The power in the South
Possibly the greatest compliment paid to Chile was paid indirectly, by one of its southern hemisphere competitors, earlier this year.
South Africa’s wine industry competes with Chile’s in a number of markets, including bulk (cheap) and premium (expensive), and in terms of consumer perception it is about where Chile was 15-20 years ago: it’s mainly in the bulk market, but produces some excellent first-grade wines, and is anxious to move upmarket. However, one of the main wine players told IEG Vu that he was envious of Chile’s programme of signing Free Trade Agreements (FTAs) with anybody, absolutely anybody, with a single-mindedness that beggars belief.
One has the impression that if there was a settlement on the moon, Chile would be negotiating an FTA with it before long. This is one of the building blocks that Chile has put in place to ensure the success of its food and beverage industry (and other industries, to be fair, but F&B is the second largest after mining, and looks like overtaking it soon). Chile’s success should not be seen solely in the context of the skill of its trade negotiators and the willingness of alternating right-wing and left-wing governments to pursue this policy, without change. Chile has also invested hugely in the essential infrastructure and skills needed to make its food industry a world-class operation.
IEG Vu does not know what the industry’collective capital expenditure represents, but it must be colossal. Apart from constantly upgrading the factories and processing plants of its long-established products, such as frozen fruits and vegetables, wines and fruit juices, the country has established totally new food industries. Three decades ago, possibly less, there was no avocado industry at all in the country, and now avocados are not just exported in bulk but are an essential component of the Chilean diet. Similarly, an olive oil industry has been started from zero and its oils’ quality is already winning awards.
The world is now seeing another seismic shift in Chile’s approach to business. The country has embraced sustainability and is taking an early lead in corporate social responsibility (CSR). Not only that, but government-sponsored plans to establish completely renewable energy sources have resulted in colossal progress in the Atacama. Chile’s power has mostly come from hydroelectric plants anyway, but the solar energy initiative is something new, and (so far) little-known elsewhere in the world.
What we are seeing now is the emergence not just of a global food power, but a food power built on low emissions, sustainable farming, and completely renewable energy sources. That really is something new.
Download the full report on Chile below.