(Bloomberg) -- Top Latin American winemaker Vina Concha y Toro SA is back in growth mode after a two-year slump marked by a global wine glut, with the Santiago-based firm upgrading vineyards, adding new products and being open to dealmaking.

The maker of the Don Melchor and Casillero del Diablo labels expects sales volume to grow around 8-12% this year, after dropping 5.7% last year, Chief Financial Officer Osvaldo Solar said in an interview from the company’s Santiago office on Thursday.

Winemakers around the world have been grappling with a mass draw-down of inventory due to higher interest rates and lingering pandemic-related consumption shifts, such as a drop in Chinese demand. While de-stocking continues, Concha y Toro is emerging from the downturn earlier than most due in part to a global distribution network that allows it to sell directly to retailers. 

With much of the industry still in defensive mode, the world’s second-largest winemaker by planted area is replacing some of its lower yielding vineyards as well as investing in wine tourism. It recently bought premium pisco label Malpaso and raised its stake in Chilean brewery Kross. The firm plans to lower debt levels this year, Solar said. 

Read More: Grape Farmers Destroying Vineyards as Global Wine Glut Persists

While Concha y Toro isn’t looking at any specific wine acquisitions right now, Solar signaled that ongoing industry weakness and his firm’s relative strength could lead to opportunities. “Today, when one is coming out of a more difficult moment, these are moments where more opportunities arise,” he explained. 

While global demand for more affordable labels remains soft, Chinese wine consumption has started to recover and sales of premium products has stayed fairly robust. Consumers who moved toward higher quality options in the pandemic are trading down amid lackluster economic conditions, but remain broadly within the premium category, Solar said.

Premium products have higher profit margins than cheaper options. 

Meanwhile, Concha y Toro is responding to shifting drinking habits with new products, as more people turn to lower-alcohol options and whites rather than reds. 

©2024 Bloomberg L.P.