PALMILLA, Chile (Reuters) - Last month’s devastating earthquake destroyed 125 million liters (33 million gallons) of Chilean wine -- and with it a little piece of the country’s heart.
Wine serves as a proxy for Chile’s ambitions. Although high in Latin American terms, the living standard here is not at a European level, just as the best Chilean wines are not yet classified like a Barolo or Bordeaux. But in both cases they are goals Chileans aspire to.
“Wine is Chile’s ambassadorial product. It’s the only product anybody knows about,” said Rene Merino, president of the industry group Wines of Chile.
“When people buy a car, they don’t know that a good part of the copper cables inside come from Chile and nobody cares, either. The product that correlates with the country is wine.”
The wine industry also provides lessons for the 2-week-old government of conservative billionaire President Sebastian Pinera as it plans reconstruction after the massive 8.8-magnitude quake on February 27.
Earthquake damage in lost wine and battered equipment was estimated at $300 million -- 1 percent of the quake’s $30 billion hit to the economy as a whole.
The grapes on the vine held up fine during the earthquake. The damage came largely when wooden barrels and stainless steel vats tipped over, pouring away about 12.5 percent of the 2009 harvest.
If Chile raises too much debt on the foreign markets or taps too much of its nearly $12 billion in copper savings held overseas, it will strengthen peso currency, cutting into profits of winemakers who export 70 percent of the country’s output, bringing in $1.4 billion a year.
Finance Minister Felipe Larrain has stressed he will seek to avoid any peso appreciation or impact on interest rates as he raises financing for reconstruction from a range of sources, including a planned moderate tax adjustment.
After a difficult 2009 when the peso appreciated 26 percent and the world was crawling out of the financial crisis, winemakers are watching earthquake recovery policy closely.
“Of course we will have to pay the price of this catastrophe and the idea is not to destroy the economy by letting the peso get too high or inflation get too high,” said Santiago Margozzini, chief winemaker and taster at the MontGras winery in Palmilla, in the heart of the Colchagua Valley.
“We have very competent people in charge of the economy and they will be sure that the solution won’t hurt us even worse than the quake,” he said.
The sun-drenched Colchagua Valley is home to some of Chile’s best wines, ideal for growing the Carmenere variety that is unique to Chile.
Chile’s consistent climate and expertise have created some of the best new world wines, and the country’s image received a significant boost when Wine Spectator magazine named Clos Apalta’s 2005 vintage its Wine of the Year for 2008, topping the best Europe could offer. Clos Apalta retails for about $90 a bottle in the United States.
That same year Wine Enthusiast named Clos Apalta’s Lapostolle the New World Winery of the Year.
The awards have helped Chile position its wines in the premium category, selling in the $15 to $25 per bottle range in the U.S. market. But Chilean wines have yet to establish that they can age more than about seven years in the bottle.
“When I spend $80 or $100 on a bottle of wine, I, like most consumers, have an expectation that it’s a wine that can be put in the cellar for a long time,” said Doug Frost, a wine writer and consultant who is a master of wines and a master sommelier.
“I‘m not somebody who has put a lot of $75 Chilean wines in the cellar, although I do have a few Clos Apaltas of seven years in my cellar and I am getting ready to check them out and see how they’re doing,” said Frost, who is a fan of Chilean wine.
Patricio Eguiguren, the managing director of Lapostolle, said Clos Apalta will prove its worth once it turns 20 but the first vintage, 1997, did not come out until 1999.
Margozzini, the MontGras winemaker whose top bottle retails for about $35 in the United States, said Chilean wine’s ability or inability to age was largely a product of nature and he was not necessarily trying to please taste-makers like Robert Parker of Wine Advocate.
“The best I can do is respect what nature gives me,” Margozzini said. “I‘m not trying to cheat nature or create a wine for Parker’s palate. If it works with Parker, great. If it doesn’t and it sells well, then that’s my reward.”
Editing by Simon Gardner and Bill Trott