The Skinny on Chile

Chilean Package Design Lives and Dies On the Strength of Its Export Markets

By Maria Loreto Valdes

The OVUM Design Studio created the wine labels the Tierra del Fuego line with brush strokes that combine the "T" of tierra (earth) and "F" of fuego (fire).

There is a famous play in Chilean theater that describes Chile as a "beautiful country at the end of the world with a nice ocean view." Bordering over 2,500 miles of Pacific Ocean, Chile's new challenges are exports overlooking the ocean into Asia or any other country across this corridor.

But in fact, Chile is a country that mainly exports fresh produce without any added value besides nature's own gifts. These exports have a strong natural sunny flavor, good size, and a lot of technology packaged in nicely printed corrugated boxes, because Chile is one of the largest fruit exporters of the world. The country now looks toward becoming a supplier of more processed food products, on top of its famous Chilean wine, salmon, and fruits.

Expanding in processed foods can open an immense arena for the packaging and package design industries, with a high demand of packaging machinery at different scales. Currently, Chilean wine (with help from Argentina) ranks fifth in wine exports, after Italy, France, Spain, and the U.S. As for salmon and trout exports in fresh, frozen, or bulk container channels, Chile ranks among the top three world producers.

Chile still looks to some distinctive Chilean packaging to convey quality overseas, especially in their strongest product categories.

Wining and dining

Packaging in the wine industry has expanded from traditional offset printed paper labels to competitive self-adhesive labels. Oddly shaped and boldly designed labels now reach diverse markets with new varieties of wines, and some bottles even feature personalized design solutions in smaller volumes. Wine glass bottles are most often made by Cristalerías de Chile, but many are also imported.

Salmon exporters have looked into processing alternatives that can expand the fish market, with tasty preparations that require processing and packaging, as well as new looks in order to export unit packs instead of bulk. Foreign supermarkets in the U.S. and Japan promote bulk sales with campaigns, but the product lacks the intricate added value of good packaging.

Ketchup and other condiments in flexible stand-up pouches are catching on in bigger sizes (up to 1 kilo), and with the spout on the side.

Chile's packaging industry is dependent on foreign printing machinery technology, mainly from Italy, Germany, and the U.S. Asian machinery is now competing in price, which is due in part to attractive free trade agreements that reduce import and export tariffs. There is an interesting market available for medium-sized machinery for those who can take advantage of the country's natural agricultural gifts and stable economic policies. However, competitors do look for opportunities to avoid too much growth in interesting markets from smaller countries with good outlooks, which is also part of playing in the global market.

Chile's raw materials allow it to produce packaging materials in glass, paper and board, and tin. Plastics are usually imported and have suffered recently from a low U.S. dollar exchange rate. This has made production and exports quite a challenge for the majority of the small- and medium-sized packaging companies. In fact, these make up around 80% of the productive area, inversely to the volume and profits, which are produced heavily by the 20% left for the bigger companies. Thus, the industry in general has a strong pyramidal structure.

Chile's new industry and tourism slogan is "Sorpendre, Siempre," which translates as "Always Surprising."

The exporting game

The population of Chile (about 15 million citizens) is relatively small when considering export competitors like China. This is a challenge in terms of investing, production scale, and local market size as well as consumption of premium products. Investment in innovation also suffers, because new strategies are needed to break even in terms of volume of production versus final product cost. Lower production volumes make products and packaging more expensive, so exports are a must for efficient production scales.

Thus, though Chilean packaging technology and materials are definitely above average in quality for South America, innovation is a point to insist on for export products, at least. Locally, however, Chilean consumers have been "guinea pigs" for local introductions in products from large multinational packaging users, such as Tetra Pak, Unilever, and others.

New detergent packs and new milk cartons, for example, have been tried out at this end of the world. Coca-Cola has a three-liter bottle for thirsty extended chilean families that gather together to watch Saturday futbol matches on TV. Tetra Pak has a large market share within the medium and cheaper lines of wine, leads completely in the milk market, and is growing in juices and tomato sauces. However, inspite of this, Chileans will definitely avoid drinking wine in a plastic cup.

A new wine "cooler" in 500-cc and one-liter containers is aimed at younger consumers. One of the three in the series have graphics that show a beach chair and says "Relájate"—relax. One medium range glass bottle wine for the younger set is Gato, with playful cat imagery on the labels. In 2005, the San Pedro vineyard had a volume of sales in the local market of 52 million liters, and exports for 40 million liters. The new image is oriented towards younger consumers, printed on transparent stock and plastic self-adhesive labels.

Pisco Sour is Chile's national drink. Made from distilled grapes under sunny skies and cool nights, it is mixed two-to-one with lemon juice and sugar. A recent new design for a variation on the drink, called Ruta Sour, is a 700-cc glass bottle that imitates a cocktail shaker. The bottle has a compass embossed on the shoulder to further emphasize the "on-the-go" intention of the packaging. The full-wrap, shrink sleeve label is fully printed in silver on clear stock.

Being flexible

Flexible packaging has experienced growth in several categories in Chile. Stand-up pouches are a must for ketchup, mayonnaise, and mustard, in portions from 250 grams to one kilo. Chileans however, are not too "hot" on sauces, as they prefer their foods naturally tasty and homemade.

Foreigners are surprised to find marmelade in stand-up pouches. Chileans use these pouches usually as refill containers for bowls and dishes to be placed on the table. Marmelade in glass is still for premium brands only. Since Chile is generous in fruits all year-round, these products compete with common and tasty—and inexpensive—homemade versions.

Packaging and printing trends

The frozen food area is expanding, but it is expensive for the local budget. In this area, new recipes are more dependent on new packaging and food processing machinery, and coming up with surprising flavors and microwaveable packs is a challenge. However, a couple of leading converters are investing in R&D for retortable packaging mainly for the fish industry.

Pet Food has become an important category in supermarkets, and multilayered paper bags hold a large market share together with plastic bags, leaving cans behind.

Special credit must be given to the printing industry, where not only in terms of design, but also in printing technology, the state-of-the-art technology meets international standards. Most converters have changed to computer-to-plate prepress and printing processes, and must consider environmental demands and ISO standards, at least as far as exports are concerned.

Still, regulations are weak in terms of applying LCA (Life Cycle Analysis) in packaging and logistics. Recycling or Eco symbols are not mandatory nor standard for local products. Trash is not separated except voluntarily and the main stimuli for doing so are social campaigns where benefits go to institutions such as for the homeless, burned children, churches, etc.

However, informal recollection of newspaper, board and glass bottles has a long history and many informal "independent workers" who are part of the curiosities for tourists, specially during evenings when they invade certain corners of neighborhoods and business disctricts to pick up packaging materials in their "territory."

In the meantime, supermarkets and "hyper" markets abound in cosmopolitan cities, have become part of malls, and form very competitive retail businesses. These places also serve as an attractive alternative for weekend family strolls, as they offer access to all types of economies and dreams, and are open seven days a week from early morning till 10 p.m., because many Chileans eat quite late.

Maria Loreto Valdes founded Chile's VAS Packaging Magazine in 1988, was its Technical Editor until 1990, and Director from 1991-2004. She now writes about packaging and design for several international publications, and can be reached at lorevaldes@mi.cl.