China surpasses the US as Chile’s biggest wine export market

China has surpassed the US to become Chile’s biggest export market for wine by value, according to the latest data dbHK obtained from Wines of Chile.

Santa Rita Estates at Chengdu Wine Fair this March

From January to December last year, the country exported about 142.5 million litres of wines worth about US$251.47 million to China, representing a 13.02% rise in terms of value despite a 7.97% volume drop over 2015.

Exports to the US totalled US$246.3 million by value and roughly 153.9 million litres of wine by volume.

In terms of bottled wine exports alone, Chile exported US$195 million worth of bottled wines to China, US$183m worth to the US, US$148m to the UK, US$142m to Japan and US$122.5m to Brazil.

Chile’s wine exports to China have been growing over the past 12 years since the two countries signed a Free Trade Agreement in 2005 that eventually saw China removing all tariff on Chilean wines in 2015, making it the second country to enjoy such policy after New Zealand. However, the wines are still subject to 17% VAT and 10% consumption tax.

The remarkable surge in exports to China has placed the country as Chile’s primary focus. “China is the focus for Chile today. We have already reached the trade, now we are communicating with the consumers through different channels in order to convert them into truly real fanatics,” Julio Alonso Ducci, director of Wines of Chile Asia, told dbHK.

In the future, Ducci revealed the trade association is hoping to grow wines exported to China in average price and value in segments over US$40 FOB (free on board) 9-litre case.

“We think we have a great opportunity in wines for RMB 150 (US$21.8) per bottle and above in the market today, with a positioning that is reaching both consumers and new comers. Young people, millennials in developing cities is the audience we want to reach. And it’s happening,” commented Ducci.

Addressing the discrepancy of Chinese Customs figure on bottled Chilean wine exports to China last year – US$209 million versus Wines of Chile’s US$195 million – Ducci explained that the 35-day shipping time, exporting from third countries as well as Customs clearance at bonded areas could cause the gap from source country to destination country, which means wines sent out, for example, in December in Chile which are counted as 2016 in Wines of Chile’s report can only be counted as January for 2017 in China.

In total, Chile exported 906.7 million tons of wines worth about US$1.85 billion in 2016, representing a 3.53% increase in value and meagre 0.86% increase in volume over the same period.