Written by Yusuke Hashimoto
After the Skype session with Courtney Kingston, Managing Partner, Kingston Family Vineyards, I was interesting in what makes Chilean wine business competitive in the world wine industry, and what could be threats for it.
As some of us described in their posts, cheap but diligent workforce supported by solid government system is one of the competitive advantages. Grapes are picked up by hand, and this makes taste of wine purer than picked up by machines, which is the way most huge wineries do. Also, its unique geography contributes the quality of wine. In Europe, most of wineries are forced to use agricultural chemicals to exterminate noxious insects named Phylloxera. However, there is no Phylloxera in Chile. Therefore, winery can cultivate grapes through organic farming.
A possible threat hides in Chilean economic structure. As Courtney said in the session, Chilean wine industry is export driven economy because the domestic market is small. As Chilean wine has been getting popular in the world, then some countries decided to give them more import duties. Since one of their competencies is the cheaper price and most of wineries export wines, this might have huge impact on their sales. Wine companies paid a 15% tax in 2014, which is expected to increase to about 24%. Especially small wine companies are imperiled.
On the other hand, Chilean wine is now very popular in my country (the import volume from Chile is ranked third in Japan) because of its quality and price. This is because not only its taste, but also its price. Chilean wine doesn’t incur import duty because of Free Trade Agreement between Chilean government and Japan. Therefore, its price is cheaper than ones imported from other European countries and the U.S.
According to this, Chilean entrepreneurs need to consider not only their business itself, but also economic situation all over the world.
References
After Currency Respite, Now More Taxes For Chilean Wines
Small Wine Producers Imperiled as Chile Wants Higher Tax
CHILEAN WINEMAKERS IN FEAR OF TAX HIKE
After the Skype session with Courtney Kingston, Managing Partner, Kingston Family Vineyards, I was interesting in what makes Chilean wine business competitive in the world wine industry, and what could be threats for it.
As some of us described in their posts, cheap but diligent workforce supported by solid government system is one of the competitive advantages. Grapes are picked up by hand, and this makes taste of wine purer than picked up by machines, which is the way most huge wineries do. Also, its unique geography contributes the quality of wine. In Europe, most of wineries are forced to use agricultural chemicals to exterminate noxious insects named Phylloxera. However, there is no Phylloxera in Chile. Therefore, winery can cultivate grapes through organic farming.
A possible threat hides in Chilean economic structure. As Courtney said in the session, Chilean wine industry is export driven economy because the domestic market is small. As Chilean wine has been getting popular in the world, then some countries decided to give them more import duties. Since one of their competencies is the cheaper price and most of wineries export wines, this might have huge impact on their sales. Wine companies paid a 15% tax in 2014, which is expected to increase to about 24%. Especially small wine companies are imperiled.
On the other hand, Chilean wine is now very popular in my country (the import volume from Chile is ranked third in Japan) because of its quality and price. This is because not only its taste, but also its price. Chilean wine doesn’t incur import duty because of Free Trade Agreement between Chilean government and Japan. Therefore, its price is cheaper than ones imported from other European countries and the U.S.
According to this, Chilean entrepreneurs need to consider not only their business itself, but also economic situation all over the world.
References
After Currency Respite, Now More Taxes For Chilean Wines
Small Wine Producers Imperiled as Chile Wants Higher Tax
CHILEAN WINEMAKERS IN FEAR OF TAX HIKE