Chile Country Profile

Market Overview:

Euromonitor reports that Chile’s economy saw stronger growth in 2018.  Growth is supported by robust private consumption and buoyant investment.  The external sector will be limited by factors such as tariffs imposed by the trade war between the U.S. and China and worsening of the economic situation in some trading partners in Asia and Europe.  Investment should rise over the next several years after four years of contraction.  Real Gross Domestic Product (GDP) will grow by around 3.2% per year in 2020-2026.

  • Chile’s economy is starting to moderate, in line with expectations.  Real GDP will increase by 3.3% in 2019 after gains of 3.9% in 2018.
  • Private final consumption (in real terms) rose by 3.8% in 2017. Growth of 3.4% is expected in 2019.
  • Unemployment was 7% in 2017 and it will fall to 6.7% in 2018.  New labor regulations intended to provide more flexibility came into effect in 2017.  The growth in the labor force is outpacing employment growth, contributing to unemployment.
  • Growth is expected to slow slightly.  However, copper prices should rise and exporters should benefit from improvements in competitiveness.  Investment should rise over the next several years after four years of contraction

Key downside risks stem from the uncertain external environment, mainly related to rising protectionism, a sharp tightening of global financial conditions, and a weaker-than-expected growth in Chile’s main trading partners.  There is a danger that disruptions in the supply of energy could push up production costs and slow the pace of growth.

The rate of population growth in Chile is slowing.  In 2018, population reached 18.2 million, up from 15.3 million in 2000. Meanwhile, population is ageing.  The median age had risen to 34.4 years in 2018, 5.5 years more than the figure for 2000.   Chilean society is experiencing a rapid ageing process.  In 2030, 16.5% of the population will be over 65 years, up from 11.4% in 2018.  Such a demographic change could soon reduce the country’s rate of potential growth.

Chile has a number of Free Trade Agreements (FTAs) with countries such as Canada, Mexico, South Korea, the U.S. and the European Union (EU).  In 2013, Chile, Colombia, Mexico and Peru signed an agreement (known as the Pacific Alliance) which removes tariffs on 90% of their merchandise trade.  Chile is a member of the new 11-member Comprehensive and Progressive agreement for Trans-Pacific Partnership (CPTPP) which was formally created in March 2018.  The new CPTPP excludes the US.

Chile is the largest market for U.S. consumer food exports in South America.  The 2018 total of consumer food exports to Chile grew 6% to US$669 million which is a new record high.  Chile is also the 2nd largest market in South America for U.S. processed food product exports, totaling US$495.4 million, up 15% from the same period in the prior year and also a new record high level.  Top processed food exports to Chile in 2018 included:

  • Beer and wine
  • Processed/prepared dairy products
  • Food preparations
  • Prepared/preserved meats
  • Condiments and sauces
  • Non-alcoholic beverages
  • Distilled spirits and other alcoholic beverages
  • Chocolate and confectionery
  • Snack foods

Advantages and Challenges for U.S. Food Exporters to Chile

U.S. exporters have some distinct advantages in the Chilean food market:

  • Clear rules and transparent regulations offered by the government allow for fair competition.
  • The purchasing power of Chile’s middle and upper-middle income consumers continues to rise.
  • The U.S.-Chile free trade agreement resulted in 0% duties for all U.S. agricultural products as of January 1, 2015.
  • Chile’s largest retailers have operations in other Latin American countries making it a gateway to other Latin American markets.
  • American brands are well-regarded as high quality with many well-known brands already present in the market.
  • Demand for premium processed foods and beverages that provide convenience and health benefits continue to increase.

Challenges for U.S. food exporters in the Chilean food market include:

  • Chile has FTAs with 66 countries worldwide, and they do not depend on imports from a specific region - Instead, imports that offer the best price and quality worldwide are the most attractive.
  • Chilean customers are accustomed to competitive prices due to the openness of the economy.
  • The establishment of personal relationships is often not a priority for U.S. companies - Chileans value face-to-face meetings and strong personal relationships.
  • There is a lack of awareness about the all the different types and qualities of some U.S. products by Chilean consumers and importers; i.e. premium quality beef cuts, high quality cheeses and dairy products, health food products etc. that do not exist in Chile - Thus more marketing and knowledge is required. 

Retail Sector:

According to Euromonitor, retail sales in the packaged food market in Chile had been estimated to reach US$15.8 billion in 2018.  That represents a growth rate of 30.8% or US$3.7 billion since 2014.  The forecast for growth in this market is also promising.  By the year 2023, the retail sales in the packaged food market in Chile is expected to reach US$21.8 billion, a growth rate of nearly 28.5%, or nearly US$4.8 billion.  High growth products in the forecast include:

• Savory snacks
• Baby food
• Ready meals
• Processed fruit and vegetables
• Breakfast cereals
• Processed meat and seafood
• Dairy products
• Sweet spreads
• Sauces, dressings and condiments
• Rice, pasta and noodles
• Confectionery 

 Chile’s food retail sales reached US$16.7 billion in 2017.  The main food distribution channels are supermarkets with a share of about 62%.  Three main business groups concentrate most of the sales providing them greater bargaining power with suppliers.  Chile is becoming increasingly urbanized, not only in Santiago, but also in other cities.

The retail food industry has been adjusting to this trend especially grocery retailing that has been adopting a convenience store or convenience shop model through convenience store chains, forecourt retailers, and smaller supermarkets.  The assortment of products includes a wide variety of prepared dishes, chocolates, beverages and bakery products.

In 2017, approximately 1,374 stores, including hypermarkets, supermarkets and other small food retail stores with a minimum of three checkouts composed the industry of Chilean food retailers according to National Institute of Statistics (INE) and 50% of them are in the Metropolitan region.  According INE, supermarkets and hypermarkets sales still have the largest market share for Chile’s food sales holding nearly 50% of total food sales, accounting US$16.4 billion in 2017.

According to the food retail industry, Walmart Chile is the largest supermarket chain in terms of revenue, operating around 253 stores under the Líder, Líder Express, and Ekono brands.  Cencosud is the second largest operator with 246 hypermarkets and supermarkets under the Jumbo and Santa Isabel brands.  SMU is the third largest chain operating 289 stores and Tottus is the fourth largest chain in terms of revenue, operating 64 hypermarkets and supermarkets.

Private label products have increased in variety and presence in modern grocery retailers, by expanding into other categories.  Nowadays the share of private label brands in the food retail industry is close to 10% of revenues.  The entry of international brands at a fair price has also benefited the product mix.  The development of private label products of good quality, good price, and a wide assortment is critical.

Best Product Prospects:

Chilean demand for healthy food products continues to grow as people increase health awareness and income rises.  U.S. products are perceived to be of high quality, safe, unique and reliable and consumers are increasingly searching for gourmet and differentiated products, providing opportunities for U.S. exporters.  In regards to this trend the best product prospects are:

  • Beer/Craft Beer And Spirits
  • Beef: Tip Beef Cut, Back Ribs, Short Ribs Beef Cut, Outside Round/Top Round/Top Of Bottom, Round Beef Cuts
  • Poultry and Pork (Chilled/Fresh)
  • Dairy
  • Sauces, Mixed Condiments and Seasonings
  • Fruit Juices
  • Frozen Meals 
  • Snack Foods

Food Service Sector:

Chile offers excellent opportunities for U.S. food exports in the Hotel, Restaurant and Institutional Food Service (HRI) sector.  Chile’s foodservice sector is expected to grow due to the increase of travel, tourism, and retail outlets/channels.  According to Euromonitor, the growth of the foodservice sector was 4.6% in 2017 and for the period from 2016 to 2022, an increase of 25.3% is expected.  The best prospects for U.S. food products resides in supplying high-end hotels and restaurants (casual dining and family-style restaurants) along with coffee shops and fast food restaurant chains.

Reasons for growth in HRI sales include that the size of the middle class in Chile continues to expand along with average income.  New lifestyle trends, such as more women in the workplace and healthier lifestyles are leading to rapid growth in consumer food service, a trend that is expected to continue over the next few years.  Hotels, currently the biggest investment sector of the HRI market, are expected to continue to thrive and this will provide export opportunities for U.S. producers.  New chains and international restaurants open each year.  And subcontracted food service operators in the institutional sector are constantly growing, with providers developing products to suit each sub-sector.

Moreover, local cuisine and ingredients, and naturally healthy products are expected to perform well in the HRI foodservice sector.  As new outlets for healthy foods appear, such as juice bars or independent restaurants, the trend is ever increasing.  The customer base is continuously expanding as health awareness is growing amongst the Chilean population driven by foreign trends, by companies seeking new markets, and by governmental campaigns that encourage healthy eating.

The fast food restaurants industry is also expected to experience growth in the areas of healthy and premium fast food outlets.  This niche market is driven by consumers lacking time and motivation to cook or health-conscious millennials entering the labor market and has resulted in an increase of fast casual restaurants offering healthier premium foods.

Best Product Prospects:

There are two main categories that have the best potential for sales in Chile: processed foods and gourmet products.   Hotels and restaurants demand processed food in order to reduce operational costs.  Specifically, their objective is to decrease labor and reduce costs.  Most importantly, companies aim to guarantee the standards and high quality of their food.  In hotels, high quality “ready-to-serve” food is in high demand, so that a chef only needs to give few touches and focus on presentation.  

Gourmet products are constantly being included in menus and offerings in the food service sector as consumer preferences become globalized and sophisticated.  Hotels and restaurants will actively request their distributors to supply these products.  There is potential in four specific areas: meat: pre-portioned fillets, prepared vegetables, pastries, desserts, baked goods, ideally ready-made and other prepared food products: i.e. ready to serve pasta.


Food-Processing Sector:

Chilean food industry is the main productive activity in the country with annual sales of $34 billion.  Healthy foods, gourmet products, prepared foods, and ready-made meals are products that show huge potential for growth in the Chilean market.  New ingredients are being used in the production of healthier products especially those adapted to consumers with food intolerances, such as lactose and gluten free products.  Consumers have an increasing concern for health issues while the food processing industry is trying to adapt to the nutritional labeling law, higher labor costs, and sophisticated customers, all of which present challenges, but also opportunities for U.S. high value added foods and ingredients such as natural additives, preservatives, thickeners and sweeteners.

The conditions in Chile favor the food processing industry due to three main reasons:  (1) the natural conditions, such as various climatic zones from the dessert to the Antarctic, allow a vast array of products to be produced;  (2) its location in the southern hemisphere offers counter-seasonal production for Europe and the United States, which is very attractive for international food processing countries that depend on the all-year supply of agricultural products;  (3) Chile’s is geographically isolated, owing to its location between the Andes Mountains in the east and the Pacific Ocean in the west, and enforces strict regulation on food imports further protecting the local production from most foreign diseases and pests.

Best Product Prospects:

The best prospects for U.S. exporters in the Chilean food processing sector include natural flavors, sweeteners and natural alternatives, pork meat (ex.: for Chilean sausage industry), non-fat dry milk, coconut and oats, protein concentrate, odoriferous substances, alternative grains (ex.: quinoa, lentils, and chickpeas), super foods (chia, flaxseeds, nutritional yeast, etc.), almonds, whey and lactose, others: additives, preservatives, thickeners, oats, vegetable fats and oils, mixed condiments, starches and enzymes

Loading...

View Calendar

Food Ingredients Europe
December 3-5, 2018
Paris, France

ISM
January 27-30, 2019
Cologne, Germany

AgraME
March 5-7, 2019
Dubai, UAE

AAHAR
March 13-17, 2019
New Delhi, India

View Calendar

Export Intelligence Video Series -What is the Branded Program

See more videos