Essay About Third Largest Winery And Domestic Market

Viña San Pedro
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Viña San Pedro
Viña San Pedro (VSP) was the third largest winery in Chile, with 1998 sales of Ch$37
billion. Bonifacio Correa had planted the original vines with French stock in 1865 on the farm in
Molina that the family had owned since 1701. For years, VSP wines enjoyed a reputation of
being one of the finest in the country and the vineyard remained in the Correa family until 1941.
New owners expanded the vineyard so that by 1994, 1,150 hectares1 were in production, making
it the largest single-site vineyard in the country. It was, however, barely profitable and survived
primarily by producing inexpensive wines for the domestic market.
Compaña Cervecerias Unidas
That year, Compaña Cervecerias Unidas S.A. (CCU), a diversified beverage company
that operated primarily in Chile and Argentina, purchased a 48.4% share of VSP stock for
CP$7.8 billion. In 1992, CCU issued 4,520,582 American Depository Shares (ADS) in an
international American Depository Receipt (ADR) listed on the NASDAQ2. In 1996, it
completed another ADR, thereby raising US$155 million in additional capital. CCU shares also
traded on the Chilean stock exchange. In 1998, CCU had sales of Ch$280 billion and was the
dominant player in the domestic beer market with a 91% market share (see Exhibit 1 for CCU
financial statements, Exhibit 2 for exchange rate information, and Exhibit 3 for inflation rates).
It was also the second largest beer seller in the Argentine beer market, the second largest Chilean
soft drink producer, the largest Chilean mineral water producer, and, with the acquisition of VSP,
the third largest producer of wine in Chile. The management of CCU recognized VSP as a
diamond in the rough.
CCU had been established in 1902 following the merger