UK overtakes China as Chile's biggest wine export market

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

According to Chilean customs data and analysis by the Spanish Wine Market Observatory, 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%, falling to $1.98 per liter.

A report released on July 12 highlighted that the surge in the UK market was a major factor in this growth, with Chilean wine imports up 40% in value. The jump saw the UK overtake China and the US to become the number one market for Chilean wine exports by value, overtaking other traditional destinations.

China, historically the leading market for Chilean wine, has seen a significant decline. In 2023, the value of Chilean wine exports to China fell by US$96.1 million, resulting in a 20% drop in the total value of Chilean wine exports for the year. Recent data from Wines of Chile shows that this downward trend continued from January to May, with export volumes to China increasing slightly by 8.85% to 1.84 million cases (9 liters per case), but the value of exports 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 weak sales in all wine regions, with a sharp decline in low-quality Chilean wines, further depressing the overall data of the wine-producing country.”

Due to zero tariffs and high cost performance, Chile has been China's main source of bulk wine. However, from February to April this year, China's bulk wine imports from Chile fell to US$12.8566 million, down 27.13% year-on-year. Bulk wine imports accounted for 41.35% of packaged wine imports, and the decline in bulk wine imports has an obvious impact on the total.

Jason Zhang, president of Shanghai Yongyu Warehouse, Shanghai Nine Coast Network Technology Co., Ltd., one of China’s top 50 bulk wine importers specializing in bulk wine and representing Chilean luxury wine brand Clos Quebrada de Maco, 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, leading to a drain on Chilean raw wine,” he said.

When it comes to bottled wine, Zhang is also pessimistic. “The current environment is bad, and people don’t want to spend money. Bottled wine is not selling as much as it did last year,” he says.

When contacted by Vino Joy News, Shi Chuntian, the legal representative of China's leading wine importer, Wine Platform Co., Ltd., the Chinese agent for Chilean wine brand Montes, was somewhat reluctant to speak and only briefly said, “This year is almost the same as last year,” before hanging up the phone.

Beijing-based China Wine Platform is one of China's top 50 wine importers, primarily selling Montes to new distribution and retail channels such as Hema Fresh and small wine bars.

Behind the decline in sales

A Chilean wine brand manager spoke frankly about the challenges they face this year, saying: “The poor economic environment this year has led to a decline in sales of Chilean wine, whether private label, branded or premium. The return of Australian wine has also increased pressure on the market space for Chilean wine.”

“Wine is not a necessity. In China, the basic scenario is to give business gifts. The economic recession first affects this type of consumption. Now many big brands hope to cultivate the minds of mass consumers, but the effect is not yet clear,” she said.

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

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

“The momentum for Chilean wines is still less than that for Penfolds. The distribution models of some wineries have affected importer confidence. Moreover, the market is still limited. Finding more importers does not create a 1+1=2 effect; instead, it leads to price wars between importers, which disrupts the market,” he added.