Food to Chile

Trends and opportunities

The market

Although Chile is a net exporter of food products it’s becoming an interesting market for Australian products, with Chileans spending 2.3 per cent of their annual income on food (Source: USDA/Economic Research Service). As the country’s GDP per capita (US$22,000) continues to grow, so does consumer demand for more convenient and nutritious options (Source: World Bank). Consumer demand, a large number of free trade agreements (FTAs) with foreign countries and major supermarket chain mergers have facilitated the import of foreign products over the past five years.

Strict new food labelling laws are having a strong impact on consumer choices. Food and beverages that are above certain limits of sugar, salt, saturated fats and calories must bear black signs advising consumers of this fact. This has prompted an increased demand for healthy and nutritious alternatives. Chile’s new regulations also prohibit products bearing the black sign from being sold in schools and marketed though channels aimed at children. This opens a unique niche for nutritious options aimed at younger consumers.

Chile’s new food labelling laws are also impacting the domestic food processing sector with manufacturing companies seeking healthier ingredients for their products.  The organic food sector is also gaining traction, particularly in Santiago and other urban hubs.

Opportunities

Opportunities for Australian exporters include:

• mid to premium level food and beverages
• healthy snacks
• healthy beverage
• milk alternatives (soy, rice, etc.)
• convenient, ready to cook / eat meals.

Competitive environment

Australian products already operating in this environment include Tim Tams, Bega Cheese and Australia’s Own Organic soy and rice milk.

Tariffs, Regulations and Customs

The Chilean economy relies heavily on trade and foreign investment and unsurprisingly, Chile’s economy is open and the country has many international trade agreements.

The Australia-Chile free trade agreement (ACI-FTA) came into force in 2009 and covers goods, services and investment. In 2015 all tariffs were eliminated with the exception of sugar. Please see the Department of Foreign Affairs and Trade website for comprehensive information on the ACI-FTA.

In 2013, the Double Taxation Agreement (DTA) came into effect. The agreement provides certainty for Australian and Chilean businesses through a framework for the taxation of cross-border transactions. It reduces barriers to the cross-border movement of people, capital and technology, primarily through reducing withholding taxes on dividend, interest and royalty payments. Further information is available at the Australian Treasury website or the Australian Taxation Office website's list of Countries that have a tax treaty with Australia.

As of August 2014, Chile has 22 preferential trade agreements in place with 59 countries, including 10 APEC member nations such as Australia, Japan, Singapore, India, New Zealand and Korea.

Chile is also a member of Mercosur (Customs Union involving Argentina, Brazil, Paraguay and Uruguay), the Andean Community (Colombia, Ecuador, Peru and Bolivia) and the Pacific Alliance Agreement (Colombia, Mexico and Peru).

Chile’s FTA and DTA with Australia combined with its extensive network of agreements with other Latin American countries reinforces its position as the hub for Australian companies to expand into Latin America.

Chile is not a signatory to the Madrid convention on trademarks, so it is advisable to protect your trademark in Chile with the relevant office.

Chile is a civil law country as opposed to a common law country which has implications in the way that business is done in the country and how contracts are enforced. It is highly advisable to consult with a lawyer before entering the market. Austrade can help you with referrals to law firms.

Marketing your products and services

Market entry

With more than 120 Australian companies doing business in Chile, there is a well-worn path for establishing a sustainable presence in this market. Many Australian companies seek to develop a presence through organically growing a subsidiary office, others have acquired a local company, or developed a joint venture.

Some suppliers may prefer not to establish a presence in Chile but instead prefer to sell into the market through distributors or agents. This approach is certainly less capital intensive but requires patience and a good local partner.

The best approach depends on a variety of factors including the type of business, the appetite for risk, funds available to the company and issues around protection of intellectual property. Relationships are very important in Chile and a local partner can provide valuable connections and networks to decision makers.

Some tips to keep in mind:

• Setting-up in Chile is a strong message to customers signalling commitment to the market and will often convert interest into a solid commercial relationship.
• Finding a local partner/representative that can help you navigate Chile public and private bidding processes is an advantage.
• Understand Chilean Government and company structures and their process for procurement. To be successful you need to be patient, persistent and polite. It is not uncommon to have your emails unanswered.
• Prepare a concrete value proposition which clearly demonstrates how your solution has saved customers money in previous projects.
• Consider participating in energy related industry conferences in Chile. They are an excellent vehicle for gathering intelligence and networking. Austrade often hosts business networking events alongside these conferences.

Links and industry contacts

Government, business and trade

INIA – Instituto Nacional de Inovacion Agraria
FIA – Fondo Nacional de Inovacion Agraria
SAG – Servicio Agricola y Ganadero
Foreign Investment Committee (CIE)

Agricultre industry

SNA – Sociedad Nacional de Agricultura

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

• develop international markets
• win productive foreign direct investment
• promote international education
• strengthen Australia's tourism industry
• seek consular and passport services.

Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.