Wine Industry in Chile Wines of Chile

Wine Industry in Chile Wines of Chile October 2008 Agenda National Wine Industry WoC Objectives and Strategy WoC Programs Challenges

Chilean Wine Industry Very decentralized Geographical Region Ha. % Valleys IV: 2,271 2% Elqui Limari V: 5,540 5% Aconcagua Casablanca San Antonio RM: 10,791 9% Maipo VI: 33,856 29% Cachapoal Colchagua VII: 50,315 43% Curico Maule VIII: 14,000 12% Itata Bío Bío Malleco Actual surface: 116.793 ha. 61% classical varieties Cabernet Sauvignon, Merlot, Chardonnay y Sauvignon Blanc 76% red varieties, 24% white varieties Chilean Wines in the World Chile is tenth in output and fifth in exports The wine industry in Chile represents 2.3% of total exports and 11% of agricultural exports

Wine Exports by Product PRODUCT September 2006 - August 2007 September 2007 - August 2008 Variation % 2007/2008 Litres US$ Average Price Litres US$ Average Price Litres US$ Average Price 1000 1000 US$/ LTRS 1000 1000 US$/ LTRS Bottled 336,935 997,563 2.96 351,636 1,143,231 3.25 4.4% 14.6% 9.8% Other packed wines 22,205 38,543 1.74 22,437 45,149 2.01 1.0% 17.1% 15.5% Bulk 240,959 125,354 0.52 202,599 136,674 0.67-15.9% 9.0% 28.8% Sparkling and others 2,632 8,280 3.15 3,911 13,468 3.44 48.6% 62.7% 9.5% TOTAL 602,731 1,169,740 1.94 580,583 1,338,522 2.31-3.7% 14.4% 19.1% Bottled wine exports reached US$ 1.143 (AUGUST 2008), with a growth rate the last 12 months of 4.4% in volume and 14.6% in value, increasing average price in 9.8% Of the total value, an 85% corresponds to bottled wine and a 10% to bulk wine Of the total volume, an 58% corresponds to bottled wine and a 37% to bulk wine Bottled Wine Exports Evolution

Exports Market by Geographic Area Bottled Wine Main Destination Markets Bottled Wine Country SEPTEMBER 2006 - AUGUST 2007 SEPTEMBER 2007 - AUGUST 2008 Variation % 2007/2008 Cases (9 LT) US$ Average Price Cases (9 LT) US$ Average Price Cases (9 LT) US$ Average Price 1000 1000 US$/ Case 1000 1000 US$/ Case UK 8,687 193,925 22.32 8,506 213,595 25.11-2.1% 10.1% 12.5% USA 6,271 169,852 27.09 6,690 186,766 27.92 6.7% 10.0% 3.1% Canada 1,589 56,627 35.64 1,711 67,471 39.43 7.7% 19.1% 10.6% Netherland 1,692 44,878 26.53 1,978 57,905 29.28 16.9% 29.0% 10.4% Denmarc 1,244 39,426 31.69 1,378 49,748 36.11 10.7% 26.2% 13.9% Brasil 1,951 46,527 23.85 1,988 49,392 24.85 1.9% 6.2% 4.2% Ireland 1,340 42,225 31.51 1,340 47,746 35.63 0.0% 13.1% 13.1% Germany 1,784 47,434 26.59 1,594 45,111 28.30-10.6% -4.9% 6.4% Japan 1,086 30,616 28.19 1,398 39,348 28.14 28.8% 28.5% -0.2% Belgium 836 25,447 30.46 883 31,071 35.18 5.7% 22.1% 15.5% Subtotal 26,479 696,957 26.32 27,465 788,153 28.70 3.7% 13.1% 9.0% Others 10,959 300,606 27.43 11,605 355,078 30.60 5.9% 18.1% 11.6% TOTAL 37,437 997,563 26.65 39,071 1,143,231 29.26 4.4% 14.6% 9.8% Main Markets: UK (19%), EE.UU. (16%), Canadá (6%) Markets with Higher Average Price: Canada, Denmarc, Ireland Most Dinamic Markets: Netherland, Japan, UK, Denmarc

Wine Exports to Vietnam Total Wine Exports RNK Bottled Other Packed Bulk Sparkling and Others Total US$ LTS Litres US$ FOB Litres US$ FOB Litres US$ FOB Litres US$ FOB Litres US$ FOB 39º 40º 925.609 3.478.945 121.011 188.017 458.314 285.062 333 851 1.505.267 3.952.876 Bottled Wine Exports September 2006 - August 2007 September 2007 - August 2008 Variation % RNK Cases US$ FOB Average Price Cases US$ FOB Average Price Cases US$ FOB Average Price 39º 32.924 1.114.171 33,84 102.845 3.478.945 33,83 212,4 212,2 0,0 Wine Exports to Vietnam Bottled Wine Exports by Winery SEPTIEMBRE 2006 - AGOSTO 2007 SEPTIEMBRE 2007 - AGOSTO 2008 VARIACION % RNK EMPRESAS CAJAS US$ FOB Precio Promedio CAJAS US$ FOB Precio Promedio CAJAS US$ FOB Precio Promedio 1º VIÑA MONTES 2.499 169.640 67,89 7.757 528.467 68,12 210,5 211,5 0,3 2º VIÑA CONCHA Y TORO 4.002 100.629 25,15 13.374 320.954 24,00 234,2 218,9-4,6 3º VINA VENTISQUERO LTDA 2.241 46.329 20,67 5.264 203.994 38,76 134,9 340,3 87,5 4º VIÑA SAN PEDRO 1.380 48.205 34,93 4.231 177.848 42,03 206,6 268,9 20,3 5º BODEGA CASAS DE MAULE LTDA 1.344 18.169 13,52 11.548 155.763 13,49 759,0 757,3-0,2 6º VIÑA SANTA RITA 1.064 33.000 31,02 3.803 147.879 38,89 257,4 348,1 25,4 7º Chilean Wines and Friut Co. 0 0 0,00 3.555 113.221 31,85 100,0 100,0 100,0 8º VIÑA MONTGRAS 1.329 26.179 19,70 2.570 106.470 41,43 93,4 306,7 110,3 9º VIÑA CARTA VIEJA 1.650 61.017 36,98 4.174 105.313 25,23 153,0 72,6-31,8 10º BARON PHILIPPE DE ROTHSCH 2.750 88.661 32,24 3.413 103.774 30,41 24,1 17,0-5,7 11º VIÑEDOS Y BODEGAS CORPORA 1.546 39.880 25,80 3.300 103.197 31,28 113,4 158,8 21,2 12º VIÑA VALDIVIESO 2.047 83.840 40,97 1.772 90.527 51,09-13,4 8,0 24,7 13º Viña Errázuriz S.A. 480 27.225 56,72 1.254 89.105 71,06 161,3 227,3 25,3 14º TERRAUSTRAL 0 0 0,00 3.300 86.264 26,14 100,0 100,0 100,0 15º VIÑA LA ROSA 0 0 0,00 2.100 85.230 40,59 100,0 100,0 100,0 16º CHATEAU LOS BOLDOS 245 22.674 92,55 605 73.453 121,41 146,9 224,0 31,2 17º VIÑA ESTAMPA 0 0 0,00 2.063 73.430 35,59 100,0 100,0 100,0 18º VIÑA VERAMONTE 0 0 0,00 1.500 67.700 45,13 100,0 100,0 100,0 19º SOCIEDAD VINICOLA DE AGUIRRE 0 0 0,00 2.937 60.494 20,60 100,0 100,0 100,0 20º ARESTI CHILE WINE 0 0 0,00 1.910 58.220 30,48 100,0 100,0 100,0 OTROS 10.348 348.723 33,70 22.416 727.643 32,46 116,6 108,7-3,7 TOTAL PAIS 32.924 1.114.171 33,84 102.845 3.478.945 33,83 212,4 212,2 0,0

Why Chile Produces World Class Wines? Chile: A Viticultural Paradise A combination of: Geography Climate Latitude Soils Chile: A Viticultural Paradise Geographic Isolation Hinder the entrance of plagues Soil variety Healthy soils, well drained, with good airing and great variety of texture. Mediterranean Climate Rainy winters, healthy soils well drained; warm summers, scarce rains and low atmospheric humidity; Thermic Differential between day and night Almost absolute lack of rains and other climatic accidents between September and April in almost all the viticulture-viniculture zones, which allows to cultivate an extraordinarily healthy vineyard, almost free of fungous, viral and parasitary diseases. Lots of sun hours Extense period of growth and maduration Great variety of agroecologycal conditions with a huge potential

Chile: A Viticultural Paradise Current of Humbolt When the sea breezes carried by the Cold Current of Humboldt, which climbs along the West Coast of South America towards the North, it finds masses of hot air of the coast, low clouds and fog build up, which penetrate towards the valley. During the night, the central valley receives the cold air descending from the snow- covered peaks of the Andes. Chile: A Viticultural Paradise In the vineyards, the alternation between the night s coolness and the diurnal heat during the period of growth favour the development of the acidity, the concentration of sugar, the colour and the fragance of the grape. For this, the production of grapes is natural, practically organic, for which producing organic wines results easy and accessible. Huge investments in technology and first level human resources

Foreign Viticulture Investment in Chile Miguel Torres. (Spain) Domaines Barons Philippe de Rothschild (Laffite) Viña los Vascos (France) Chateau Larose Trintaudon Viña de Larose (France) Baron Philippe de Rothschild Maipo Chile (France) Produits Marnier Lapostolle Casa Lapostolle (France) Soc. Du Vignoble William Fevre Viña William Fevre Chile (France) The Robert Mondavi Corporation (United States) Franciscan State Selection (United States) Kendall Jackson (United States) Viña Domaine Oriental at Maule Valley (France) Villard Fine Wine (France) Château Los Boldos (France) Viña Aquitania (Domaine Paul Bruno)(France) Mildara Blass (Australia) Viña Selentia S.A. (England and Spain) Odfjell Vineyards S.A. (Norway) Sogrape Viña Château Los Boldos (Portugal) Industry Perspectives World Industry Channel consolidation High level of competition Chilean Strength Natural conditions of Chile among best in the world for viticulture/winemaking Infraestructure in place Human resources at international level Chile Positioning Lack of country positioning Chilean wines position as value wines

Wines of Chile Mission Strengthen the category of Chilean Wines in International Markets by Increasing Brand Value (Wine of Chile) and Improving Industry Exports and returns (sell more expensive wines). Objectives Reach a level of exports FOB by 2012 of US$ 1,700 millions, increasing the average price (10% annual growth in value) Increase and strengthen the image of Chilean Wine, positioning Chile as a quality producer with great value wines in every price bracket, specially in the segment between USD 12 and USD 25 retail.

Strategies Market Positioning in key segments: Develop Positive perceptions in key segments (Gate Keepers): consumers, buyers, importers-distributors and journalists, among others. Increase presence in different distribution channels: special focus: ontrade and specialists Define price focus for all the activities: ALLWAYS above USD12 retail Define geographic coverage in each market Programs WoC has programs operated by marketing and public relation agencies in: Canadá, operated by three agencies in Vancouver, Montreal y Toronto EE.UU. with an agency in Nueva York Ireland Denmarc An office in UK With ProChile we cover 12 to 15 complementary markets in Asia, Latin America and Europe The main focus of most of the activities is to educate and to influence the gate keepers, with only a few activities with focus in consumers.

Activities Journalist, Buyers and Sommeliers Visits Activities Tastings and Seminars

Activities Consumer and trade fairs Activities Inserts and newsletters

Activities Specialize Magazines Market Intelligence Activities

Sommelier Summit Activities On trade promotions Activities

Activities Point of sale promotion Activities Awards: AWOCA, Innovation Awards.

Challenges Strengthen Wines of Chile Financing Incorporate the whole value chain in the financing of WoC Increase state financing Communication and information Continue investing in market intelligence and share it withing associates. Make sure that the information gets to the desicion makers Improve the communication between WoC, their associates and agencies. Improve the content and funtionality of the web page. Develop a Business Plan that includes a UNIQUE SELLING PROPOSITION, a vision and a process to reach it. Wine and suistainability (Triple Bottom Line: environmental, economic, social). We are missing an ambicious agenda. Fitosanitary condition of Chile: it could be the base of a comparative and competitive advantage. Conclusions We are optimistics: Natural conditions of Chile among best in the world for viticulture/winemaking The investments are in place Excelent human resources The industry is aligned behind the same strategy We have government support The suppliers are in our side and are investing in WoC El timing es favorable; the wine consumption ins increasing in key markets