MercoPress. South Atlantic News Agency

Strong Chilean peso hitting wine exports

Chilean wine exports dropped in value for the first time since 1994, when the boom in international sales of Chilean wines first began.

Over the past 12 months, the value of wines fell, largely due to the drastic 30% drop in the value of the U.S. dollar against the Chilean peso over the past two years.

Wine exports the past year (between May 2005 and April 2006) dropped 0.72% in value as compared to sales from the previous year.

Wine industry consultants at Rodrigo Alvarado & Associates said this is a red flag for the nation's winemakers, whose industry has been driven by growing demand from international sales.

Chilevid general manager René Merino agreed, saying because of the falling value of the wines, sellers have been forced to raise their prices.

"This undermines our competitive edge with other wine producing countries. They're happy in New Zealand because Chile has a worse exchange rate than they do."

Still, Merino remains optimistic for export sales for the remainder of the year since the first trimester historically reflects fewer wine sales.

But in spite of the current situation in Chile, the country's wine industry is also strong in Argentina where seven Chilean wine companies control 10.2% of Argentine wine exports, consisting of some 300 different brands.

Between January and March of this year, Chilean wine companies have recorded exports valuing 6.7 million US dollars in Argentina's market. Concha y Toro and San Pedro, common names in the Chilean wine industry, are benefiting from their neighbouring countries' larger internal market and recent devaluation of the peso to the dollar. Argentines consume around 32 litres of wine a year, which is double that of the average Chilean.

Chilean companies started investing in Argentina's wine market in the 1990s with export sales amounting to 30 million US dollars in 2005, accounting for 11.2% of all Argentina's wine exports.

Almost all investments are around Mendoza, Argentina, close to the Chilean border where the climate provides for good harvests and low risk of crop disease.

The most successful exports have been from the Trivento estates in Mendoza, founded in 1996, which comprise of five vineyards. Winemaker Federico Galdeano has utilized his skills to produce an array of different wines including syrah, sauvignon and a chardonnay.

By J. Sotolongo & G. Updegrove The Santiago Times - News about Chile