Don Melchor & Chile’s Good Value Curse

Sue and I have been looking for the right excuse to open a bottle of Don Melchor, the famous Chilean Cabernet Sauvignon that was named 2024 Wine of the Year by Wine Spectator magazine. Finally, we decided that the act of pulling the cork was excuse enough, and we enjoyed the wine with a nice steak.

Don Melchor is the flagship winery of Concha y Toro, one of the world’s most respected wine producers. The wine was world class, balanced and elegant, and paired perfectly with a dry-aged steak. I admit that I don’t really know what it means to be “wine of the year,” but this wine (and everyone who helped make it) deserves whatever recognition they receive. Bravo!

Message in a Bottle?

You would think that the year’s top wine could be the wine with the highest score, but if you pay attention to these things, you have already noticed that, while all the highlighted wines have high scores, the final rankings are not simply by the numbers.

Sometimes, it seems to me, the people who put together Top 10 or Top 100 lists (and not just Wine Spectator) want to send a message. Sometimes it is to highlight particular regions or to balance Old World and New World recognition. In 2009, in the aftermath of the global financial crisis, for example, a Reserve Cabernet Sauvignon from Columbia Crest was Wine Spectator’s top wine. It was an excellent wine (a friend opened a bottle for us last year), but I think it was chosen in part to send a message that excellent wines didn’t have to cost a fortune (the release price of the Columbia Crest was just $27) or come from Bordeaux or Napa, either.

In the same way, I suspect that the Don Melchor was chosen at least in part to draw attention to Chile’s excellent wines and the fact that they can command high prices. (The Don Melchor we enjoyed was an editorial sample, but the local Total Wine has it in stock for $140.)  Chilean wines have long been filed under “good value,” which is much better than a “bad value” label that some other regions have earned. But I think many producers see good value as a barrier to their quest for higher status. The Wine Spectator award helped in this regard, and the Don Melchor wine has the quality to make the label stick, if you know what I mean.

The Good Value Curse

You can see the good value curse in the numbers. U.S. wine market data in the most recent issue of Wine Business Monthly put the average bottle-equivalent price for Chilean wine at $5.04 for the previous 12 months, lower than the import average of $9.66 and even lower than Australia’s $5.49.

Not surprisingly, measured U.S. sales of Chilean wine are down with the rest of the market, falling 3.6% by volume and 0.3% by value. (These declines are actually less than the overall market’s decline.)

Chile is more dependent on export markets than most other major producing countries, so wine market contractions in the U.S., U.K., and perhaps especially China have been a major blow. Factor in the uncertainty caused by the Trump tariffs and the list of Chilean wine’s challenges grows.

It is, therefore shocking, but perhaps not surprising to see this graph from the OIV database, which shows that the vineyard area in Chile has quite suddenly declined back to levels last seen at the turn of the century. Wine grapes are unprofitable, especially in the O’Higgins region, according to a Department of Agriculture report. Growers are shifting to cherries, citrus, and other crops with better prospects and margins.

Quality and Diversity

Sue and I have sampled many Chilean wines and we have been impressed by both the surprising diversity of wine types and styles and the steady rise in quality. The challenge, or perhaps one of the challenges, is to bring the best of Chile’s wine into sharper focus for consumers who confront a dazzling array of wine choices. Not an easy task, especially in this market environment.

Don Melchor has a role to play here as a sort of beacon to draw consumers closer to the world of quality Chilean wines.