Chile’s pricing ambitions “optimistic”

Chile’s plans for price increases may be overly optimistic, according to a recent Rabobank report.

The report considered Wines of Chile’s “Plan 2020” and concluded that with the current economic climate and recent rates of growth, the desired price increases by 2020 may be difficult to achieve.

Plan 2020 projects a 3% average annual price increase per bottle of Chilean wine over the next decade.
Rabobank stated in its report: “A cursory analysis suggests that the 3% growth projection may be optimistic though not unattainable.”

Measured in US dollars, the report pointed out that between 2001 and 2010, pricing for Chilean wine exports grew by just 2%.

This included an 8% decline in bottled wine prices in 2009 in what was a difficult year for the trade overall.

Excluding 2009 however, pricing grew by 3% annually during this period, which is what keeps Chile’s hopes for Plan 2020 afloat.

Rabobank went on to examine the challenges that Chile faces over the coming years. The use of US dollars it said was perhaps not the best way of measuring success due to the market’s recent volatility.

Although pricing trends in dollars over the last decade have been positive, when converted to Chilean pesos, they in fact show a Compound Annual Growth Rate decline of 1%.

The problems in the UK and US, Chile’s largest export markets but not necessarily its most profitable, are also on-going and so even if the 3% increase is achieved it may not reflect improving returns due to the “downward pressure on their (US and UK) currencies relative to the Chilean peso”.