BY AFP

The US dollar's steady decline -- and its sharp impact on export revenue -- has galvanized Chile's wine industry to boost quality in hopes of entering the more resilient prestige end of the market, officials say.

"This is the basis of Chile's strategy: we are trying to do away with this image of Chile being a producer of good but cheap wine," Paola Vasquez, the head of the government's wine promotion agency ProChile, told AFP.

Wine makers are trying to lift themselves out of the low-margin middle part of the market that is being battered by the plunging dollar, she explained.

Over the past year, the US currency has slipped nearly 13 percent against Chile's peso, pushing producers in the region to the brink of a financial crisis.

Many are concentrated in the Colchangua Valley, an area 150 kilometres (100 miles) south of the capital Santiago that US trade review Wine Enthusiast in 2005 billed as the best wine growing region in the world.

This weekend, the valley's small town of Santa Cruz will celebrate this year's harvest with a traditional festival.

Andres Barros, the general manager of the Caliterra vineyard, said he expected "a major financial crisis" would sour the revelry.

"Many wine growers are putting off investment planned for this year," he said.

"To get past such a critical situation we have to put a lot more emphasis on wines of better aggregated value and also have the courage to raise prices," he said.

The head of the Colchagua association grouping 18 vineyards, Mario Pablo Silva, also said efforts were being made "to be able to raise our prices abroad by producing better-quality wine."

"We are already improving and focusing on superior quality lines," said Klaus Schroeder, manager of the Caliterra wine label.

He explained there were plans to plant vines at the base of the valley's mountains, where the earth was deeper and, it is thought, likely to produce better grapes.

Sales strategies were also being revised, the head of a wine marketing company, Maximiliano Morales, said.

"There are vineyards in distinct valleys. To improve the wines, we are looking which are the best areas in these valleys and will use them as another marketing tool," he said.

In effect, that would mean building reputations around certain zones, as happens in France and Spain, where labels of origin guarantee certain factors.

"To make exclusive wines there has to be care in the details and processes. Beyond the physical conditions of 'terroir' (the type of soil appropriate for each type of wine) we also have to look at the best wine-making techniques, oenology, how the wine is fermented, the quality of the wood of the barrels used to age it, and even the corks and the bottles," Morales said.

"Taking all these elements together can drastically improve the quality of a wine -- it's complexity, its color, its nose, how long it can be kept and also its international reputation," he said.

Chile exported one billion dollars' worth of wine last year, with Europe buying up 52 percent of the output, followed by the United States and Canada.

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