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Chile adapts strategy to global change
Wines of Chile president Mario Pablo Silva has set out a revised global export strategy to guide the country’s wine industry for the next decade.
Positioning the move as a development rather than replacement for the organisation’s Strategic Plan 2020, which was launched five years ago, Silva told the drinks business: “In 2014 Chile became the first New World country for wine exports when we beat Australia so our pillars were correct, but the situation of the world is different to 2010.”
Looking to some of Chile’s key export targets, he observed: “The economies of the world are different now: the UK is more difficult, Brazil is getting difficult and the US is going to be better.”
Another bright spot highlighted by Silva was China. “In the last two months China has been the number one market for Chile,” he revealed. Noting that Chile is now the third largest exporter to China after France and Italy, he remarked: “It’s growing very, very well. They love Chilean wines and they know Chile because of wine.”
Assessing the ongoing effect of the Chinese government’s austerity crackdown and recent economic slowdown, Silva maintained: “China is starting to have problems with its economy but for New World wines it will be an opportunity.”
To explain the factors here that are working in Chile’s favour, he outlined: “They like good quality wines but perhaps there’s a change from luxury to high prestige. The market is going to be more stable in China. They need to be educated about wine, but each time I’m there people are drinking more wine because the government is sending a message that it is good for your health.”
As for the US market, currently an attractive target for many wine exporters, Silva commented: “Chile has a very good image in the US. It’s a very mature market for us, but we’re behind in our strategy to increase sales at $15-25.”
Outlining the challenge here, he explained: “We have the best price to quality ratio under $12 but with the new Chile coming through our focus in the US is to promote Chile in the $15-25 segment, and to show we are very diverse here. It’s about education and talking to the higher level retailers.”
Underpinning this drive in all markets, explained Silva, is the message of “the purity and diversity of our country”, an angle that he is working hard to build into a wider message in partnership with the Chilean government and tourist sector, putting wine at the centre of Chile’s image to the outside world.
“Chile is a pure, natural country to be visited and explored,” remarked Silva, highlighting the credibility of its Sustainability Code, which now covers 75% of wine exports. “You have the sea and the Andes, and in between is wine paradise.”
The country has already launched a domestic campaign with the tag line “Nos gusta el vino” (“We love wine”) and Silva is now keen to build on this foundation abroad. “Copper is the biggest export for Chile, but it’s a commodity,” he commented. “Wine is on the table of millions of people around the world.”
For an in-depth look at the latest news and trends from Chile, see the drinks business‘ September issue.
I’ve been doing wine business in China for the last 9+ years. Things are certainly improving when it comes to wine knowledge and culture. But when it comes to prices, the growth is in the “value” category. The days of buying expensive wine without caring about the price tag are long over.
The government is blamed for this (anti graft) but the truth is, and this is never mentioned, is that China has been flooded with “cheap” wines (compared to old prices). Chile and Australia lead the charge here. French Vin de Pays and some vin de communauté Européenne can be found, but in Chinese customers’ mind, Australian Shiraz and Chile reds (Carmenère does quite well here) is where it’s at. There is NO import duty here on Chile wine, which makes the prices very attractive. And soon Australia will be duty free as well. It’s becoming increasingly difficult to sell old Bordeaux and others, even from good AOCs, unless it’s a famous brand or the prices are similar to the Chilean wines.
There’s certainly still a market for mid priced wines, and to some extant premium wines, but the future is sub 100 yuan (retail) wines, and even that is starting to be considered “expensive”. Many customers contact me to find wines under 50 yuan retail.