Chile's wine exports have plummeted, and what about replacing Australian wine?

From new favorites to falling out of favor, Chilean wines are facing a crisis.

Recently, the Chilean Wine Association said that in the first half of this year, wine exports fell by 24% year-on-year, sales and profits of large and small producers fell sharply, and the wine industry is in the "most challenging period", facing an "unprecedented downturn", and small exporters are also facing complications such as higher costs, fewer market opportunities and less competitiveness.

Once expected to be the best alternative to Australian wines, why is Chilean wine in trouble today?

In 2021, the Ministry of Commerce announced the final ruling on the anti-dumping and countervailing duty investigation of import-related wines originating in Australia, and decided to impose anti-dumping duties on relevant wines originating in Australia from March 28, 2021, with anti-dumping duty rates ranging from 116.2% to 218.4% for each company.

Since then, Australian wine has staged a big ebb in the Chinese market, almost reaching a state of "zero". Its market share was quickly divided among many wine-producing countries such as France, Italy, the United States, and Spain, while the low-end part basically fell into the hands of Chile.

When the opportunity came, Chilean wine became a new favorite on the table of Chinese consumers for a while. This can be seen in the data - in 2021, Chilean wine exports to China reached 256 million US dollars (about 1.6 billion yuan), a year-on-year increase of 38.1%, a record high, and the share of Chilean wine accounted for the largest proportion of all Chilean export destinations. In 2020, the volume of Chilean bottled wine exports to Chinese mainland fell by 28.26% year-on-year, and the amount decreased by 26.08%, and in the critical year of 2021, Chilean wine swept away the haze of setbacks and achieved a "headwind turnaround".

Chile and Australia, both of the Southern Hemisphere, are wine producers in the New World, and their regions have similar latitudes and similar productions, with Chile producing 1.24 billion litres in 2022 and Australia producing 1.27 billion litres.

Because of these many similarities, many wine merchants and distributors believe that Chilean wines are expected to become the most competitive substitutes after the withdrawal of Australian wines from the Chinese market, and their confidence and expectations in Chilean wines can be reflected in their consistent purchase of Chilean wines to lay out the market.

However, 2022 seems to have reached a turning point for Chilean wines, which are booming, and their fatigue is beginning to show signs. Although Chile's wine exports to China reached 134.5 million liters, an increase of 5.81% compared to 2021, maintaining its position as the country's second largest wine supplier, its total exports have fallen slightly by 1.53% to US$326.7 million.

Entering 2023, Chilean wines are not having a good time. According to the data released by the Wine Importers and Exporters Branch, from January to September this year, Chile's wine imports fell by 24.93% and 33.23% respectively, maintaining a high decline, which is in stark contrast to New Zealand and South Africa, which bucked the trend and rose in volume.

Affected by factors such as the slowdown in world economic growth, inflation, war, and energy crisis, Chilean wines have also been given a "cold reception" in other countries in addition to the Chinese market. Chilean wine exports in the first four months of 2023 were 20.5% lower than the same period last year, and the total value of exports fell by 21.4%, according to Chile's national daily, La Tercera, citing data from the Chilean Wine Association. During this period, Chilean wine exports to Brazil, South Korea, Canada and other countries all fell by double digits.

In just two years, Chilean wine has experienced a meteoric increase to a sharp decline, and the process has been a roller coaster, why?

When it comes to Chilean wine, many people naturally think of cheap and affordable. The low-price label is like a double-edged sword, on the one hand, the affordable price lowers the threshold of consumption, makes entry-level consumers more willing to buy and try, and is more conducive to seizing the mass consumer market. On the other hand, consumers' stickiness and loyalty to low-end wine is not high, and once the low-end coat is put on, it is difficult to take it off, especially for mid-to-high-end consumers, such wine is "not stylish".

According to iiMedia Research, the price of wine accepted by Chinese netizens in 2021 is mainly concentrated in the two ranges of 101-200 yuan and 201-500 yuan. However, from Taobao, Jingdong and other platforms, Chilean wine is still mainly low-end, and the number of 60-100 yuan accounts for a relatively large amount, which is also a reason why Chilean wine "fell out of favor". For example, the price of a whole box of Red Devil Zunlong series Cabernet Sauvignon red wine on the Jingdong platform is 298 yuan, and the average bottle is less than 50 yuan. In addition, the domestic low-end wine market is flooded with a large number of lower-priced bottled wines, which are shoddy, which inevitably squeezes out the living space of low-priced imported wines.

More importantly, at present, the overall decline of mass consumption, the competition in the low-end wine track is becoming more and more fierce, and consumers also pay more attention to taste and brand when choosing wine, so no one wants to drink low-end wine, and it cannot be sold. Because of the brand blessing, mid-to-high-end liquor meets consumers' demands for quality and has a fixed consumption circle, and is still competitive in the market.

After the ebb of Australian wines, Chile quickly picked up the leaks and filled the gaps in the market, but the gaps will always be filled, and if you want to go further, you have to rely on brand power to break through. Although Chilean wines have "Eighteen Arhats", consumers have a vague impression of them, lack recognition, and there are not many brands that can be named other than Living Soul and Montes. It is difficult to replace Australian wines, which have been deeply involved in the Chinese market for many years and are led by well-known leading brands.

In the past October, China and Australia reached a consensus on the settlement of the wine trade dispute, and the bitter winter of Australian wine may soon usher in a warm spring. Wine merchants are gearing up, actively arranging, and ready to go. This is naturally another challenge for Chilean wines.

文、编 | Rayna