Photo: Wine Australia

Close – but no cigar: how does Chile rate as a competitor to Australia in the world wine market?

Market Bulletin | Issue 125
Photo: Wine Australia
18 Sep 2018
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In many ways, as a wine-producing country, Chile is a lot like Australia. This makes it important to understand the Chilean wine sector, and how it rates as a competitor when it comes to global wine customers.

Image: Wine Australia

Similarities: making wine

Despite having only around 10 per cent of the total landmass of Australia (756,000km2 compared with 7.7 million km2), Chile’s wine producing area is very similar in size to Australia’s. In fact, both were reported at around 130,000 hectares in 2015 – the latest official figures[1].

The amount of wine produced has also been similar historically, except that Australia’s harvests have been more consistent (see figure 1).

Figure 1: Wine production for Australia and Chile 20112018 (million litres)

Source: OIV and Wine Australia

Chile is also somewhat similar in the location of its wine producing regions, which are distributed along a fairly narrow band in central Chile from Elqui Valley at around 29 degrees south to Bio Bio Valley and Malleco Valley at around 38 degrees south. By comparison, Australian wine regions range from South Burnett at 26 degrees south to Tasmania at 42 degrees south. In both cases, the majority of wine production is concentrated in the middle of those extremes. The largest area in Chile – Maule Valley – which accounts for around 44 per cent of Chile’s wine production, sits at a very similar latitude to the Riverland in South Australia.

Image: Andre Castelluci / Wine Australia

Similarities: exporting wine

When it comes to exports, Australia and Chile also traditionally run neck and neck. In the year ending May 2018, Australia was the world’s fourth largest wine exporting country and Chile the fifth (by value). Australia exported US$2.14 billion of wine, while Chile exported US$2.03 billion. In volume terms, the positions were reversed; Chile exported 902 million litres compared with 849 million litres for Australia – giving Australia a slightly higher average value per litre[2].

Given that these figures are likely to be primarily comprised of wines from the 2017 harvest, Chile’s exports could be expected to increase in the near future, after a larger 2018 crop and reduced demand from Argentina, which also had an exceptionally low harvest in 2017 followed by a return to average in 2018.

Another interesting similarity identified by Wine Intelligence is that both countries out-perform other wine-producing countries in the Global Wine Brand Power Index – a measure of the power of wine brands in various markets. In 2018, 3 of the top 15 global power wine brands were Australian and 4 were Chilean, reflecting the relatively high international reach of these 2 strongly export-oriented wine producers. For the record, an Australian brand ([yellowtail]) pipped a Chilean brand (Casillero del Diablo) for top spot.

Chile relies more heavily on exports than Australia does, because its domestic market is smaller. Total wine consumption in Chile in 2017 was 308 million litres, at a per capita consumption of 15.7 litres/capita, while Australia’s was 588 million litres, with per capita consumption of 24.2 litres/capita. In both cases, imported wine accounts for only around 15 per cent of total domestic sales. Chile’s domestic consumption is forecast to grow to 423 million litres by 2022, while Australia’s is forecast to grow at a slower rate to 657 million litres in the same timeframe[3].

Image: Andre Castelluci / Wine Australia

Differences: making wine

These similarities, however, do not tell the whole story. Chile has quite a different variety mix compared with Australia. While both countries have Chardonnay and Cabernet Sauvignon in their top three, Australia is particularly known for its Shiraz, which accounts for around 30 per cent of plantings. Australia has 23 per cent of the world’s Shiraz plantings, while Chile has just 3 per cent, and Shiraz only accounts for 5 per cent of its plantings. Conversely, Chile’s top variety is Cabernet Sauvignon, which accounts for more than one-third of Chilean vineyards. Chile is also identified with the less widely-known variety Carménère, having more than three-quarters of the world’s plantings of this variety[4].

Image: Wine Australia

Differences: exporting wine

When it comes to export markets, in the year ending May 2018, Australia exported more than double the value of wine to mainland China than Chile did (US$740 million compared with US$347 million) – even though it was the top market by value for both countries. Australia also outdid Chile in exports to the United States of America (USA) (US$335 million compared with US$243 million) and the United Kingdom (UK) (US$311 million vs US$192 million). Conversely, Chile dominated in Japan, with US$189 million in export wine value compared with just US$38 million for Australia, and Germany (US$63 million compared with US$30 million). Not unexpectedly, Chile also exports a significant proportion of its wine to other South American countries, which don’t feature in Australia’s top 20 export destinations, while Australia has strong markets in Asia Pacific countries including Singapore, Hong Kong and New Zealand (see table 1). Setting aside markets where there is an obvious location or culture-based competitive advantage, Chile seems to be over-indexing in Japan and the Netherlands, while Australia is currently well ahead of Chile in China, the USA and the UK. There may be some risk-based advantage to Chile in having a lower concentration of its exports in its top three markets (38 per cent of exports compared with 66 per cent for Australia).

Table 1: Share of country’s total export value by destination market, year ended May 2018[5]
















Malaysia, Singapore, Hong Kong, New Zealand






Brazil, Mexico, Argentina









And the final word…in the year ending May 2018, Australia imported US$3.5 million of Chilean wine, while Chile imported just US$38,000 of Australian wine.

[1] Australia 135,133 hectares – Australian Bureau of Statistics. Chile 130,000 hectares – Chilean Ministry of Agriculture

[2] Figures from Global Trade Atlas – may vary slightly from Australian export figures published by Wine Australia

[3] Source: Euromonitor

[5] Source: Global Trade Atlas

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