Chile's Wine Exports Show Signs of Recovery

In the first half of 2024, Chile's wine industry showed modest signs of recovery, following a sharp decline in exports the previous year. According to data from Chile's customs authorities, the country's wine and must exports registered a 2.1% increase in value (in USD) and a more substantial 14.1% rise in volume compared to the same period in 2023. However, this recovery in volume does not tell the full story. Despite the increase in the number of liters exported, the average value per liter dropped by over 10%, from $2.25 per liter to $2.02 per liter—the lowest price point since 2017. These figures indicate that while Chile is moving forward, it is still far from regaining the levels of success seen in the first six months of 2022 and earlier years.

The wine export data for 2023 paints a sobering picture. That year, Chile's wine industry suffered significant setbacks, with exports plummeting by nearly a quarter in both value and volume. This translated to a loss of more than 200 million euros and a decrease of over one million hectoliters. By the end of 2023, Chile's annual wine export revenue had fallen to $1.5 billion, a stark contrast to the $2 billion mark that had been maintained even during the pandemic years. The volume followed a similar trajectory, shrinking to less than 7 million hectoliters, well below the 8 to 9 million hectoliters that had been the norm in the preceding decade.

As of June 2024, the export volume has slowly crept back up to around 7.3 million hectoliters, representing partial recovery. But this comes at the expense of a notable decline in average prices, underscoring the complexity of Chile's road to recovery.

Chile's wine export growth in 2024 has been uneven across different categories. The bulk of the country's wine exports still comes from non-sparkling bottled wines, which account for 54% of total sales and an even more commanding 80% of revenue. These wines brought in $600 million during the first half of 2024, and while their volume grew by 9.8%, their value increased by just 2.6%, a reflection of the 6.6% drop in unit price, which is now hovering around $3 per liter.

However, sparkling wines, a much smaller segment of Chile's overall wine exports, have seen significantly stronger growth. Following global trends toward lighter, fresher wines, which countries like Italy have capitalized on, Chile's sparkling wine exports jumped by 18% in value and over 22% in volume during the first half of the year. Although sparkling wines represent just a fraction of the non-sparkling category in terms of volume—1.5 million liters versus nearly 200 million—they are sold at a higher price, close to $4 per liter, generating over $6 million in revenue.

Bulk wine, the second-largest category in terms of volume, has had a more mixed performance. Chile exported 159 million liters of bulk wine during the first six months of 2024, but with an average price of only $0.76 per liter, this category earned just $120 million—far less than bottled wines.

One notable bright spot is the bag-in-box (BiB) wine category, which, although still relatively small, has shown robust growth. In the first half of 2024, BiB exports reached 9 million liters, generating nearly $18 million in revenue. This category saw a 12.5% increase in volume and over 30% growth in value, with the average price per liter rising by 16.4% to $1.96, positioning BiB wines between bulk and bottled wines in terms of pricing.

Chile's wine exports in 2024 were distributed across 126 international markets, but the top five—China, the United Kingdom, Brazil, the United States, and Japan—accounted for 55% of total revenue. A closer look at these markets reveals diverging trends, with the UK emerging as a key growth driver and China experiencing notable setbacks.

In the first half of 2024, China and the UK were nearly tied in terms of revenue, each bringing in around $91 million. However, this figure represents a 14.5% increase in sales to the UK, while exports to China dropped by 18.1%. The divergence is also evident in terms of volume: shipments to the UK surged by 15.6%, whereas exports to China declined by 4.6%. The most significant challenge in the Chinese market appears to be the steep drop in the average price, which fell by 14.1%.

Brazil, another major market for Chilean wine, remained stable during this period, with exports reaching 30 million liters and generating $83 million in revenue, reflecting a modest 3% growth. Meanwhile, the United States came close in terms of revenue, with sales totaling $80 million. However, Chile exported significantly more wine to the U.S.—nearly 40 million liters—due to the lower average price of $2.03 per liter compared to Brazil's $2.76 per liter.

Japan, though slightly behind in terms of revenue, saw impressive growth. Chilean wine exports to Japan increased by 10.7% in volume and 12.3% in value, bringing in $64.4 million from 23 million liters, with an average price of $2.11 per liter. Additionally, Canada and the Netherlands emerged as key markets with substantial growth, while Mexico and Ireland remained stable. South Korea, on the other hand, experienced a sharp decline.

A surprising development in 2024 has been the surge in exports to Italy. Historically, Italy has imported very little Chilean wine, but in the first half of 2024, it purchased more than 7.5 million liters, marking a dramatic shift in trade dynamics.

Chile's wine industry has shown resilience in 2024, making tentative gains in both volume and value after a challenging 2023. However, the recovery is far from complete. The sharp drop in average prices highlights the continued difficulties facing the sector, particularly in terms of maintaining profitability while boosting export volumes. The rise of categories like sparkling wine and BiB shows promise, as does the growing importance of markets like the UK, Japan, and Italy. Nonetheless, the industry will need to navigate ongoing price pressures and market fluctuations to sustain this fragile recovery in the months ahead.