This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/15/2017
Overview
Chileans spend 23.4% of their annual income on food.  With a relatively low birth rate and more disposable income, this percentage is expected to grow. Chileans generally prefer a diet with bread, meat, fish, seafood, milk, confectionery, fruit and vegetables. In addition, imported food products have grown in popularity over the last five years.

Consumer demand for organic food, especially in urban areas such as Santiago, has been steadily increasing over the past five years.  Despite consumer price-sensitivity, Chileans are increasingly searching for more organic, gourmet, and differentiated products, providing opportunities for U.S. exporters. In addition, consumers are increasingly seeking for greener packaging made from recycled products. Shifting demographics and increased women’s integration in the workforce (49%) have resulted in increased demand for processed and ready-made food products. Finally, in recent years, the Chilean Government has led a campaign to foster healthy diets and combat obesity, thus increasing consumer awareness and public dialogue about healthy and nutritionally balanced foods.

Chilean Processed Food Industry
Currently, the food industry represents 25% of Chile’s economy, and is forecast to grow to more than 35% by 2030. The food and beverage industry is expected to grow by 6.6% annually until 2019.

Chile’s Southern Hemisphere location provides counter-cyclical advantages in the food sector. Since crops are harvested during counter-seasons, and most of the world’s consumers are in the Northern Hemisphere, Chilean agricultural producers export to other countries in their local off seasons. Chile is amongst the top ten agricultural exporters in the world, with US$17.5 billion in agricultural exports in 2014. Their main exports commodities are fish, seafood, wine, fresh fruit, dairy and meat products.

Chile’s processed food industry is made up of different sectors that constitute it such as chilled processed food, frozen processed food, dried processed food and the beverage industry.

In turn, Chile imports agricultural and food products from the Northern Hemisphere during their winter, to the tune of US$78 million of food ingredients/products, of which US$13 million is imported from the United States.

Nutritional Labeling Law
As referenced in more detail in the Labeling and Marking Requirements section of this report, on June 26, 2015, Chile’s Ministry of Health published in their National Gazette the final Decree to implement Law 20,606 on the nutritional labeling of foods, and implementation began on June 26, 2016. The law specifically targets products intended for children under 14 years of age and requires a black octagonal sign(s) on the front of pre-packaged food and beverages if the item exceeds thresholds for saturated fat, calories, sugar, and sodium established by the Ministry of Health (for sample, please refer to Chart 1 on this page). One label is required for each nutrient threshold exceeded; thus, one product could bear up to four labels covering anywhere from 18 to 42 percent of the package cover/face.  Imported products can use a sticker to avoid the modification of the package.

Photo: Chile Black Octagonal “Excess Of” (Alto En) Nutrition Labels
Title: Chile Black Octagonal “Excess Of” (Alto En) Nutrition Labels - Description: Picture displaying the Excess of (Alto En) marking, a mandatory label mark for food products imported to Chile that exceed nutritional thresholds.

Table: Chile “Excess Of” (Alto En) Nutritional Label Dimensions
Labeled area of the main face of the labelRequired dimensions for each “EXCESS OF” sign (height and width)
Less than 30 cm2Label in the bigger container
Between 30 and 60 cm21.5 x 1.5 cm
Between 60 and 100 cm22.0 x 2.0 cm
Between 100 and 200 cm22.5 x 2.5 cm
Between 200 and 300 cm23.0 x 3.0 cm
Greater than 300 cm23.5 x 3.5 cm
 Food Retail Market
The Chilean market for retail food is composed of a mix of large supermarkets, mid-sized grocery stores, convenience stores, gas station markets and an array of smaller independent neighborhoods “mom-and-pop” shops.  To give the reader a sense of the size of the retail food market, the sub-sectors composed of supermarket, grocery stores, convenience stores and gas-marts had sales of $14.3 billion in 2015 and $9.8 billion from January to August 2016. This number includes other items sold in larger supermarkets and hypermarkets such as clothing and kitchen appliances. When looking only at food products, sales where around $9.5 billion USD in 2015.

Note: Exchange rate 1 USD = 670 CLP

Where the customers are spending their money to buy food has been changing over the years. In 2006, supermarkets accounted for 62.4% of all food sold to consumers. By 2014, this number declined to 48.2%, due to diversification of the places where people buy their food products.
Table: Chile Market Share by Store Type, 2006
Store TypeMarket Share (%)
Big Supermarkets51.6%
Medium Supermarkets5.6%
Mom and Pop31.3%
Liquor Store3.5%
Butcher and Deli4.6%
Fruits and VegetablesN/A
Seafood StoreN/A
Bakery and PastryN/A
Pet FoodN/A
Source: Servicio de Impuestos Internos (SII), 2016.

Table: Chile Market Share by Store Type, 2008
Store TypeMarket Share (%)
Big Supermarkets67.6%
Medium Supermarkets8.3%
Mom and Pop13.1%
Liquor Store3.5%
Butcher and Deli3.3%
Fruits and VegetablesN/A
Seafood StoreN/A
Bakery and PastryN/A
Pet FoodN/A
Source: Servicio de Impuestos Internos (SII), 2016.

Table: Chile Market Share by Store Type, 2010
Store TypeMarket Share (%)
Big Supermarkets65.2%
Medium Supermarkets10.4%
Mom and Pop12.6%
Liquor Store3.6%
Butcher and Deli3.7%
Fruits and VegetablesN/A
Seafood StoreN/A
Bakery and PastryN/A
Pet FoodN/A
Source: Servicio de Impuestos Internos (SII), 2016.

Table: Chile Market Share by Store Type, 2012
Store TypeMarket Share (%)
Big Supermarkets48.4%
Medium Supermarkets12.0%
Mom and Pop21.6%
Liquor Store6.1%
Butcher and Deli4.5%
Fruits and VegetablesN/A
Seafood StoreN/A
Bakery and PastryN/A
Pet FoodN/A
Source: Servicio de Impuestos Internos (SII), 2016.

Table: Chile Market Share by Store Type, 2014
Store TypeMarket Share (%)
Big Supermarkets48.2%
Medium Supermarkets12.1%
Mom and Pop21.2%
Liquor Store6.1%
Butcher and Deli4.6%
Fruits and VegetablesN/A
Seafood StoreN/A
Bakery and PastryN/A
Pet FoodN/A
Source: Servicio de Impuestos Internos (SII), 2016.

Supermarket Chains
There are eight major supermarket chains operating in Chile with varying presence in different cities and targeting different customer profiles. Although they all compete among each other, they follow different strategies based on locations and depth and scope of the product mix.

Unimarc, a medium-sized grocery store, has the largest number of stores across the country operating in 294 locations. Wal-Mart operates two brands: LIDER / LIDER EXPRESS and EKONO. LIDER, with 82 locations, represents the very large hypermarkets and supermarkets, while EKONO, with 127 locations, may be on a category of its own as a small discount grocery store. CENCOSUD also operates two distinct lines of supermarkets. SANTA ISABEL, a medium to large grocery store with 128 locations and JUMBO, the flagship hypermarket with 50 stores nationwide. Falabella, another large retailer, operates a supermarket chain, TOTTUS, with 58 locations. MONSERRAT and ERBI are the last two important chains with 34 and 33 locations, respectively.

Gas Marts or “Mini-Markets”
Gas Marts or “mini-markets” are primarily operated by three fuel companies. PETROBRAS, from Brazil, operates 89 marts called ESPACIO1. COPEC, from Chile, operates 79 PRONTO locations. Lastly, SHELL operates two lines of stores:  SELECT, with 46 locations and UPA, with 49 locations.

Wholesale markets
Wholesale markets have been on the rise totaling 146 locations: MAYORISTA 10 operates in eight regions with 64 locations; ALVI operates in nine regions with 29 locations; LA OFERTA has 12 locations, and Wal-Mart operates two different store brands; CENTRAL MAYORISTA has 4 locations; ACUENTA has 37 locations.

Convenience Stores
There are three big convenience store chains: OK MARKET (Chile), BIG JOHN (Mexico), CASTAÑO (Chile). These types of convenience stores are driven by location. They cater to the upper-middle class by offering good service, convenient locations and a variety of foods and snacks. There are 257 convenience stores, but only OK MARKET operates outside Santiago. In other Chilean cities, independent stores service the markets. BIG JOHN was acquired by the Mexican company FEMSA in June 2016. Industry experts believe that FEMSA will enter the Chilean market with OXXO the giant convenience store chain with more than 14.000 outlets in Latin America.

Mom and Pop Stores
Mom and Pop stores, supermarkets, fruit and vegetables shops, and liquors stores are the most abundant types of retail stores in Chile (graph 3). The most frequently found type of retail store is this type of independent small neighborhood store with a total of 69,223 locations.

Table: Chile Retail Store Types, 2016
Store TypeNumber of Stores
Mom and Pop69,223
Supermarket16,821
Liquor Store10,486
Fruits and Vegetables9,742
Butcher and Deli2,831
Pet Food2,545
Bakery and Pastry1,998
Seafood Store1,793
Source: Servicio de Impuestos Internos (SII), 2016.

Table: Chile Advantages and Challenges for U.S. Agricultural Exporters
AdvantagesChallenges
Clear rules and transparent regulations offered by the government allow for fair competition.There are stricter regulations surrounding fresh products to avoid the spread of diseases that may affect local production.
The purchasing power of Chile’s middle class continues to rise.Chile is a competitive market; which has free trade agreements that cover 65 countries including the European Union, China, Central America and South American countries.
The U.S.-Chile free trade agreement resulted in 0% duties for all U.S. agricultural products as of January 1, 2015.There has been an increase in the market share of Chilean brands at the expense of global brands.
Chile’s largest retailers have operations in other Latin American countries making it a gateway to other Latin American markets.Chile’s new nutritional labeling law requires possible stickering/labeling if thresholds of sodium, saturated fat, sugar and calories exceed certain levels set by the Ministry of Health.
American brands are well-regarded as high quality with many well-known brands already present in the market.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 that do not exist in Chile. Thus, more marketing and knowledge is required.
Equal playing field for imported and local products.Strong competition from other producing countries.
 New technologies like web based grocery sales.
Opportunities
The following steps highlight the main points that need to be taken into consideration when attempting an entry into the Chilean retail food market.
Market Analysis:
  • There is a wide variety of food products in Chile’s retail sector, due to the market openness. Thus, the U.S. exporter must be clear as to what role the product will have in the market and how will it be positioned in relation to other competitors.
  • Supermarkets have limited shelve space and usually different brands are available.
  • Supermarkets will assess if their new product margin is attractive in comparison to other brands, which is mainly a cost-benefit decision.
Market Access:
  • Enter through the big supermarket chains or find a partner/distributor.
  • Supermarkets chains will allow for a new product to have a countrywide presence, and these chains carry a more diverse variety of products.
  • Trying to enter the Chilean retail market through smaller stores can be a bit more challenging, as it is more limited it the variety of products it holds for its customers.  In addition, this sector is more focused on price than variety.
  • Another possibility is to enter through a partner or distributor that will sell the product in different types of stores.  The advantage is that the distributor has a variety of clients and could sell a bigger volume of the product.
Marketing Campaign:
  • It is important to differentiate your product against other like products.
  • U.S. produced products have a very positive image and are viewed as high-quality and safe.
  • The appropriate marketing campaign would inform the consumer the origin of the brand. i.e. American meat cuts are a good example of this strategy as they have an American flag on the packaging that differentiates them from other available meats.  Slogans and marketing materials should be understood in Spanish.  Be mindful of using slang.  The word American coupled with a flag can be favorably used in this market.
There are three main players in the importation side:
  • Wholesalers and producers import large quantities to distribute to smaller independent stores. i.e. Dairy product manufacturers import dry milk to package and distribute. Most of the independent stores get their products at a discount price from wholesalers. They act as an intermediary, as the smaller stores are not able to import entire containers or do not have the logistic capacity to do so.
  • Large supermarket chains import directly from foreign producers and also own most of the wholesale supermarkets which then redistribute to smaller stores as well. They operate large distribution centers that supply the entire country.
  • Distributors that supply gas stations for their countrywide operations on the gas marts.
There are no regulations limiting the number of actors who can import. The import process is as cost-effective as possible, using economies of scale whenever possible. All major retailers have distribution centers where they group imports and local production to be distributed to their retail outlets.

Leading International Agricultural Product Suppliers to Chile
Four countries are the dominant suppliers of consumer oriented agricultural products for Chile’s retail industry—Brazil, the United States, Argentina and Paraguay. They are all located in the Americas and each of these countries operates under the same conditions, as they all enjoy trade agreements with Chile. Aside from differences in distances from Chile, their strengths and weaknesses rest on their own competitive advantages in the manufacturing and production of food and beverage products.

Brazil is the top supplier of HVFBP with a market share of 17.3%. Beef and poultry are their main products exported to Chile. Beef and poultry exports have grown 20.1% and 20.3% per year, respectively, over the period of 2010 to 2015.  In the meantime, pork exports have grown 23% making it the fourth largest export to Chile.  Brazil also exports non-perishable items, such as chocolates, pastas, coffee and canned goods.  Brazilian coffee exports have not grown over the 2010-2015 period.
The U.S. is the second largest exporter of HVFBP to Chile with a market share of 16.4% market share. It has been growing at a 20.4% annual rate over the period from 2010 to 2015. The top ten U.S. HVFBP exported to Chile in 2016 were: dairy products, prepared foods, beer, beef, poultry, pork, condiments and sauces, almonds, processed vegetables and pet foods.
Argentina is the third largest exporter of HVFBP to Chile with a 15.7% market share in 2015 valued at almost US$ 451 million. Argentina’s main exports to Chile are beef, dog & cat food and dairy products.

Paraguay is the fourth largest HVFBP exporter to Chile, enjoying a 12.0% market share.  Exports consist almost entirely of beef products. Paraguay’s strength is its production of commodities such as beef, rice and wheat, which have very competitive prices in relation to other suppliers.

Leading Sub-Sectors
In addition to the opportunities found in the most-commonly imported food products, the best product prospects for U.S. producers are a mix of categories which fulfill the needs of Chilean consumers for healthier products and high value added specialized products.

The fastest growing segment is products targeted at consumers that seek healthier eating habits. This trend is also reinforced by Chile’s recent Nutritional Labeling Law, which makes it mandatory to put special labels on products that exceed levels set by the Ministry of Health for sodium, saturated fats, sugars or calories. For more information, please see the USDA’s Foreign Agricultural Service’s (FAS) “Chile’s New Nutritional Labelling Law” Report.

More and more Chilean consumers are concerned about their health and wellbeing. According to a 2016 survey by Kantar, a consultancy agency who monitors household consumption, 54% of consumers stated that they are concerned with their health and physical wellness, which is higher than the 40% average for Latin America.  Also, according to Kantar, the wellness product mix has grown 6.8% compared to a 1.6% growth of all other products between June 2015 and June 2016. The biggest increases in this food and beverage sector (from June 2014 to June 2016) are for products low in sodium (38%), diet juices (33%), bottled water (22%) and lactose-free milk and yogurt products (57%).

There are market opportunities in the energy drinks category where the U.S. exports to Chile grew at a 43% annual rate in value during the period 2010 to 2015.  Red Bull, Monster, and like products represent 71% of energy drinks, and the U.S. may take advantage of high-quality brand perception that the Chilean consumer has of U.S. products to increase market share in this category.

Specialty ice cream is also a fast-growing category of products that are well received by the Chilean consumer. From 2010 to 2015 exports of ice cream to Chile have increased at a 65% rate per year, reaching almost US$ 4.4 million in 2015.
Other products present in the market with good continued sales potential include:
  1. Beef: Tip beef cut, Back ribs, short ribs beef cut, Outside Round / Top Round / Top of Bottom Round beef cut: Retail stores offer a variety of cuts suitable for the BBQ/grill or ‘asado’, which is a tradition amongst Chilean consumers. These cuts are characterized for having a high-fat content, which gives the beef a better flavor.  Per industry experts, these cuts can be packaged at a low cost for U.S. producers, but are sold at a premium price in Chile given their U.S. origin.
  2. Dairy:  The United States is the main supplier of dairy to Chile, with a market share of 30% of all dairy imported.  The main dairy product the U.S. exports to Chile is cheese; which is estimated to reach $30 million in 2016 and is mostly made up of cream cheese and mozzarella cheese. Non-fat dry milk (NFDM) followed by cheddar cheese and ice cream make up the remainder of the dairy products imported from the United States.  Per post sources, U.S. dairy products exports are attractive due to their quality, competitiveness and low prices in relation to other suppliers. Prepared foods exported to Chile are mainly cereals, pasta and infant foods.
  3. Fruits Juices: there is increasing opportunity for all natural, no-sugar added orange, grapefruit, and grape juices.  The imports of juice from the U.S. have grown 37% per year in value between 2010 and 2015.
  4. Poultry:  Chile is the largest market for U.S. poultry in South America.
  5. Pork (Chilled/Fresh): The United States is the main supplier of pork in Chile, offering low prices and a high-quality product.
  6. Pork as ingredient is primarily used in Chile’s sausage and hotdog industry.
  7. Food Ingredients
  8. Frozen Meals
  9. Beer/Craft Beer and Spirits: Chile is the largest consumer of alcohol per capita in Latin America, reaching 61.3 liters per capita a year. Alcoholic beverages consumption grew 2.1% in 2015, with beer recording the highest per capita consumption levels reaching 43.7 liters per capita.
  10. Snack Foods
  11. Cereals
  12. Pet Foods
  13. Natural/Organic Foods: there is a growing niche for this product segment.
Other products not widely (or at all) present in the market and with few suppliers, but with good demand:

Products consumed in Chile in small quantities that have none or few U.S. suppliers include: skirt steak/outside skirt beef cut, flank steak beef cut, subcutaneous muscle (Malaya) pork and beef cut., beef neck, frozen high quality hamburgers, specialty desserts, energy drinks, premium ice-cream, value- added supplement milk, cheddar cheese in sliced format, mozzarella cheese in sliced format, blue cheese, parmigiano and provolone cheeses.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Chile Agribusiness Trade Development and Promotion