Tuesday, March 2, 2010

Impact of Earthquake on Chilean Wine Industry

Chile was struck by a magnitude 8.8 earthquake on February 26th, an earthquake so powerful that, according to NASA, it shifted the earth's axis and, in so doing, shortened the length of an earth day. The damage wrought by the earthquake, and an associated tsunami, has affected a broad swath of Chilean life and industry and early reports indicate that the local wine industry did not escape unscathed.

The map to the right (Source: http://www.drvino.com/) illustrates the various wine regions of Chile and the location of the epicenter of the earthquake vis a vis the wine regions.

Chile produced 8.3 million hectoliters of wine in 2008 with 6.2 million hectoliters exported to areas such as the European Union (40%), China (12%), and the US (10%). The country has a tradition of good value white (Sauvignon Blanc, Sauvignon Vert, Chardonnay, Muscat of Alexandria (a fortified wine)) and red (Cabernet Sauvignon, Merlot, Carmenere, Syrah, Pais (also called Criollo or Mission)) wines. Of the regions closest to the epicenter, Bio Bio, Maule, and Maipo are known for whites while Caciapoal and Colchagua Valleys are best known for reds. The best-known wineries closest to the epicenter are Concha Y Toro and Vina Porto in Maipo and Casa LaPostalle, Cono Sur, and Valdivieso in Rapel (the region which contains the sub-regions of Caciapoal and Colchagua).

Of the major wineries that have gotten information out to date, Concha Y Toro is reporting that the central area of the country was the hardest hit. The winery claims that there has been serious damage to wineries located in the affected areas resulting in significant loss of wine and production capacity. The impact of the earthquake has caused the company to temporarily suspend logistics and production operations in the affected area. Jose Manuel Ortega, Chairman of O Fournier Group, has said that his La Higuero vineyard has lost 10 meters to a local river. Michael Cox, Director of Wines of Chile, has reported that many wineries in Maule and Colchagua have suffered serious damage.

In addition to damage to in-place production and storage facilities, the Chilean wine industry is faced with the problem of what to do about harvesting. It is currently Fall in the Southern Hemisphere and harvesting was expected to begin sometime within the next 10 days. The wineries in the affected areas will face the problems of locating staff, getting staff to harvest in available areas, determining where to process the harvested grapes, and finding storage facilities for the juice.

We will keep you abreast of developments as the situation becomes clearer.

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