Cruz, centre of the Colchagua valley, one of the most important of Chile’s wine regions. Here we visited three wineries, each remarkable in its own way. Montes[iii] is located in the Apalta area of Colchagua. Apalta has been voted as the best wine growing region in the world. It is a semi-circle of hillside, whose upper slopes reach the maximum steepness at which vines can be cultivated. The vineyards face south, a gentle orientation that exposes them to moderate amounts of sunshine. Temperatures are slightly lower on the hillside compared to the valley floor, allowing slower, more physiologically complete grape ripening. To the north, a high mountain range steers sea breezes from the coast 60 km away, refreshing the vineyards, moderating the hot summer sun and prolonging the maturation of the grape tannins.

Montes has developed a gravitational and feng shui winery which they claim is carbon neutral and the most modern and state of the art in Chile. The wines are aged in French Oak barrels with Gregorian chants played to them as there is evidence that soothing music assists the fermentation process. In any case the wines are delicious.

Nearby is Lapostolle[iv] founded twenty years ago by Alexandra Marnier Lapostolle of the Grand Marnier family and her husband Cyril de Bournet. The Grand Marnier family is famous for producing spirits and liqueurs, but the family has also been involved in winemaking for generations. In creating Lapostolle their objective is to create world-class wines using French expertise and the superb terroirs of Chile. They now own 370 hectares in three different vineyards producing 200,000 cases mainly for export to over 60 countries. But the Apalta vineyard just produces 5,000 cases of the highest quality in an incredible architectural and engineering installation with six floors carved into the depth of the hill. On the lowest floor at very cool temperatures the family have their own private cellar where they store the world’s top wines for purposes of comparison. In the floor above on a giant stainless steel table we tasted some of their award winning organic wines.

We also visited Viu Manent[v] in the Colchagua valley, another excellent winery that has been owned by the same Catalan family since 1935. They feature a fine restaurant where we enjoyed lunch with a bottle of their best. If we’d had the time we could have also enjoyed a tour on horseback as they feature an equestrian centre.

On our way from Santiago to the coast we visited two wineries in the Casablanca valley. Veramonte was founded by Agustin Hunneus who led the growth of Concha y Toro in the 1960s as its CEO. He left Chile in the Allende era and headed up Seagram’s worldwide wine business. In the 1980s he developed Caliterra and Errazuriz, two other well-known Chilean brands and then founded Veramonte, building another impressive modern winery in 1998. All the wineries try to offer something different and Veramonte offered pairings of wines with chocolate. So we tasted organic raspberry chocolates with a Pinot Noir, chocolate bonbons filled with smoked chili pepper with a Carmenère, chocolate with touches of French lavender with an Argentinean Malbec and chocolate with pistachio with a Cabernet Sauvignon.

Our last visit was to Indomita which has the advantage of an amazing view across the entire Casablanca valley. Our tasting took place in a room with this view. Also presented to us were glasses filled with other products like fruits, spices, tobacco etc. Wine experts like to say that when they experience the aroma of a wine they get cherries or gooseberries or some such. In this case we had the chance to make such comparisons directly and it brought it alive.

That was the wine. What about the women and the scandal? The two women are Michelle Bachelet and her daughter-in-law Natalia Compagnon.  It seems that Ms Compagnon owns half of a company called Caval Ltd which held assets of under $8000. During the 2013 presidential campaign she and her husband, Bachelet’s son, Sebastian Davalos, met with Andronico Luksic, one of Chile’s wealthiest men and a member of the family that controls Banco de Chile. He offered her a loan of around $10 million with which her company bought land. After the election change of use was granted for this land and she sold it this month at a profit of around $5 million. It is alleged that Luksic granted the loan in return for influence and that Compagnon had inside information about the possibility of change of use. In any event it does seem odd that a solidly commercial bank like Banco de Chile would offer a loan of $10 million to a company with assets of only $8000 for the purchase of land. How this company was going to pay back the loan and its interest is not clear.

Such is the media storm that has arisen Davalos has resigned from his government post as sociocultural director while denying that he had done anything illegal. While we were in Chile people talked of little else. A poll from Cadem showed President Bachelet’s approval rating has fallen to 31%, down nine points in just a week. Her disapproval rating was up 8 points to 54%. The poll also shows that 70% believe that Davalos used insider information or his position as the prospective president’s son to obtain the loan and 60% do not believe President Bachelet’s claim that she knew nothing about the loan before the scandal appeared in the media. That lack of trust in the president is a number that is likely to remain with her for some time, even if this immediate scandal goes away.

At the heart of the scandal is the fact that Bachelet campaigned on the theme that the growth in the economy was just benefitting the privileged while ordinary people were left behind. Now the accusation is that her family was using the same type of privileged access that she was campaigning against.

Bachelet wants to reform labour laws boosting trade union power. She has already increased the tax burden on business. Investment has fallen every quarter since her election. Some of her more far reaching reforms such as in education have been watered down by the Christian Democrats in her own coalition but the increasing cost of employment and production is acting as a disincentive.

One joke that is going the rounds shows how many people feel.

“Michelle Bachelet, George Bush and the Queen of England find themselves together in Hell.
Bush comments that he has seen a red telephone and that he is going to ask the Devil permission to use it. He quickly goes to find the Devil and asks him if he can make a phone call to the USA to see how the country is coping after his departure.  The Devil says yes and Bush made a 2 minute phone call. When he is done the Devil tells him that the cost of the call is 6 million dollars.  Bush writes a cheque.
When the Queen hears of this she wants to do the same and made a 5 minute phone call to the UK.  The Devil gave her a bill for 10 million Pounds Sterling.
Bachelet, of course, wants to do the same and calls Chile to see how she had left the country.  She spoke for 3 hours.
When she finished the Devil said that the cost of the call was 100 Chilean Pesos.  Bachelet was astonished since she had seen how much the others had paid.  So she asked the Devil why it was so cheap to phone Chile….and the Devil said:
‘Look, Fatty[vi].  With the education reform, tax reform, labour reform, economic stagnation, abortion, falling employment, delinquency problems, robberies and the citizens’ insecurity, the rise of motorway tolls and travel tickets, the mansion at Cerro Castillo bought by one member of the government, the incompetence of the minister for education, the assaults on armoured vehicles etc etc etc, you have turned Chile into a real Hell… and from Hell to Hell is a local call!’”

[ii] Fine Wines From Chile 17th December 2011
[vi] In Chile terms like Gordo (Fatty) and Flacco (Skinny) are commonly used between friends as terms of endearment.

Copyright David C Pearson 2015 All rights reserved

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