Market Overview

Peru's economic growth has developed and improved in many sectors like food retail, gastronomy and tourism, among others. The growth in all of these sectors has had a positive impact in wine consumption. In the last five years, the wine market in Peru has grown at an average annual rate of 9.4% due to a combination of increased consumer purchasing power, increased interest in gourmet food of which wine is a complimentary product, and a wider variety of modestly priced wines, reaching an average annual consumption of one liter. In 2007, a total of 830 different brands of wine were imported, with a majority (72.5%) being red, followed by white and sparkling. However, the fastest growing variety of imported wine has been sparkling wine.

In the first quarter of 2008, 367 different brands of wine were imported into Peru: 129 from Argentina, 79 from Chile, 65 from Spain, 49 from France, 20 from Italy, 3 from Germany, 2 from Ecuador, and 3 from the United States. In the third quarter, Argentina led the import segment of the market in volume with 2,953,000 liters followed by Chile with 1,956,000 liters, Spain with 291,000 liters, Italy with 145,000 liters, France with 101,000 liters, Germany with 43,000 liters and the United States close behind with 40,000 liters.

The increase in the value of wine imports in 2008 was due to an increase in market size, a tariff reduction for wine imports and a drop in the exchange rate of Nuevo Soles. It is expected that the Peruvian wine market will grow 20% in 2008. Domestic production of wine grew 13.3% in 2007 and focused mostly on red wine varieties. Due to the international financial crisis, the wine market is expected to only reach 6% growth this year, emphasizing the lower demand in the fourth quarter. Locally produced wines represent 30% of the wine market and less than 1% of domestically produced wine is exported. Excluding beer, wine accounts for 64.7% of the volume of beverage sales in Peru.

Imports

Peruvian consumers prefer red wine, as demonstrated by imports, with the overwhelming majority of them being red (72.5%). White wine makes up 16% of the market while sparkling and rose wine hold just over 10% of the market. It is important to note, however, that the fastest growing wine variety is sparkling wine. In Peru, wine is subject to a 17% Ad Valorem tax, a 20% consumption tax, and 18% VAT. However, with implementation of the US-Peru Trade Promotion Agreement, all duties on wine containers of two to four liters would be immediately eliminated. Within three years, duties on wine in containers less than two liters will be phased out and, within five years, duties on sparkling wine will be phased out.