Part One: The Chile Wine Industry
The Chilean wine industry has experienced various transformations over the past 30 years – its quality revolution led by the complete technological renovation during the 1980s, the export boom of the 1990s, and the new terror developments during the 2000 decade. This transformation has allowed a new generation of talented viticulturists and winemakers to capitalize on Chile’s viticultural paradise and to produce World Class Wines of unique character and personality.
Chile is the world’s eighth largest wine producer and the fifth largest exporter, reaching a market share of 8% by volume of the global international wine market at the close of 2010. However, and most importantly, Chile exports 70% of its wine production, making it the world’s most globalized wine industry, with great flexibility, innovation and a long-term commitment to quality and service. With 150 destination countries and 1.5 billion consumers for each year, Chilean wines are positioned as the country’s most emblematic and best known world ambassador.
In the late 1970s and early 1980s, Chileans adopted advanced technology and invested in new machinery for optimizing the winemaking process in the field. The winemaker offered an innovative higher-quality product that was conducive to the development of new wine varieties. Later producers also perfected their wine cellars and invested in better labels and packing, such as boxes, bottles and cartons, that were more attractive to consumers. In addition, the country developed effective marketing campaigns. All of this combined to spark growth in the industry and enabled it to open new markets. There were more than 120 companies on the market, shipping thousands of cases to such international markets as Peru, Argentina, Paraguay, Uruguay, Ecuador and Brazil. Later, Chile also moved into the United States and Europe, and more recently, into Asia.
At first, wine imports from Chile and the Viceroyalty of Peru into Spain were banned. The market loss caused the huge surplus of grapes. The concentration solely on pisco production, nearly eliminated wine production in Peru. The Chileans ignored these restrictions, preferring their domestic production to the oxidized and vinegary wines that didn't fare well during the long voyages from Spain. They were even so bold as to start exporting some of their wines to neighboring Peru. From my point of view, the reason why choose Peru to be the first country to enter, is because at that time Peru’s wine industry got damaged hugely from the restriction of Spain. Also, to ensure the quality of the wine taste, and due to the lack of technology, Peru has the relatively perfect distance for Chile to export their wine.
The trading strategy of the country is based on the efficient management of the ports of Valparaíso and San Antonio, which made it possible for the country’s products to be well positioned in the principal export destinations (the U.K., the U.S., Canada, Germany, Brazil, as well as Asian countries). It’s also important that the undeniably attractive characteristics of the country’s agricultural environment – the valleys of Apalta, Casablana and Maule – and the support related industries have provided for winemakers, such as the food industry’s slogan: “Chile: A global food and agricultural power.” Chilean food producers have focused on incorporating traceability systems into their supply chains ever since the European Union made them obligatory in 2005. Various Chilean companies have reacted to the EU regulations by designing a special system for wine traceability. Known as Kupay, it’s a digital platform that records data from the moment when the grape is planted until the delivery of the final product to its ultimate destination.
Nowadays, despite the global demand for Chilean wine, winemakers here are still struggling to move up market because consumers are not willing to give up cheaper vintages brewed here due to economic crisis. The decline in wine exports could also be due to the appreciation in Chilean currency making the wine more expensive in majority of the countries. The country was hit badly in 2009 when shipments fell by 4 million cases, the first time in 16 years.

Part Two: Country Analysis - Chile
• Size of population: 17,067,369
• Currency and its fluctuation: Chilean peso (CLP), 1 Dollar = 472.9 CLP
The USDCLP spot exchange rate depreciated 7.1200 or 1.48 percent during the last 30 days. Historically, from 1981 until 2012, Chilean Peso averaged 498.5 reaching an all time high of 759.8 in October of 2002 and a record low of 39.0 in April of 1981. The USDCLP spot exchange rate specifies how much one currency, the USD, is currently worth in terms of the other, the CLP. While the USDCLP spot exchange rate is quoted and exchanged in the same day, the USDCLP forward rate is quoted today but for delivery and payment on a specific future date. This page includes a chart with historical data for USDCLP - Chilean Peso Exchange rate.
• GDP: $257,900,000,000 (USD)
• GNP: $279,061,300,000 (USD)
• Income Distribution, Gini index:
52.1 (2009), 57.1 (2000)
• Approach to International:
The trade weighted tariff rate is 4 percent, and non-tariff barriers are relatively low. Chile has actively pursued free trade deals with many countries. Guided by a transparent and efficient investment regime, foreign and domestic investors generally receive equal treatment. The financial sector remains one of the region’s most stable and developed. Capital market reforms to enhance access to financing for individuals and firms have progressed gradually.
Transparency Index 7.2
• Developing Country
According to human development, level of nutrition, communications, defense forces, health systems, social safety net, low levels of corruptions, standards of life, cleanness of the cities, low levels of crime, democratic and stable government, life expectancy of its citizens, freedom of press, freedom of religion, freedom of political association, freedom of workers association, technological development, use of computers everywhere, good and modern transport systems, tourism infrastructure, solid financial banking systems, government wealth, and many other indexes, Chile is a developed country. However there are a few indexes where Chile is not so developed namely income per cápita, distribution of wealth, standards of state funded primary and secondary education, research and development and respect for indigenous communities.
• Globalization and Competitiveness:
Globalization, competitiveness, tariffs and security
• Infrastructure level:
Transport, technology penetration, access to water and quality of electricity supply
• Political Environment:
Government type: Republic
Political freedom, political stability, political outlook, judicial independence, business policies of government, transparency and intellectual property rights
• Import Regulations:
Contractual agreements in Chile are the most secure in Latin America. Courts are transparent and efficient. Property rights are strongly respected, and expropriation is rare. Lingering intellectual property rights concerns involve protection of patents and copyrights. In 2010, the government implemented a new intellectual property law amending its copyright law, and the Chilean Congress has ratified the Trademark Law Treaty.
From 1990 to 2009, left-of-center governments largely maintained the market-based institutions and sound economic poli¬cies established under the 17-year rule of General Augusto Pinochet. President Sebastian Piñera and his center-right Alianza coalition assumed power in 2010. Chile is the world’s leading producer of copper and has bounced back from the effects of a major earthquake in early 2010. An innovative, countercyclical fiscal policy accumulates surpluses when copper prices are high and operates in deficit only when prices and economic activity are low. This has helped maintain fiscal balance. Exports of minerals, wood, fruit, seafood, and wine drive GDP growth. Chile joined the Organisation for Eco¬nomic Co-operation and Development in 2010.
• Economic and Consumption Trends:
Chile’s economic freedom score is 78.3, making its economy the 7th freest in the 2012 Index. Its overall score is 0.9 point better than last year due to improved scores in property rights, freedom from corruption, and monetary freedom. Chile enjoys the highest degree of economic freedom in the South and Central America/Caribbean region. Regaining its status as one of the world’s 10 freest economies, Chile continues to be a global leader in economic freedom. The economy benefits greatly from its solid foundations of economic freedom, which have been further strengthened in recent years. Recognizing the importance of limited government, the government has adhered to prudent public finance management practices that have kept public debt and recent budget deficits under control.
The overall regulatory framework facilitates entrepreneurial activity and productivity growth. The time needed to start a business has been reduced to seven days from 22, with only seven procedures required. Bankruptcy is relatively cumbersome and costly. Minimum wage increases have exceeded overall productivity growth in recent years, but labor laws generally facilitate efficient hiring and dismissal procedures. Inflation has been under control.
The top income tax rate is 40 percent. July 2010 tax amendments temporarily increased the 17 percent corporate tax rate to 20 percent for 2011. The rate will come down to 18.5 percent for 2012 and return to 17 percent for 2013. Other taxes include a value-added tax (VAT) and a property tax, with the overall tax burden equal to 16.1 percent of GDP. Government spending is 24.4 percent of