Chilean wine producer Aurelio Montes has, with his longstanding partners, built one of Chile’s foremost wineries. He grew up in Santiago, but became fascinated by agronomy after his father bought a piece of land outside the city. Although he intended to work with animals, he took a course in winemaking and discovered a talent. In 1987, frustrated by the poor-quality winemaking that characterised Chile at the time, he decided to strike out on his own.
MEININGER’S: What was it like when you started winemaking?
MONTES: It was basic. I studied oenology in the Pontifical Catholic University in Chile and when I left university, winemaking was so basic. We didn’t make much difference among the varieties. We didn’t look for terroirs. We didn’t check the sulphur when we bought.
I worked for 12 years for Undurraga Winery, a family-owned business, one of the biggest wineries in Chile. After giving a speech that we should go forward and create more quality and I was unheard by my bosses, I decided to start my own winery. I was 39 with five kids at home. It was a very tough decision. We gathered together four partners, each one covering a different area of the business. Douglas Murray was the most talented guy in marketing, Alfredo Vidaurre came from Chicago business school and had a PhD in business, an engineer, Pedro Grand, and me, the winemaker. The four of us made it possible that all the pieces connected with the other one in a perfect way. We had no money behind ourselves. We don’t come from rich families at all. My father worked in insurance. We had a normal family.
MEININGER’S: What did your financial partner’s knowledge bring to what you were doing?
MONTES: Actually, we invited Alfredo Vidaurre to join the society because we thought he was rich. After he signed the papers we realised he was not rich. We all put what we had. It was $50,000 between us, the price of a car. Each of us had a side job. I consulted to around 20 wineries in Chile. On weekends and in my free time, we worked at Montes. What happened is that we succeeded so fast and so quickly that it nearly killed us.
MEININGER’S: For many companies, it’s the moment of expansion that they face problems, particularly with finance. Did you?
MONTES: As we all had side jobs, we didn’t take a penny out of the company. Every profit that we got we put back to buy grapes or bottles or corks or whatever. But the growth was so fast that the profit wasn’t enough. We had cash flow problems, because we were growing so fast, we needed to buy more grapes. We didn’t own the farms, but because I had over 17 years in the wine business I knew exactly where to go and what to buy.
We had to go to the bank but the bank didn’t believe in us. They said, “Who are you? You’re just beginning. This is a very adventurous project.” At some point we had to sell 10 percent of our shares to a company. That was about 1992 or ’93. We were four years old, roughly. That 10 percent brought $500,000 which was like fresh air into the company, and that saved us. [The shareholders] sold that six years later for $10m. Today we have the banks knocking on the door to lend us money.
MEININGER’S: You were one of the first people to look at Chile’s Merlot and say, “This isn’t Merlot” — it turned out to be Carménère. What was the story?
MONTES: We already had the Sauvignon Blanc problem. In those early days, our Sauvignon was not even Sauvignon but Sauvignonasse. And, shame on us, for 100 years we were selling Merlot that was not Merlot.
MEININGER’S: What was the reaction of the industry when you said, “Guys, I don’t think this is Merlot?”
MONTES: They were absolutely scared at the beginning and said, “What shall we do?” Well, my advice was, “We must tell the truth. We cannot hide this. It will be something that will be known someday so we must tell the truth.”
Jean-Michel Boursiquot, a great ampelographer from Dijon University, came to Chile. We asked for some help and he said, “Well, let me find out what is this.” So, he took some samples back to France and he came back couple of months later saying, “I did all the DNA and everything and this is Carménère.” Then we said, “Okay. It’s a shame that we did this but on the other hand we have what we call a Jurassic variety that has gone from the world but we have it.” We have the cuttings from the pre-phylloxera era.
Then we started planting Carménère in, I think, the wrong spots. The first Carménère that came to the market were awful. At the end we learnt where to plant it, when to pick it, how to vinify it. Today Carménère is the flagship of Chile.
MEININGER’S: During the period when you were growing very fast, where were your wines going?
MONTES: We always defined ourselves as an export company from the very beginning. Actually our first name was Discover Wines. Douglas Murray was a genius. He told us, “You know, this will be for the exports and let’s get a name that is a challenge. Discover Wine meaning ‘discover this bunch of young guys with a passion. We have no background but discover this adventurous project’.” The first Vinexpo in Bordeaux we had 10 meetings, but no one showed up. No one. We said, “What a miserable thing that’s happened. What shall we do?” Then we came back to Chile. We called all the people and say, “What happened? You didn’t show up.” They said, “Well, I was in Bordeaux but you were not in the catalogue. We looking for Montes and we never found Montes.”
MEININGER’S: Chile’s export price was very low at the time.
MONTES: Very low. When we started with Montes, our dream was $15.00 for a case of 12 bottles. Chile was selling at $9.00. We started selling at around $14.00 and $15.00 so we matched our target. The beginning was a full container to New York. We framed Invoice Number 1 and we have it hanging in our office. Today we export 95 percent of our production. Locally, of course, we do well in the top restaurants and clubs.
MEININGER’S: How difficult was it to get a higher price, when everybody else was selling so low?
MONTES: My speech when I worked as a winemaker in these companies was, “We must go for something else. Chile’s a paradise with grapes. We have no phylloxera. We have total isolation with the Andes and the Pacific Ocean, so there’s no mould. We only have a few little problems. We have no rain in summer. Why should we stay in bulk or in part in cases and so on?” Everyone said, “No. Competing with France, Spain, Italy, it’s impossible. We would like to stay here.” Then my decision was I quit and try to do something else. I was, of course, very afraid. What we found out in the market was that they were prepared to pay a good price for a Chilean wine.
MEININGER’S: Chile is a powerhouse in terms of selling wine but few producers have managed to climb into the fine wine category. What does Chile need to do?
MONTES: I think that we need more wineries going the same way that the Rothschilds, ourselves and Lapostolle are following, because it demonstrates the world that we are able to do these amazing wines. Not just average and good value for money, which is the image that Chile has today. If a couple is celebrating whatever they will never ask in New York for a Chilean wine. They will ask for an Italian or a French wine. When that couple ask for a Chilean wine to celebrate, we will have hit the big one. The average price in Chile is $28.00 per case. Our average price is $62.00. It’s more than double. We need more good wine.
MEININGER’S: Speaking of fine wine, you also bought into Apalta, which was unknown. Today, it’s a fine wine area. Why did you go there?
MONTES: When I started working with the Undurraga family, my boss, Mr Undurraga, told me, “There’s a little place called Apalta where there’s a little producer. Why don’t you go there and try the wine.” I went to Apalta and it was love at first sight. I was 22 years old. I said, “Some time in my life I want to have one square metre here to put my feet. To put a little house here.” It’s so beautiful. It’s a little mountainside. When we started with Montes I told my partners, “I know a little place that no one else knows. It’s either forgotten or abandoned. We should have vineyards there.” As we respected a lot each other they told me, “Okay. Buy it.” Then we borrowed money and we bought this land.
When we started to clear a hillside people said, “These guys are crazy. They’re clearing the hillside.” We took 300 full truckloads of stones and 300 full truckloads of trees and trunks and roots out of 10 acres only. People said, “These guys are stupid” because we had bought a lot of hillsides for nothing. We got amazing scores immediately on those wines. Then people said, “My goodness. We should have thought of this.” We paid $1,000 per acre and bought 135 acres. Today it’s the most expensive land in Chile and the price is $100,000 per acre.
MEININGER’S: Which are your important export markets?
MONTES: Today Asia is by far our strongest corner in the world. The UK is a nightmare. They only pay very low prices and it’s a difficult market with Brexit and all this. It’s a problem. The US has become a bit of a difficult market as well.
MEININGER’S: Why is that?
MONTES: When the big crisis came in 2008 with the banking system and Lehman Brothers and all that, it was a world crisis, of course. My feeling is the American consumer is still bleeding. They don’t want to pay high prices for anything, so they’re looking for bargains. In the past five years, California — not Napa — has been producing very decent wines at very low prices. The Americans are loyal to California of course. That has hurt the New World. We’re all suffering: Chile, Argentina, South Africa, Australia. We’re all suffering.
MEININGER’S: In 2003, you started a new project in Mendoza, Argentina. But you picked a very difficult time economically. What drove you?
MONTES: It was a challenge. It was there, so just climb it. In 2002 when there was a huge internal problem in Argentina, we didn’t think about it. We like it. We go for it. If it was about analysis, we wouldn’t have done anything that we did. We went to Argentina because we wanted to be there. It was a natural thing to do. They have a much stronger international image than Chile — they have the football, the tango, the beef, Buenos Aires, the Pope. So let’s join them. So we crossed the Andes and we started there with the same scheme and model as Chile. We didn’t buy land or wineries or whatsoever. We just leased the winery and started buying grapes from different producers until we understood Argentina. Then we bought land and we bought a winery. We grew up. It was just a challenge, but we survived that period. Now the new president has been in power for two years, it’s another world. We can import the goods that we need. We have a much better pricing and the rate of exchange for the dollar. We are now with blue numbers in our balance sheet and we have grown. We’re doing close to 3m bottles and are among the 20 strongest exporters.
MEININGER’S: You also had a Napa project. What was the outcome?
MONTES: We created a brand called Napa Angel. The problem was that crushing grapes, keeping the wine, barrel aging, bottles and everything were so expensive. The grapes were expensive. In the end we had to sell the wine at about $100.00 retail per bottle. We decided to slow down, so today the project is sleeping.
MEININGER’S: The other project you’ve been involved in is dry farming.
MONTES: Maybe seven years ago I realised that there was a global change in the climate. I told my people, “Let’s try rehearsing. Let’s put ourselves in the situation where there is no more rain. We’ll stop irrigating a certain lot of vines.” The plants didn’t die, of course, but they suffered dramatically. The plants were very sad — but the following year, the plants had adapted themselves. They had less fruit. We kept on with the investigation and have reached a point where we now use a quarter of the 4,000 cubic metres of water per acres that we used to use. What we save in only one of our estates is equivalent of the needs of 20,000 people per year.
MEININGER’S: Can you farm completely without irrigation?
MONTES: At some point we need help the plant; if not, in time they will just die.
MEININGER’S: Are you getting less rain?
MONTES: We have maybe half of the rain we used to have and when the rain falls, it falls in one day and then you have floods. If you see the amount of water falling over a full year, it’s half what we need but it falls in a day or two.
MEININGER’S: Your winery was designed on Feng Shui principles. Do you think that helps?
MONTES: I’m not the crazy guy that started with the Feng Shui. Douglas was the crazy guy. He was a deep believer in that, so we have all the elements of water and natural light positioned in a way that is totally Feng Shui. It’s beautiful place. It’s a safe place to work. When you come in to the barrel room there are Gregorian chants being played all day long. When people come to do the topping of the barrels, or the cleaning of them, it makes it a wonderful place to work. My opinion is more than the spiritual effect of Feng Shui on wine is how the surroundings affect people. The people have a big effect on the wine by the work they do — filtering, topping barrels, moving and bottle wines. I believe a little bit in Feng Shui, but more in the effect of people.