This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 10/24/2018
Overview
Exports drive Chile’s economy, concentrated primarily in copper and its agricultural sectors - fresh fruit, forestry, wine and fishery products. The agriculture industry is responsible for 28% of total Chilean trade, as well as 11% of its total GDP.  Twenty percent of Chile’s labor force is engaged in agriculture. Agricultural industry has experienced 4.5%growth in 2018.

The Chilean food industry is one of the main productive activities in the country, with annual sales of $34 billion.  Furthermore, 54% of total food production is sold in the domestic market and 46 percent is exported to more than 190 countries worldwide (Source: FAS-Exporter guide).

Production of healthier products uses new ingredients to produce new categories of products such as organic foods and those adapted to consumers with food intolerances, lactose and gluten free products. 

As a result of Chile’s nutritional labeling law and implementing regulations that explicitly label products with high quantities of sugar, salt, saturated fat, and calories, Chilean and foreign companies are seeking to reformulate and develop new products that do not need to carry the required warning labels.  Therefore, companies seek new ingredients for healthier substitutes (for example, sweeteners instead of sugar) or innovations on how to produce healthier products that have the same or similar teste and are within the same price range.

Healthy foods have a huge potential for growth in the Chilean market, due to the heightened concern for health among consumers and food processing companies that are trying to adapt to health regulations and consumers’ demand.  Another category of products with high growth potential is gourmet food and beverages.

Table 1: Advantages and Challenges for U.S. Food Exporters to Chile
AdvantagesChallenges
Clear rules and transparent regulations offered by the government allow for fair competition.Chile has FTAs with 64 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.
The purchasing power of Chile’s middle and upper-middle income consumers continues to rise.Chilean customers are accustomed to competitive prices due to the openness of the economy. Moreover, economic slowdown has increased their price-sensitivity. 
The U.S.-Chile free trade agreement resulted in 0% duties for all U.S. agricultural products as of January 1, 2015.The establishment of personal relationships is often not a priority for U.S. companies.  Chileans value face-to-face meetings and strong personal relationships.
Chile’s largest retailers have operations in other Latin American countries making it a gateway to other Latin American markets.The nutritional labeling law could increase costs of packaging products.
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, high quality cheeses and dairy products, health food products etc. that do not exist in Chile. Thus, more marketing and knowledge is required.
Equal playing field for imported and local products. 
Chile has one of the highest percentages of non-traditional store sales in Latin America, which allows suppliers to target large retail chains for larger volume sales. 
U.S. food inputs are known for their high quality and meeting respected FDA and USDA standards. 
Demand for premium processed foods and beverages that provide convenience and health benefits continue to increase. 
Demand for healthier foods ingredients has increased due to food processors that are seeking solutions to produce foods, which do not exceed the nutritional limits set by the 2016 nutritional labeling law. 
Source: USDA-FAS, 2018.

Leading Sub-Sectors
Chilean Processed Food Industry
The demand for U.S. “consumer oriented” agricultural products in Chile has increased in step with higher per capita income.  This category represented 67% of all U.S. agricultural and related exports to Chile in 2017, reaching a value of $676 million and a 39% increase over 2016.  Top products exported to Chile are beer, poultry, pork, beef, dairy products, condiments, and sauces.

There are three main reasons for Chilean companies to import food ingredients: 1) if the products are not available domestically through local production, 2) if it is cheaper to import rather than buy domestically; or 3) if imported products offer a higher quality than those available in the domestic market.

Total sales, based on retail value of the food processing industry at constant 2016 prices, reached $14.7 billion in 2016, growing 3.8% over 2015.  Furthermore, between 2016 and 2021, the industry is expected to grow by a compound annual growth rate (CAGR) of 3.2%.

Demand for healthier products is growing regarding value-added products.  Increased awareness of the health aspects of food has made consumers more selective about their food choices.  New ingredients are being used in the production of healthier products, especially those required by consumers with food intolerances, such as lactose and gluten-free products.  Organic foods are also in demand.

As noted above, Chilean companies are seeking to reformulate and develop new products that do not need to carry a warning label from the nutritional labeling law.  Therefore, companies are looking for ingredients and healthier substitutes (for example, sweeteners instead of sugar) or innovations on how to produce tasteful products within the same price range and taste, but with healthier ingredients.

For further information on food processing ingredients please see GAIN report.

Food Retail Market
Chile has a modern, highly competitive supermarket sector. 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.  In all, there are five main retail groups in Chile: Falabella, Cencosud, Walmart Chile (known as “Lider” locally), Ripley, and La Polar. Falabella and Cencosud have department stores, home centers and supermarket/ hypermarkets.

Most consumption occurs in the Santiago Metropolitan Region since it is home to 40% of the country’s total population.  Supermarkets have the largest market share, accounting for 48.2% of total food sales, followed by grocery stores (21.2%), and mid-sized supermarkets (12.1%).  The most common retail store is the grocery store, with a total of 69,223 locations.

Chile is becoming increasingly urbanized, not only in the Santiago Metropolitan Region, but also in other provincial or second-tier cities.  The retail industry has been adjusting to this trend, especially grocery retailing that has been adopting a convenience model through chained convenience stores, forecourt retailers, and smaller supermarkets.

Hypermarkets and supermarkets in the mid to high-income areas carry a varied assortment of specialty items with a relatively high degree of imported products.  A rise in consumer sophistication in the mid to high socio-economic areas, in terms of products, brands and price, has resulted in increased demand for imported food products.  These stores now account for 26 percent of total sales and offer customers fresh bakery goods, fresh seafood, coffee bars, prepared salads, pizzas, meat dishes, and the typical assortment of grocery products. Warehouse outlets and wholesale clubs have not yet made an appearance.

Despite the increasing selection of products and advances made in the supermarket sector, compared to the U.S., the selection of imported specialty products is still limited.  About 10-15 percent of products sold in supermarkets are imported, but this segment has grown by 85 percent over the last years.

The 2004 U.S.-Chile FTA prompted new interest in U.S. products and opened new opportunities for products such as beef, poultry, pork, processed foods and dairy products.

For more information on the retail market see GAIN report.

Hotel, Restaurant and Tourist Industry
Chile continues to draw tourists from around the world. Hotels, restaurants, and institutions are looking to reduce operational costs by buying processed foods and ready-made meals which minimize labor costs. Hotels, currently the biggest investment sector of the HRI market, will continue to thrive and this will provide export opportunities for U.S. producers.

Consumers’ healthy lifestyle trends have changed not only restaurant and hotel operators, but also institutional food services. 

A nutritional labeling law for food products was implemented on June 27, 2016.  Processed food products are required to carry black octagonal labels noting that the product contains high amounts of sugar, salt, saturated fats, and calories.  Many companies have responded to this law by modifying the recipes and ingredients of their current products, and by innovating and investing in new “healthy” products and formulations which do not require such labels.
With the recent Chilean Government law/regulations and increased popular concern for a healthier lifestyle, healthy foods have a huge potential for growth in the Chilean market.  Another category of products with high growth potential is gourmet food and beverages.

For further information on food services please see HRI GAIN report.

Business Recommendations and Import Procedures
  • Offer a strong value-added proposition to Chilean counterparts that is competitive in quality, prices, and payment conditions.  Chile is an open economy and the food industry is very competitive.
  • To be an attractive alternative to domestic producers, quality must be high.  Balance higher prices through better service or higher quality.  Moreover, companies that import ingredients from the U.S. report that good payment conditions are relevant selection criteria of business partners.
  • 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/segment the product will have in the market and how it will be positioned in relation to other competitors.
  • It is important to differentiate your product against like products.  Supermarkets have limited shelf space and many brands are generally available.
  • U.S. produced products have a very positive image and are viewed as high-quality and safe.
  • An appropriate marketing campaign informs the consumer the origin of the brand. Slogans and marketing materials should be in Spanish.  Be mindful of using slang.  The word “American” coupled with a flag can be favorably used in this market.
  • Agents/importers must be able to store imported products until they are tested and approved for sale/distribution by local health officials.
  • While regulations are relatively transparent, changes are not widely advertised.  Hence, the exporter or his/her representative must monitor the official journal (Diario Oficial), where periodic changes are published. One can also visit the websites of the Ministry of Agriculture and the Ministry of Health to seek further updates.
  • Consumers are very brand-oriented, but major supermarket chains are introducing and seeking private labels.
  • Consumers relate expired shelf life to spoilage, which is one of their major concerns when shopping.
  • Labeling in Spanish is mandatory for all products.
  • On June 26, 2015, the Ministry of Health published the implementing regulation to Law 20,606 that regulates the labeling of the nutritional compositions of food products, Decree 13, 2015. The Decree aims at targeting food products for consumption by children under 14 years of age if they exceed specified limits of sodium, sugar, energy (calories) and saturated fats.  Food products that exceed the limits will are required to use black stop signs that state “high in salt, sugar, energy or saturated fat” according to its nutritional composition.  One stop sign must be used for each of the critical nutrients in excess.  Therefore, some products may have up to four stop signs.  (More information on the Lawa and its regulations can be found in the section on Customs, Regulations and Standards Requirements.)
 
Best Product Prospects
  • Healthy foods: Superfoods, functional foods, sweeteners and natural alternatives, spreads, free-from products and private label products
  • Snacks: Dried fruit & fruit snacks, rice snacks, vegetable and bread snacks and other natural foods & snacks
  • Poultry, pork and beef
  • Dairy Products : low-fat powder milk and premium cheese
  • Ready-made meals: fresh and healthy ingredients, premium ready-made meals and shelf stable ready-made meals
  • Breakfast Cereal: muesli and granola
  • Coconut Products
  • Creative Condiments
  • Alternative Grains
  • Value Added Baked Goods: Packaged flat bread and pita, wholegrain bread and bread with natural ingredients, gluten free bread and “light” varieties of bread
  • Non-Alcoholic Drinks: Tea products, juices, sports and energy drinks.
  • Alcoholic Drinks: Pre-mixed and convenient drinks, cider and sparkling wine, beer and lighter alcoholic drinks (sparkling wine or lager beer) and craft beer
  • Pet Food
For additional information, please contact FAS Santiago Agricultural Attaché Marcela Rondon, marcela.rondon@fas.usda.gov.

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