Chilean Wine and U.S. Trade Policy

Wine Clubs, Exports, and Chilean-U.S. Free Trade

Nov 5, 2009 Melanie Zoltan

From 1995 to 2005 Chilean vineyards grew from 12 to 70. Chilean wine and U.S trade policy is critical for wine exports, inclusion in wine clubs, and continued growth.

Chilean wine is a common sight in liquor stores and the wine sections of grocery stores in the United States. Until 1995, however, Chilean wine was largely a local phenomenon, with vineyards confined to Chile's central valley and the domestic market small. Within 10 short years, vineyards had grown seven-fold, and 17 percent of all Chilean wine exports went to the United States in 2008, with U.S. trade policy reflecting the shift.

The Growth of Chilean Vineyards

Chile's central valley is a microclimate suited perfectly for producing wine grapes. Nestled between the Pacific Ocean and the Andes mountains, with a temperate climate and with top soils with the right nutrients for viticulture, the central valley's Chilean wine exports have skyrocketed since the late 1990s.

Viticulture in Chile is not new. Wine has been produced since the mid-1550s, the first wine culture in the New World. Many of the vineyards known for export to the United States today, such as Concha y Toro, Casillero del Diablo, and Viña Santa Rita were established in the 19th century but are "new wines" to the U.S. market.

Chilean Wine Exports

Until 1998, unlike other regions in Europe, the United States, and Australia, Chile did not have a specific wine specialty. Chilean wine exports included Chardonnay, Pinot Noir, Merlot, Cabernet Sauvignon, but the Merlot was tested and found to be made from a unique grape. The Carmenere grape had been thought extinct in Europe, the victim of phylloxera, an insect similar to aphids which consumes the roots and leaves of specific grapevines. Europeans had brought the Carmenere grape to Chile at some point in the distant past and the variety had thrived in Chile, mistaken for the grape used to make Merlot.

With this discovery, Chilean wine had its niche. Over the past decade production of wine made from the Carmenere grape has spiked, with the Carmenere constituting 10% of all wine produced in Chile as of 2008.

Wine Clubs and Chilean Wine

Chile's rise on the international wine market coincided with the creation of online alcohol sales and online wine clubs. Chilean wine exports to the U.S. allow the wines to be affordably priced due to exchange rates. Wine clubs added Chilean selections to promote a variety of value options. Some wine clubs allow for exclusively Chilean choices, such as the UK's Chilean Wine Club.

Chilean-U.S. Trade and Chilean Wine

According to the Gomberg-Fredrickson Report, the international wine industry's leading analyst report, Chilean wine exports skyrocketed by 19% to the U.S. in the first half of 2009, and Chilean-U.S. trade in vino reached 40% of all imported wine to the states. Aided by currency exchange rates and a down economy that sent wine drinkers to select more budget-conscious bottles, Chilean wine and trade policy has been bolstered by the free trade agreement negotiated between the two countries in the early 2000s.

In 2016 Chilean-U.S. trade tariffs will be eliminated for key exports, opening the U.S. market further to Chilean wine exports.

To read more on Chilean wine, read Wines of Chile, Chilean Wine Regions, and Fair Trade Wine from Chile.

Resources:

Kym Anderson, The World's Wine Markets: Globalization at Work. Edward Elgar Publishing, 2004.

The copyright of the article Chilean Wine and U.S. Trade Policy in South American Affairs is owned by Melanie Zoltan. Permission to republish Chilean Wine and U.S. Trade Policy in print or online must be granted by the author in writing.

Chilean Wine and Wine Clubs Expand Market

What do you think about this article?

---

NOTE: Because you are not a Suite101 member, your comment will be moderated before it is viewable.

post your comment

What is 6+5?