
A current hot topic is whether Chile is finally getting rid of its boring image as a source of cheap and cheerful wine which, whilst it serves a purpose and hits a price point, does not exactly set the palate racing. Obviously as wine drinkers we would like to see some new and exciting stuff coming from Chile. But I wonder if it really makes sense for Chile to move away from what it does best, i.e. off-trade targeted value-for-money varietals.
It is generally agreed that Chile has been slowly but surely emerging from the doldrums over the past decade and that it now has the potential to be far more than a cheap source of reliable plonk. When I first visited Chile in 1997, the nascent export market was almost entirely dominated by the three big players (Concha y Toro, San Pedro and Santa Rita) and the vast majority of the wines exported were straightforward Bordeaux varietal gluggers.
Quality - develop regionality and introduce premium varietiesA strong image is a prerequisite in order to break into the premium wine arena - think Argentinian Malbec, South African Pinotage, Barossa Valley Shiraz. Chile's image is currently badly defined (indeed, it has been said that more than a problem of bad image, Chile has no image). Its Andean neighbour Argentina, on the other hand, didn't export for many years during the era of dollar equivalency and high export tarifs and so was able to develop "behind the scenes" and present a fully-formed wine industry to the world once the impediments to exports were reduced.
Nonetheless, if Chile gets its act together with the right PR and marketing, it certainly has the ability to establish itself in due course as a producer of premium wines. The keys to this will be increased regionality and more imaginative planting and blending. The emergence of Carmenere as a "signature" premium varietal (
a la Malbec) will also be interesting to watch, although Chile should probably not pin all its hopes on it. New up and coming areas include Elqui and Limari for Syrah (see 31 July post below) and Bio Bio for Pinot Noir and aromatics such as Riesling and Gewurztraminer. The main advantage of the south of the country is the cool climate and Pacific fog, although levels of rainfall can be rather high. Jancis Robinson has commented on the lack of fruit concentration in Chile's southern whites, but the vines are still young and if this remains a problem in future years winemakers will have the option to reduce yields (and so increase concentration in the remaining grapes). Importantly, vineyard sites remain relatively cheap in the sparsely populated south.
Quantity - stick to the popular grapes and sell, sell, sell!The bigger companies in the more established areas are pursuing a different tack by going after the mass market. Concha y Toro and Viña Ventisquero, both based in the Central Valley, have recently thrown down the gauntlet to Italian producers by introducing Pinot Grigio. Casablanca could offer excellent growing conditions for the fashionable grape. Whereas Italy is incredibly reliant on Pinot Grigio, Chile's breadth of wines would allow its larger wineries to take on the Italians without exposing themselves unduly. There are synergies with their existing portfolios too - buyers of Concha y Toro's Sunrise brand are also likely to be in the market for some gluggable Pinot Grigio and will probably be more concerned about its drinkability than its country of origin.
Chile's export volumes are growing. According to market research company Nielsen, it has now overtaken Spain to become the sixth biggest importer to the UK. It is predicted to overtake South Africa by the end of 2008, and is breathing down the neck of Italy. The comparison with South Africa highlights the million dollar question for Chile. Both countries export similar quantities of wine to the UK, but whereas Chile has a strong off-trade offering, largely built around Bordeaux varietals, South Africa also includes the premium end of the market in its portfolio. Should Chile try to compete in this premium arena or stick to pursuing volume by offering discounts to the off-trade? Daniel Hart, senior New World buyer at Enotria, acknowledges that this is a "tough choice in tough market conditions", but notes that if Chile decides to pursue volume in the off-trade market, it could do so at the expense of its drive for regional and premium recognition.
So...The fundamentals of Chile's wine industry (infrastructure, economy, training) are all in place. The big companies are getting better and better at pursuing volume. Quality winemaking is developing in interesting new directions and the wine map is being stretched both north and south. The greatest impediment to the premium market is image: if Chile wants to play the premium wine game, it will need a combination of the right marketing (both by individual wineries and national trade bodies) and a shift in focus by the big producers towards the upper end of the market. As far as the second of these goes, the need for profitability in the big players may prove to be the sticking-point. What may well develop over the coming decade is a two tier system of big producers of cheap table wine and smaller wineries targeting the premium market. Which is workable in theory but doesn't make solving the image problem any easier.

Sources: (1) Edmundo Bordeau and Gonzalo Vargas, "Prospects for the Fine Wine industry: Competitiveness and development for Chile 2010"; (2) Jancis Robinson, "Hot Spots for Chile's Vineyards"; (3) Mark Lewis, "Chile pins hopes on Pinot Grigio"