UK Overtakes China as Chile’s Top Wine Export Market

The UK has surpassed China as the largest export market for Chilean wine in the first quarter of this year. This shift comes amid a challenging economic environment in China and controversial market strategies by some major Chilean brands.

According to data from Chilean customs and analysis by the Spanish Wine Market Observatory (OEMV), Chilean wine exports grew by 9.6% in volume and 3.3% in value compared to the same period last year, reaching 18.46 million liters and $366.3 million. However, the average export price fell by 5.8%, dropping to $1.98 per liter.

A report released on July 12 highlighted that the surge in the UK market was a significant factor in this growth, with the value of Chilean wine imports increasing by 40%. This leap propelled the UK past China and the US to become the top market for Chilean wine exports by value, overtaking other traditional destinations.

China, historically the leading market for Chilean wine, experienced a substantial decline. In 2023, the value of Chilean wine exports to China decreased by US$96.1 million, leading to a 20% drop in the total export value of Chilean wine for the year. Recent data from Wines of Chile shows that this downward trend continued from January to May, with export volumes to China slightly increasing by 8.85% to 1.84 million cases (9 liters per case), but the export value fell by 4.49% to US$61.13 million.

Speaking to Vino Joy News, Bai Ziyi, who runs the popular Chinese Chilean wine brand “Yellow Code,” noted: “The current unfavorable environment for wine in China has led to poor sales across all wine regions, with a sharper decline in low-end Chilean wines, further dragging down the overall data for the wine-producing country.”

Due to zero tariffs and high cost-performance, Chile has been the top source of bulk wine for China. However, from February to April this year, China’s imports of Chilean bulk wine dropped to USD 12.8566 million, a year-on-year decrease of 27.13%. Bulk wine imports accounted for 41.35% of bottled wine imports, and the decline in bulk wine imports clearly affects the total.

Jason Zhang, head of Shanghai Yunjio Warehouse, a subsidiary of Shanghai Nine Coast Network Technology Co., Ltd., one of China’s top 50 wine importers that specializes in bulk wine and represents Chilean premium winery Clos Quebrada DeMacu, described a similar situation. “In the first quarter, many Chinese bulk wine importers bet on the full reopening of Australian wine, placing many orders while Australian bulk wine prices were at their lowest, squeezing out Chilean raw wine,” he said.

When it comes to bottled wine, Zhang is also quite pessimistic. He said, “The current environment is bad, and people don’t want to spend money. Bottled wine isn’t selling as well as last year.”

When Vino Joy News reached Xie Chuntian, the legal representative of leading wine importer China Wine Platform Ltd. on the phone, the Chinese agent for Chilean wine brand Montes, he was somewhat resistant to talk and only briefly stated, “This year is about the same as last year,” before hanging up the phone.

China Wine Platform based in Beijing is one of China’s 50 top wine importers, mainly selling Montes to distributor channels, new retail channels like Hema Fresh, and small wine bars.

Behind the Sales Decline

A manager from a Chilean wine brand, speaking on condition of anonymity, candidly discussed the challenges this year. “This year’s poor economic environment has led to a decline in sales of Chilean wines, whether private label, branded, or premium wines. The return of Australian wines has further squeezed the market space for Chilean wines,” the manager said.

“Wine is not a necessity. In China, its core scenario is business gifting. An economic downturn first affects this kind of consumption. Now, many big brands hope to cultivate the minds of mass consumers, but the effect is not yet apparent,” she said.

Bai Ziyi commented, “The markets for Chilean wine in the UK and the US have always been large. China’s sudden rise a few years ago and now falling below the UK is normal; China’s consumption has never been as large as the UK’s.”

Another long-time Chilean wine importer, who wished to remain anonymous, highlighted some internal issues within Chilean wineries. “In recent years, some large Chilean wine producers have made adjustments in China, including changing management or importers,” the importer said. “Especially when Australian wine was ‘out’ a few years ago, Chilean wine sales were indeed good for a while, which led some brands to want to expand the market, switching from exclusive agents to multiple agents or changing agents if they were dissatisfied with one.”

“However, Chilean wine’s momentum is still not as strong as Penfolds. Some wineries’ distribution models have affected importers’ confidence. Moreover, the market is only so big. Finding more importers does not achieve a 1+1=2 effect; instead, it leads to price wars between importers, disrupting the market,” he added.