Studying the science and business of wine in Chile

Students Alim Leung, Chris Curtis and Andres Espinoza taste grapes of different varieties as they research Chile’s wine industry for a course at U-M’s Ross School of Business. (Credit: Austin Thomason – Michigan Photography)

SANTIAGO, Chile—On their first day in Chile, a group of University of Michigan students spent the evening dining in a historic district of Santiago and discussing how they would spend their spring break researching the country’s wine industry.

As they ate empanadas, fried potatoes in spicy tomato sauce and other Chilean specialities, the restaurant’s sommelier heard about their project for a course at the Ross School of Business. He was so intrigued that he invited them down to the wine cellar after his shift and gave them a master class in wine.

“He spoke with us and answered questions for more than a half hour, even though he was done for the day,” said Ryan Cesiel, a junior in business administration. “I have traveled to many places and never experienced such a welcoming culture.”

Nancy Sun and Dan Dobras were among the students who received an impromptu wine lecture from Kevin Kremer, head sommelier at the Bocanáriz restaurant in Santiago. (Credit: Ryan Cesiel)

The experience highlights the great value of getting outside the classroom to engage with other cultures and seek out new learning opportunities. As the U-M students discovered, sometimes one of the best lectures of the semester can happen in an impromptu class on a late Sunday night in a restaurant’s basement.

In Chile, the goal of the group of 21 students was to meet with small family-owned vineyards, gain a better understanding of their business and then return to Ann Arbor to devise strategies that will help build their brands in the U.S. and increase tourist traffic to their wineries.

Chile is an interesting case study for the students. The country—a long ribbon of land down South America’s western Pacific coast—was once one of the region’s poorest nations and ruled by a brutal dictatorship.

Now, Chile has a vibrant democracy and a prosperous economy. Its wine industry is the world’s No. 4 top exporter by volume. But the problem is that the product is often perceived to be plonk—cheap and of low quality. The U-M students learned that Chile does indeed produce some of the world’s best wine.

Their trip began in Santiago, where industry experts briefed them about marketing campaigns to improve the image of Chilean wine. Next, they headed to one of the country’s main wine-growing regions, the Colchagua Valley, about 100 miles south of the capital, where they split up into small groups to work with different family-owned vineyards.

“By choosing family wineries, we learned a lot about the culture and the values of Chile,” said Michael Metzger, visiting assistant professor of marketing who is teaching the course and led the group. “Each team has learned different things because they had different companies to work with, different families that have different cultures. It’s just been an amazing experience.”

Three laborers ride to work at the Viu Manent Winery in Valle Colchagua in central Chile. (Austin Thomason – Michigan Photography)

The Colchagua Valley in central Chile is sandwiched between the Pacific to the west and the Andes to the east. Rivers and streams carry minerals from the mountains that enrich the soil. From the Pacific, fingers of fog climb up the mountain range, creating a cool climate conducive to growing grapes for white wines.

One of the small wineries the students visited was Viu Manent near the city of Santa Cruz. Rows of lush green grape vines stretched out to the base of the Andes. Riding a horse carriage, students checked out the vineyards before touring traditional white stucco buildings with red tile roofs that housed offices, showrooms and laboratories where technicians in white coats tested wine in beakers and other glassware.

Workers had already harvested most the grapes, crushed them and stored the juice in huge stainless steel tanks to ferment. Later, the juice will be transferred to oak barrels for aging that could last up to 23 months.

At Viu Manent, the students learned about how soil or “terroir” plays a crucial role in making superb wines.

“If you know the soil, you understand the wine,” winemaker Patricio Celedon told the group.

Winemaking is a science. A worker analyzes wine at the Viu Manent Winery in Valle Colchagua, Chile. (Credit: Austin Thomason – Michigan Photography)

Celedon described the vineyard’s efforts to maximize the quality of wines by using technology to better understand the soil. The winery has worked extensively to measure soil moisture, chlorophyll levels and electrical conductivity.

Vineyards in the Colchagua Valley grow grapes for merlot, cabernet sauvignon and other popular varieties. But Chile’s signature wine is carmenere, which was brought to the country from France in the 1800s. The variety was nearly destroyed in Europe by insects and was only rediscovered in Chile in 1994.

Carmenere is sensitive to temperature and gained a poor reputation during the early years of production when winemakers were still fine-tuning the harvesting and wine-making process.

“I found the story of carmenere to parallel Chile’s current struggle to shed its image as a cheap value wine producer,” said Lily Cheng, a senior in engineering. “As both the quality of carmenere and Chilean wines in general increase, they are both working to reinvent the public perception.”

The students said they were impressed with how open the wineries were. Some of the groups were invited to have dinner with wine executives and families that owned the vineyards.

Chris Curtis, a senior in business management, said he liked the way some of the wineries engaged with their customers. Viu Manent sent him a text message thanking him for the visit. This got Curtis thinking about a strategy to expand that personalization.

“People value that extra care and attention that you give to the consumer,” he said. “It makes you appreciate the product more.”

Students in front of the Santiago Stock Exchange. From the left: Garen Leung, Nancy Sun, Kristen Wang, Lamontre Jackson, Philip Nydick, Prof. Michael Metzger and Trevor Flegenheimer. (Credit: Austin Thomason – Michigan Photography)

Having students from different fields of study in the group allowed for a variety of perspectives that will lead to better strategies for the wineries, said Daniel Dobras, a senior majoring in business administration.

“I’m really into marketing and sales, so a lot of what we were talking about with the wineries and how they’re working to grow their business is in that form,” he said. “But there are some students who are really interested in finance, and they are really looking at the investment side of things, and the engineering and computer science people are looking at technology that the companies have been using.”

As he got ready to fly back to Ann Arbor, Jacob Gordon, a junior majoring in business administration and Spanish, was already planning a marketing strategy for the wineries.

“We’re going to take a lot of the principles we’ve learned in our marketing class, such as positioning and targeting, but also some of the things we learned from finance and accounting, like how much will it cost for us to get them into the Michigan market,” he said.

Gordon said he usually spends his spring break in Florida, and he’s so glad he didn’t do that this year.

“Coming to South America with a group of great people and exploring an emerging economy and learning while having an unbelievable time,” he said. “It was definitely the best experience I’ve had at Michigan so far.”