AN INTERVIEW WITH DR JORGE HEINE, AMBASSADOR OF CHILE TO INDIA
 What would be the defining moment for this change?
As mentioned earlier, the arrival of Miguel Torres with latest technology and the most modern approaches to wine-making would probably be one of the turning points. Between 1987 and 1993, some 10,000 hectares of vineyards were planted, and, to give only one example, companies such as Santa Rita bought 7000 barrels of American and French oak, leading to a substantial upgrading in the quality of their wine making.
It was in this period that the dramatic change from producing mostly for the domestic market to the much more demanding world market took place. From exporting 10% of our wine production in 1990, we are now at 75%. This period also witnessed a dramatic increase in the number of vineyards: from the half dozen that had dominated the market until then- Concha y Toro, San Pedro, Santa Carolina, Santa Rita and Cousiño Macul , we now have close to 230 vineyards, including many boutique vineyards , that produce only a few thousand cases a year, and still manage to find a niche in the increasingly competitive world wine market.
In the nineteenth century many successful Chilean mining entrepreneurs invested their profits in vineyards and laid the foundation for our modern wine industry. Many successful businessmen and women in today's Chile with the most vigorous economy in Latin America are putting their capital into these vineyards in much the same way.
How far has the foreign investment taken place during the last 30 years and how far has it helped in terms of technology improvement?
After Miguel Torres when FDI in Chile really took off in the nineties, around US$ 45 billion in FDI came to Chile in that decade, averaging US$ 4.5 billion a year. Chile 's FDI stock is 65% of GDP, much higher than the world average of 22%. Many of the world's leading wine makers, have realized the considerable comparative advantages that Chile offers for producing wine, and have invested in it, either in joint ventures with Chilean entrepreneurs, or on their own.
Eric von Rothschild ( Los Vascos), Dominique Messeny (Chateau Los Boldos), Robert Mondavi (Caliterra), Kendall Jackson (Vigna Cali), Alexander Maria Lapostolle (Casa Lapostolle), Baron Philippe de Rothschild, William Cole are only a few of such foreign investors. These wine makers from France , Spain , Australia , the United States and New Zealand , brought expertise as well as the most up-to-date technology. Chile also offers other advantages like qualified labour and relatively low costs. Our agronomists, many of them with postgraduate studies at the University of California-Davis , and fully familiar with the latest techniques of grape growing and wine making are also an asset.
Would you say that the government is pro-active, pushed by the wine industry or do they work hand-in-hand?
The Chilean government is not in the business of producing wine, but it has taken a active role in creating the conditions, both phyto sanitary and regulatory, that make a successful wine industry. It has also facilitated the access of Chilean wine makers to foreign markets. Our international economic policy, based partly in signing FTAs with some of the world's biggest markets including the USA , EU , South Korea and soon, China has been the key.
On the other hand, in keeping with our overall economic policy, there are no barriers to the entry of foreign investors into the industry. They are welcome to do so either in joint ventures or on their own.
Argentina is a much bigger producer, producing about 3 times the amount Chile produces. Yet, it trails behind your country in the world market. What do you think are the reasons?
Chile has 110,000 hectares planted for wine production and Argentina has 210,000. In 2004, Argentina produced 15.4 million hectolitres, vis a vis 6.3 million produced by Chile . However, Chile exported U$ 835 million and Argentina around U$ 200 million.
One difference is that Argentina has a much bigger internal market, and does not feel the pressure to export that Chile does. Having said that, some areas in Argentina , like Mendoza , have a great potential for high quality wine production and many Chilean companies are investing there. Nevertheless, no other country has the optimal combination of natural advantages that Chile has for wine production, the soil, the climate and sanitary conditions.
These include: four clearly differentiated seasons.; temperature levels which are adequate and sufficient for cultivating vines, and cold winters necessary for their dormancy; little rain in spring and almost none in summer and fall; a wide thermal range which gives our wines their exceptional colour and aroma; and low or nil incidence of frost in spring. Recent studies have also underscored the importance of sunlight for winemaking. Chile is exceptional in the number of days with sunlight in any given year and its clear skies— ideal conditions for photosynthesis as the grape matures.
Argentina has its Malbec. Australia has its Shiraz and South Africa has Pinotage as their signature grapes. I have always maintained that Chile should go with Carmene`re as a signature grape for marketing its country brand. What are your views and those of the producers?
Chile has been traditionally a red wine country though we are now also producing some excellent white ones, with Cabernet Sauvignon being our most recognized one. Over a third, some 40,000 hectares of our vineyards are planted with it. Carmene`re, on the other hand grows almost exclusively in Chile these days and is becoming increasingly popular among wine connoisseurs all over the world. Although belonging to the Cabernet family, to the palate of many cognoscenti it is softer with a velvety texture, and less acidic than Cabernet Sauvignon, and more complex in its flavour than Merlot which is often with blackberry and chocolate flavours and a spicy aroma.
Many, including myself, consider that it should be Chile 's flagship wine, but the issue has not been fully settled yet. Given the high world wide demand for Cabernet Sauvignon, of which we have plenty, some think it is just not worth the effort to position a largely unknown variety. As of now, only 6000 hectares are planted with Carmene`re, a relatively small share (5%) of our total wine-producing surface. About a third of that is in the Colchagua Valley considered by many to be the best region for growing it.
I have seen more and more producers coming out with this variety. Recently, Montes came out with a premium blend called Purple Angel with Carmene`re as the main grape. Do you think that there is a trend now that will pick up?
The trend in Chile is to produce premium quality wine s, and among them we find classical varieties as well as the newer ones, and assorted blends. In 1997 Concha y Toro, Chile 's biggest vineyard entered into a joint venture with Baron Philippe de Rothschild, to do a great red wine. The result was Almaviva, a blend of Cabernet Sauvignon, Carmene`re and Cabernet Franc. The Wine Spectator ranked it 16 among the world's top 100 wines last December. But we also have the classical Don Melchor from Concha y Toro, which is 100% Cabernet Sauvignon, whose 2000 vintage was ranked #26 in the same survey.
Chilean wine producers are becoming more adventurous and imaginative, and I think we will see more of these interesting blends.
Chile hasn't had a breakthrough with the French market whose grapes it has traditionally been growing. French are known to drink primarily their own wines but don't you think culturally they would relate best to you and breakthrough should be possible? Or is Chile is not making enough effort in this region?
France buys more than US$ 350 million of wine, 77% of which is from its European neighbours like Portugal , Italy , Spain , Germany and United Kingdom . In sixth place is the United States with 3.7% of the market and later comes Chile with 2.3%.
However, a significant part of our wine exports go to the UK , which is a distributor's hub for all of Europe , so these numbers may only partially reflect actual Chilean wine sales in France .
Chile sold wine to France as far back as the second half of the nineteenth century. So this is nothing new to us, but it is true that, much as it happens in Chile , wine in France is closely tied to their sense of nationhood, and there are cultural barriers to the consumption of foreign wines.. I should add that the dynamics of the wine world market has even started to worry our French friends. As a 2001 report of the Department of Agriculture of France put it, “Recently, wine was there where we are and we were at the centre, the point of inevitable reference…and today we have barbarians at our doors: Chile , Australia and USA .”
What is Chile 's plan of action for the export of bulk wine or wine grapes?
There is no such thing. In 2004 Chile exported US$ 115 million in bulk wines, out of total exports of U$ 835 million, that is, less than 15%. Chile 's emphasis now is on premium wines. We know that a market for this type of wine exists, especially in Asia , but there is a bit of a glut of bulk wines in the world market today.
About 47% of the wine imported by China originates from Chile …..Contd. Part 2
There is a lot more in the interview which will be published in a couple of weeks.
Subhash Arora
November 4, 2005
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