Chile’s wine consumption fell 17.5%, the steepest drop among major markets

Chile’s wine industry is under growing pressure as domestic consumption falls much faster than the global average, leaving producers with weaker local demand, slower export sales and lower grape prices in one of the world’s largest wine-exporting countries.

Data from the International Organization of Vine and Wine, or OIV, show that wine consumption in Chile dropped 17.5% in 2025 from a year earlier. Worldwide consumption fell 2.7% over the same period. The Chilean decline was the steepest among the main wine markets, according to the organization.

The longer-term slide has been even sharper. Over the past decade, Chilean wine consumption fell to 1.56 million hectoliters from 2.58 million hectoliters, a drop of 39.5%, OIV figures show. Global consumption declined 13.7% over the same period.

That retreat matters well beyond restaurant sales and household buying. Chile is the world’s fourth-largest wine exporter, and the local market absorbs only a limited share of national production. When domestic demand weakens at the same time export markets soften, more wine remains in storage, grape prices come under pressure and margins narrow across the industry. For the broader beverages business, that can translate into weaker profitability, less room for investment and more pressure on Chile’s ability to compete abroad.

Chile exports most of what it produces. Between January and November 2025, the country shipped 686 million liters of wine abroad, roughly 82% of annual production, according to the Office of Agricultural Studies and Policies, known as Odepa, and the Agriculture and Livestock Service, or SAG. In the first half of 2026, exports totaled 302.8 million liters, down 13.2% from the same period a year earlier.

The government has stopped short of calling the situation a full crisis. Agriculture Minister Jaime Campos described it as “an important adjustment process” and said he preferred to wait for the next harvest before using harsher language. He told EL PAÍS that production in the sector usually moves within a 10% to 15% range, and that larger swings would point to more serious problems. Producers are “obviously worried,” he said, and will have to adjust to a new market reality.

Industry specialists say the downturn is no longer just a normal cycle. Yerko Moreno, director of the Vine and Wine Technology Center at the University of Talca, said the industry is going through a structural transformation. In his view, the sector is moving toward fewer producers and greater concentration, with smaller growers facing the greatest strain.

Moreno said the roots of the problem predate the recent consumption slump. Chile’s wine area expanded to nearly 140,000 hectares on the expectation that annual growth near 10% would continue, as it had in earlier decades. But even before the pandemic, he said, there were signs that selling the wine was becoming harder. Lockdowns temporarily lifted consumption and delayed a correction that the market eventually had to absorb.

Both government officials and analysts point to changing drinking habits as a major factor. Campos said consumer preferences have shifted in recent years, with stronger demand for lower-alcohol wines, especially among younger drinkers. He linked that to broader lifestyle changes and a greater focus on health, a trend that has affected alcohol consumption in many countries.

Moreno argues that Chile also has a domestic marketing problem. He said the country has not built a strong wine culture at home despite its reputation as a major producer. Outside Santiago, he said, it is still common for restaurants to offer soft drinks rather than wine by the glass. He contrasted that with Argentina and said Chile’s producers need to connect better with younger consumers by teaching them more about grape varieties, winemaking and food pairing.

The vineyard itself has been shrinking. SAG says the area used for wine production fell 22% over the past decade to 110,768 hectares. Moreno said he doubts that official figure and believes the real planted area is closer to 95,000 to 100,000 hectares based on what people in the field are seeing. He said the official register depends on producer declarations and lacks technical information that would help both growers and policymakers, including trellising systems, grafting and clone data. In his estimate, the industry may need to shrink to 85,000 to 90,000 hectares to return to sustainable profitability.

The immediate problem, he said, is oversupply. Wineries ended last year with 1.1209 billion liters in storage, according to Odepa. With so much wine in stock, the price of grapes has fallen. Chile and Argentina now have the lowest grape prices among the major exporting countries, Moreno said. He expects growers to receive less money for their grapes this year, and warned that producers who cannot make up the shortfall with higher yields per hectare may be forced to leave the business.

Weather is adding to the strain. Moreno said the 2026-2027 season is likely to be very difficult because falling grape prices are coinciding with pressure to produce more kilos per hectare and with heavy spring rains that have not eased. He said the following season may be somewhat better, but not easy.

The pressure is especially acute for smaller growers. Campos said the Agricultural Development Institute, or Indap, works with about 4,500 grape producers and that some are already shifting to other crops. He said that process is not easy, but acknowledged that there is an objective problem in the sector.

There has been little relief from foreign markets. Between January and August 2026, Chile exported 419.4 million liters of wine, down 9.9% in volume and 7.4% in value from the same period in 2025, according to Odepa. August posted an 18.4% increase in volume, but that rebound was not enough to reverse the broader decline for the year.

The United States has been the biggest setback. Sales of Chilean wine there fell 33% in value and 23% in volume in the first half of the year, according to industry association chief executive Claudio Cilveti, as cited by La Tercera. Since July 24, a general 12.5% tariff has also applied to Chilean imports into the United States. Wine had previously entered duty-free under the bilateral free trade agreement, but it was not exempted from the new measure. Chilean and U.S. officials are now negotiating to widen the list of products excluded from the tariff.

Campos said the state has limited room to respond directly. He said that if Chile has chosen an agro-export model, the main policy response is to keep opening new markets, with India and Southeast Asia among the current priorities.

The government recently created a new category that allows products with alcohol content starting at 8.5 degrees to be sold as low-alcohol wine, compared with the 11.5 degrees required for traditional wine. Campos said the change came at the industry’s request and is aimed at a market segment Chile had not been serving. He said he did not know how much impact the move would have, but expected some effect. Moreno said he does not believe the measure will materially change export performance.