Required Report - public distribution

**Date:** 5/25/2004

**GAIN Report Number:** CI4013

I4000

**Chile**

**Food Processing Ingredients Sector**

**Food Processing Sector**

**2004**

**Approved by:**

![](media/image1.wmf)Christine M. Sloop, Agricultural Attaché

U.S.Embassy Santiago

**Report Highlights: Chile's Food Processing Sector offers opportunities
for U.S. ingredients exports.**

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Santiago \[CI1\]

\[CI\]

Table of Contents

[**Section I. Market Summary 3**](#section-i.-market-summary)

[Country Overview 3](#country-overview)

[Size of Chilean Food Processing Industry
3](#size-of-chilean-food-processing-industry)

[Macro-Economic Factors and Key Demand Drivers in Food Processing Sector
6](#macro-economic-factors-and-key-demand-drivers-in-food-processing-sector)

[Advantages and Challenges facing U.S. Food Ingredient in Chile
6](#advantages-and-challenges-facing-u.s.-food-ingredient-in-chile)

[Section II. Road Map for Market Entry
7](#section-ii.-road-map-for-market-entry)

[A. Entry Strategy 7](#a.-entry-strategy)

[B. Market Structure 9](#b.-market-structure)

[C. Company Profiles 11](#c.-company-profiles)

[D. Sector Trends 20](#d.-sector-trends)

[Section III. Competition 21](#section-iii.-competition)

[Section IV. Best Product Prospects
23](#section-iv.-best-product-prospects)

[Section V. Post Contact and Further Information
26](#section-v.-post-contact-and-further-information)

# Section I. Market Summary

## Country Overview

Chile, with a population of 15.5 million, is a very centralized country
with an estimated 5.2 million living in and around the greater Santiago
area. The capital city of Santiago hosts the seat of government, most of
the industrial activity, and business activities in general. A GDP of
nearly \$70 billion and a per-capita GDP of nearly \$5,000 (depending on
exchange rate), had been growing dramatically since the 1980's until it
suffered the effects of the various economic crises (Asian, Brazil,
etc.) in 1998. After a 1.1- percent drop in GDP in 1999, it has resumed
growing at between 2 and 3 percent and its GDP is expected to expand 3.5
percent in 2004. Santiago, the capital city, is home to some 40 percent
of the population and concentrates the great majority of the HRI sector
companies that would purchase imported food products.

Most Chilean homes spent on average around \$100 per month on food and
personal and home care products in 2003. Santiago homes spent between
\$150 and \$200 on these items. Consumer spending on personal products
was made up as follows: Food -- 62%, personal care -- 16%, home care --
11%, paper products -- 7%, and pet foods -- 3%. Supermarkets are the
leading retail channel for food products.

Economic growth will be boosted by the new free trade agreements signed
with the European Union, which came into effect on February 1, 2003, and
the one signed with the United States on June 6, 2003 and which went
into effect on January 1, 2004. The U.S.-Chile Free Trade Agreement
reduces the previous 6% across-the-board tariff to 0% for 87% of
non-agricultural products immediately, and for three quarters of
agricultural products within 4 years, the rest over 12 years. U.S. and
Chile Tariff Schedules for all Harmonized Tariff System customs codes
can be found at
[www.ustr.gov/new/fta/Chile/text/](http://www.ustr.gov/new/fta/Chile/text/),
"Section 3. National Treatment and Market Access for Goods".

Although food product imports are only 8% of total Chilean imports, they
have grown 85% over the past five years, whereas exports have grown 23%.
The main Chilean processed food industries are those related to dairy
products, processed or canned seafood, cookies, candy, chocolates,
canned peaches, jams and tomato sauces.

## Size of Chilean Food Processing Industry

-   The processed (packaged) food sector's annual growth rate is
    expected to be about 4% during 2003 and 2004, rising to 5-6% until
    2007 as the export-driven economy settles into solid growth again.
    Certain sector will see stronger growth as more people join the work
    force and eat out-of-home, as domestic help salaries rise and their
    availability drops. Especially promising products are convenience
    and fast foods, out-of-home foods (snacks, etc., which are
    surprisingly consumed more by lower-income households and young
    consumers than others), and health and light foods. Strong annual
    growth can be expected for snack bars (30%), ready meals (10%),
    noodles (6%, though now stagnant), and frozen foods (5%).

-   The number of Chilean food processing companies continues to shrink
    through mergers and acquisitions. The last such operation in 2003
    was the buy-out of the Lucchetti pasta company (valued at \$100
    million and with 37% share of pasta market) by the large Corpora
    Tres Montes food-processing corporation.

-   There are a few very large companies and a large number of small
    ones, with the mid-sized range relatively non-represented.

-   The size of Chile's food processing industry is tracked by the
    official Annual National Industrial Survey, which polls companies
    with 10 or more employees. It included 1,252 food and beverage
    production companies in 2001, the last available survey results,
    down from 1,590 in 1997. In 2001, 1,158 of the 1,252 companies were
    in the food sector and 94 in the beverage business, and less than
    one-third (398 establishments) had 50 or more employees.

# 

###### Size and Sales of Chilean Food and Beverage Manufacturing Industry, 1997 vs. 2001

Food and Beverage Sales: millions of US Dollars

Includes companies with more than 10 employees each only

+-------+-------------------------------+----+----+---+---+---+---+------+
|       | **Chile Economic Indicators** | ** |    |   | * |   | * |      |
|       |                               | 19 |    |   | * |   | * |      |
|       |                               | 97 |    |   | 2 |   | 2 |      |
|       |                               | ** |    |   | 0 |   | 0 |      |
|       |                               |    |    |   | 0 |   | 0 |      |
|       |                               |    |    |   | 1 |   | 1 |      |
|       |                               |    |    |   | * |   | / |      |
|       |                               |    |    |   | * |   | 1 |      |
|       |                               |    |    |   |   |   | 9 |      |
|       |                               |    |    |   |   |   | 9 |      |
|       |                               |    |    |   |   |   | 7 |      |
|       |                               |    |    |   |   |   | * |      |
|       |                               |    |    |   |   |   | * |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
|       | Chile's GDP, US\$ Billion     | 82 |    |   | 6 |   | - |      |
|       |                               | .8 |    |   | 8 |   | 1 |      |
|       |                               |    |    |   | . |   | 7 |      |
|       |                               |    |    |   | 3 |   | . |      |
|       |                               |    |    |   |   |   | 5 |      |
|       |                               |    |    |   |   |   | % |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
|       | Chile's GDP, real growth      | 6. |    |   | 3 |   | 1 |      |
|       |                               | 6% |    |   | . |   | 0 |      |
|       |                               |    |    |   | 1 |   | % |      |
|       |                               |    |    |   | % |   |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
|       | Exchange Rate, average,       | 41 |    |   | 6 |   | 5 |      |
|       | Ch\$/US\$                     | 9. |    |   | 3 |   | 1 |      |
|       |                               | 31 |    |   | 4 |   | . |      |
|       |                               |    |    |   | . |   | 4 |      |
|       |                               |    |    |   | 9 |   | % |      |
|       |                               |    |    |   | 4 |   |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
|       |                               |    |    |   |   |   |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| *     | **Manufacturing Sector        | *  | *  | * |   | * |   | **Sa |
| *ISIC | Description**                 | *N | *N | * |   | * |   | les, |
| code, |                               | o. | o. | S |   | S |   | pct  |
| rev.  |                               | of | of | a |   | a |   | chan |
| 3**   |                               | Es | Es | l |   | l |   | ge** |
|       |                               | ta | ta | e |   | e |   |      |
|       |                               | b. | b. | s |   | s |   |      |
|       |                               | ** | ** | , |   | , |   |      |
|       |                               |    |    | U |   | U |   |      |
|       |                               | ** | ** | S |   | S |   |      |
|       |                               | 19 | 20 | \ |   | \ |   |      |
|       |                               | 97 | 01 | $ |   | $ |   |      |
|       |                               | ** | ** | m |   | m |   |      |
|       |                               |    |    | i |   | i |   |      |
|       |                               |    |    | l |   | l |   |      |
|       |                               |    |    | l |   | l |   |      |
|       |                               |    |    | . |   | . |   |      |
|       |                               |    |    | * |   | * |   |      |
|       |                               |    |    | * |   | * |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| *     | **Food and Beverage           | *  | *  | * |   | * |   | **-2 |
| *15** | Production**                  | *1 | *1 | * |   | * |   | 1%** |
|       |                               | ,5 | ,2 | 1 |   | 1 |   |      |
|       |                               | 90 | 52 | 3 |   | 0 |   |      |
|       |                               | ** | ** | , |   | , |   |      |
|       |                               |    |    | 1 |   | 3 |   |      |
|       |                               |    |    | 6 |   | 9 |   |      |
|       |                               |    |    | 9 |   | 6 |   |      |
|       |                               |    |    | * |   | * |   |      |
|       |                               |    |    | * |   | * |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1511  | Production, processing and    | 1  | 86 | 1 |   | 1 |   | -29% |
|       | preserving of meat and meat   | 04 |    | , |   | , |   |      |
|       | products                      |    |    | 6 |   | 1 |   |      |
|       |                               |    |    | 4 |   | 7 |   |      |
|       |                               |    |    | 2 |   | 0 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1512  | Processing and preserving of  | 1  | 1  | 2 |   | 1 |   | -21% |
|       | fish and fish products        | 89 | 52 | , |   | , |   |      |
|       |                               |    |    | 2 |   | 7 |   |      |
|       |                               |    |    | 2 |   | 5 |   |      |
|       |                               |    |    | 3 |   | 9 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1513  | Processing and preserving of  | 99 | 74 | 1 |   | 6 |   | -32% |
|       | fruit and vegetables          |    |    | , |   | 9 |   |      |
|       |                               |    |    | 0 |   | 1 |   |      |
|       |                               |    |    | 0 |   |   |   |      |
|       |                               |    |    | 8 |   |   |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1514  | Manufacture of vegetable and  | 10 | 11 | 4 |   | 2 |   | -35% |
|       | animal oils and fats          |    |    | 5 |   | 9 |   |      |
|       |                               |    |    | 8 |   | 9 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1520  | Manufacture of dairy products | 61 | 55 | 1 |   | 1 |   | -17% |
|       |                               |    |    | , |   | , |   |      |
|       |                               |    |    | 3 |   | 1 |   |      |
|       |                               |    |    | 5 |   | 3 |   |      |
|       |                               |    |    | 9 |   | 4 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1531  | Manufacture of grain mill     | 91 | 77 | 7 |   | 4 |   | -29% |
|       | products                      |    |    | 0 |   | 9 |   |      |
|       |                               |    |    | 3 |   | 6 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1532  | Manufacture of starches and   | 1  |    | 0 |   | \ |   | -    |
|       | starch products               |    |    |   |   | - |   | 100% |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1533  | Manufacture of prepared       | 33 | 23 | 8 |   | 8 |   | 1%   |
|       | animal feeds                  |    |    | 8 |   | 9 |   |      |
|       |                               |    |    | 6 |   | 6 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1541  | Manufacture of bakery         | 8  | 6  | 8 |   | 6 |   | -25% |
|       | products                      | 22 | 05 | 0 |   | 0 |   |      |
|       |                               |    |    | 7 |   | 7 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1542  | Manufacture of sugar          | 6  | 5  | 3 |   | 3 |   | -20% |
|       |                               |    |    | 8 |   | 0 |   |      |
|       |                               |    |    | 6 |   | 9 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1543  | Manufacture of cocoa,         | 24 | 27 | 3 |   | 3 |   | 14%  |
|       | chocolate and sugar           |    |    | 1 |   | 5 |   |      |
|       | confectionery                 |    |    | 4 |   | 7 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1544  | Manufacture of macaroni,      | 7  | 8  | 2 |   | 1 |   | -40% |
|       | noodles, couscous and similar |    |    | 2 |   | 3 |   |      |
|       | farinaceous products          |    |    | 9 |   | 8 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1549  | Manufacture of other food     | 53 | 35 | 7 |   | 4 |   | -36% |
|       | products n.e.c.               |    |    | 5 |   | 8 |   |      |
|       |                               |    |    | 7 |   | 1 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1551  | Distilling, rectifying and    | 12 | 10 | 2 |   | 1 |   | -36% |
|       | blending of spirits: ethyl    |    |    | 3 |   | 4 |   |      |
|       | alcohol production from       |    |    | 3 |   | 9 |   |      |
|       | fermented mat.                |    |    |   |   |   |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1552  | Manufacture of wines          | 49 | 48 | 7 |   | 6 |   | -18% |
|       |                               |    |    | 4 |   | 1 |   |      |
|       |                               |    |    | 1 |   | 1 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1553  | Manufacture of malt liquors   | 9  | 3  | 2 |   | 2 |   | -20% |
|       | and malt                      |    |    | 7 |   | 2 |   |      |
|       |                               |    |    | 6 |   | 1 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| 1554  | Manufacture of soft drinks    | 20 | 33 | 1 |   | 1 |   | -6%  |
|       | production of mineral waters  |    |    | , |   | , |   |      |
|       |                               |    |    | 1 |   | 0 |   |      |
|       |                               |    |    | 4 |   | 7 |   |      |
|       |                               |    |    | 6 |   | 7 |   |      |
+-------+-------------------------------+----+----+---+---+---+---+------+
| So    |                               |    |    |   |   |   |   |      |
| urce: |                               |    |    |   |   |   |   |      |
| ENIA  |                               |    |    |   |   |   |   |      |
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+-------+-------------------------------+----+----+---+---+---+---+------+

-   The best estimate of food ingredient imports in Dollar value is that
    provided by the annual industrial survey and included in the table
    below. Sales dropped from \$13.2 billion to \$10.4 billion from 1997
    to 2001, and total inputs constitute about half of the decline.
    Imported inputs, which are assumed to continue being a bit less than
    10 percent of total inputs, are estimated to have dropped to \$485
    million in 2001 as a result of a higher exchange rate.

-   The key imported ingredients are shown in Sector 3 table "[Key Food
    Ingredients with Potential for US Producers, Principal Competing
    Countries"]{.underline}. Those 26 items total \$323.5 million for
    the year 2002, accounting for about two-thirds of declared imported
    inputs by the local processing industry which sounds reasonable.

[Food and Beverage Manufacturing Sector Inputs, 1997 vs. 2001 (U.S.
Million Dollars)]{.underline}

(Includes only companies with more than 10 employees each).

+-------+---------------------------+-------+-------+-------+-------+
|       |                           | **1   | **1   | **1   | **2   |
|       |                           | 997** | 997** | 997** | 001** |
+-------+---------------------------+-------+-------+-------+-------+
| *     | **Manufacturing Sector    | **    | **    | **Imp | *     |
| *ISIC | Description**             | Total | Local | orted | *Esti |
| code, |                           | In    | In    | In    | mated |
| r.    |                           | puts, | puts, | puts, | Imp   |
| 3**   |                           | US\$  | US\$  | US\$  | orted |
|       |                           | m     | m     | m     | Inpu  |
|       |                           | il.** | il.** | il.** | ts\*, |
|       |                           |       |       |       | US\$  |
|       |                           |       |       |       | m     |
|       |                           |       |       |       | il.** |
+-------+---------------------------+-------+-------+-------+-------+
| *     | **Food and Beverage       | 6,960 | 6,344 | 616   | 485   |
| *15** | Production**              |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1511  | Production, processing    | 968   | 908   | 60    | 43    |
|       | and preserving of meat    |       |       |       |       |
|       | and meat products         |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1512  | Processing and preserving | 1,119 | 1,101 | 19    | 15    |
|       | of fish and fish products |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1513  | Processing and preserving | 454   | 422   | 33    | 22    |
|       | of fruit and vegetables   |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1514  | Manufacture of vegetable  | 226   | 115   | 111   | 73    |
|       | and animal oils and fats  |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1520  | Manufacture of dairy      | 770   | 734   | 36    | 30    |
|       | products                  |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1531  | Manufacture of grain mill | 445   | 373   | 73    | 51    |
|       | products                  |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1532  | Manufacture of starches   | 0     | 0     | \-    | \-    |
|       | and starch products       |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1533  | Manufacture of prepared   | 768   | 686   | 82    | 83    |
|       | animal feeds              |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1541  | Manufacture of bakery     | 311   | 307   | 4     | 3     |
|       | products                  |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1542  | Manufacture of sugar      | 237   | 199   | 38    | 31    |
+-------+---------------------------+-------+-------+-------+-------+
| 1543  | Manufacture of cocoa,     | 182   | 133   | 49    | 56    |
|       | chocolate and sugar       |       |       |       |       |
|       | confectionery             |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1544  | Manufacture of macaroni,  | 97    | 90    | 7     | 4     |
|       | noodles, couscous and     |       |       |       |       |
|       | similar farinaceous       |       |       |       |       |
|       | products                  |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1549  | Manufacture of other food | 372   | 304   | 67    | 43    |
|       | products n.e.c.           |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1551  | Distilling, rectifying    | 62    | 60    | 2     | 1     |
|       | and blending of spirits:  |       |       |       |       |
|       | ethyl alcohol production  |       |       |       |       |
|       | from fermented materials  |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1552  | Manufacture of wines      | 424   | 417   | 7     | 5     |
+-------+---------------------------+-------+-------+-------+-------+
| 1553  | Manufacture of malt       | 117   | 102   | 15    | 12    |
|       | liquors and malt          |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| 1554  | Manufacture of soft       | 407   | 393   | 13    | 13    |
|       | drinks production of      |       |       |       |       |
|       | mineral waters            |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+
| So    |                           |       |       |       |       |
| urce: |                           |       |       |       |       |
| ENIA  |                           |       |       |       |       |
| (Enc  |                           |       |       |       |       |
| uesta |                           |       |       |       |       |
| Nac   |                           |       |       |       |       |
| ional |                           |       |       |       |       |
| Indus |                           |       |       |       |       |
| trial |                           |       |       |       |       |
| Anual |                           |       |       |       |       |
| --    |                           |       |       |       |       |
| A     |                           |       |       |       |       |
| nnual |                           |       |       |       |       |
| Nat   |                           |       |       |       |       |
| ional |                           |       |       |       |       |
| Indus |                           |       |       |       |       |
| trial |                           |       |       |       |       |
| Su    |                           |       |       |       |       |
| rvey) |                           |       |       |       |       |
| ca    |                           |       |       |       |       |
| rried |                           |       |       |       |       |
| out   |                           |       |       |       |       |
| by    |                           |       |       |       |       |
| INE   |                           |       |       |       |       |
| (Inst |                           |       |       |       |       |
| ituto |                           |       |       |       |       |
| Nac   |                           |       |       |       |       |
| ional |                           |       |       |       |       |
| de    |                           |       |       |       |       |
| Est   |                           |       |       |       |       |
| adíst |                           |       |       |       |       |
| icas, |                           |       |       |       |       |
| Nat   |                           |       |       |       |       |
| ional |                           |       |       |       |       |
| Stati |                           |       |       |       |       |
| stics |                           |       |       |       |       |
| I     |                           |       |       |       |       |
| nstit |                           |       |       |       |       |
| ute), |                           |       |       |       |       |
| 2001  |                           |       |       |       |       |
| is    |                           |       |       |       |       |
| l     |                           |       |       |       |       |
| atest |                           |       |       |       |       |
| avai  |                           |       |       |       |       |
| lable |                           |       |       |       |       |
| data. |                           |       |       |       |       |
|       |                           |       |       |       |       |
| \*    |                           |       |       |       |       |
| NOTE: |                           |       |       |       |       |
| Imp   |                           |       |       |       |       |
| orted |                           |       |       |       |       |
| i     |                           |       |       |       |       |
| nputs |                           |       |       |       |       |
| for   |                           |       |       |       |       |
| 2001  |                           |       |       |       |       |
| were  |                           |       |       |       |       |
| esti  |                           |       |       |       |       |
| mated |                           |       |       |       |       |
| by    |                           |       |       |       |       |
| ass   |                           |       |       |       |       |
| uming |                           |       |       |       |       |
| same  |                           |       |       |       |       |
| perce |                           |       |       |       |       |
| ntage |                           |       |       |       |       |
| comp  |                           |       |       |       |       |
| onent |                           |       |       |       |       |
| of    |                           |       |       |       |       |
| total |                           |       |       |       |       |
|       |                           |       |       |       |       |
| sales |                           |       |       |       |       |
| as in |                           |       |       |       |       |
| 1997. |                           |       |       |       |       |
+-------+---------------------------+-------+-------+-------+-------+

## Macro-Economic Factors and Key Demand Drivers in Food Processing Sector

-   Artesian production of kitchen staples such as bakery products still
    dominates Chile's packaged food market. One third of total packaged
    value of sales in 2001 were of this type, of which about 80% were
    bakery products.

-   The market continues to consolidate through mergers, leaving a wide
    gap in size and capacity between the leading food producers and the
    universe of small ones.

-   Consumers and the small producers have little power and influence
    over prices.

```{=html}
<!-- -->
```
-   Key market drivers for food processing are the economic situation in
    Chile, which finally showed strong signs of growth at the end of
    2003, after three years of touch-and-go\'s or false takeoffs and six
    months of no growth in food sales. Supermarket sales grew a real
    9.2% during the first ten months of 2003, and October's growth
    figure was 10.5% according to AC Nielsen. Total supermarket sales
    are expected to grow 8% in real terms in 2004.

-   Consumption trends influencing the type and quality of inputs being
    used are a trend towards easy-to-prepare food as more people join
    the workforce and spend less time at home, as out-of-home meals
    become more frequent, as young people continue adopting new fast
    foods and snack foods and as diet and light foods and beverages
    continue capturing market share as demand increases and as a result
    of marketing campaigns. Organic foods are being adopted at a much
    slower rate but this is becoming a trend. The recent slow economic
    period drove price sensitivity to an all-time high among food
    processors.

## Advantages and Challenges facing U.S. Food Ingredient in Chile

  ----------------------------------- -----------------------------------
  **Advantages**                      **Challenges**

  U.S. food inputs are known for      Quality of food ingredients is said
  their quality. They meet respected  to have become very similar from
  FDA & USDA standards. Health        the U.S., Europe, Asia, etc., and
  concerns are low.                   many European inputs meet U.S.,
                                      European and Japanese standards.

  The U.S. is a strong, traditional   U.S. food input producers sometimes
  trading partner and its products    are not as aggressive in following
  are welcome.                        up sales leads as European or other
                                      suppliers.

  The U.S.-Chile Free Trade           Prices for U.S. products may still
  Agreement, which went into force on be higher than local products or
  January 1, 2004, will make U.S.     imports from nearby countries. FOB
  products more competitive.          prices for U.S. inputs, even before
                                      adding freight, insurance and
                                      duties, are normally 10-14% higher
                                      than local prices for equivalent
                                      quality.

  The rapidly dropping U.S. Dollar    The Argentine and Brazilian
  exchange rate, -15% from Jan to Dec recessions and currency
  2003, will make U.S. inputs more    devaluations preceded the U.S.'s,
  competitive.                        so that their products displaced
                                      U.S. raw materials, and U.S.
                                      products will have a hard time
                                      recovering their market position.

  Certain companies have corporate    Purchase decisions are often global
  requirements to purchase U.S.       and are influenced by headquarters,
  inputs, for example Nestlé for      not just local management.
  products re-exported to the U.S.    

  Shipping from the U.S. is cheaper   U.S. ingredients are often too
  and quicker than from Europe.       expensive, even the FOB cost
                                      (before freight, insurance and
                                      duties) is usually more than 10%
                                      higher than local equivalents.

  Rising consumer spending and        Price sensitivity became stronger
  adoption of foreign food types      than ever during the economic slump
  favor new types of inputs.          since 1999.
  ----------------------------------- -----------------------------------

## 

# Section II. Road Map for Market Entry

## A. Entry Strategy

-   U.S. food ingredient producers who want to enter the Chilean market
    can deal with local food processors directly or with
    representatives/agents/distributors depending on the product and on
    the application and type of end users. Large corporations are
    increasingly preferring to import directly from the foreign
    suppliers. But smaller processors are often not able to purchase
    whole containers or prefer that a distributor manage logistics and
    their inventory. Eventually, large sales volumes would justify
    establishing a local subsidiary to guarantee customer service and
    quality levels.

-   Sales in Chile are made based on a relationship of personal trust,
    and personally visiting the country and demonstrating products to
    potential distributors and end-users is fundamental for generating
    solid, durable business relationships.

-   Market access is open to all products from all countries. Except for
    products covered by a Free Trade Agreement, all products pay a
    standard, across the board 6% tariff. All edible products must be
    approved by the Chilean health authorities and received a
    registration number and open sales permit before being put on the
    market.

-   U.S. food products are sought after and respected for their
    dependably high quality levels, but prices are generally
    uncompetitive. To compete in Chile, U.S. producers need to focus on
    profit margins, which are very often significantly lower in Chile
    than in other countries which are not as open to the world as Chile
    is. Specialty products and chemicals have a better chance of success
    than more basic inputs, which are preferably sourced locally.

-   Distribution trade is very receptive to U.S. products as they are a
    guarantee of quality and good packaging and therefore low losses. As
    soon as possible, buyers will try to buy direct, without a local
    middleman, because they cannot pass those margins on to the product
    price and remain competitive.

-   U.S. exporters are considered to be less flexible or agile than
    others in their ability and willingness to meet market requirements.
    Prices are key in this aspect as is a more active marketing style
    than American producers are used to at home, and minimum order
    quantities are often too high for this market, especially during the
    initial stages of market penetration. Local distributors also expect
    the manufacturer to share in marketing and promotion efforts and
    expenses.

**What You Must Do to Successfully Enter and Develop the Chilean
Market**

The key market success drivers are a strong proactive attitude,
long-term commitment to the market, conscientious follow-through of
exporting effort; marketing and promotion; adapting to competitive local
price points and margins; customer service and terms of payment. The
Chilean market for ingredients imported from the U.S. is small compared
to sales in the U.S., even at a State level. High U.S. market shares are
linked mainly to a product's uniqueness (e.g. peanut butter, baked
beans, etc.) or special characteristics (above-average quality or
quality consistency especially with respect to human health, service,
international corporate headquarters requirements, quick response and
delivery capabilities, etc. Low U.S. market share is generally due to
the high impact of freight costs on commodity products, the acceptably
high quality of products offered at much more attractive prices by other
competitors, many in the region (Brazil, Argentina, etc), or the
inability to adapt product and packaging to local standards.

[Export Success is a Result of a Proactive Attitude and Long Term
Commitment]{.underline}: U.S. suppliers are all-too-often less
aggressive and persistent than European or Asian ones, or even Latin
American competitors. The Chilean market is not large but it is
sophisticated, innovative and competitive, and already being supplied by
many world-class local and international suppliers and competitors of
yours. It should not be considered as a spot market but must be
systematically developed with strong marketing and promotion campaigns
in order to conquer and enduring market share.

[Stress Marketing and Customer Service]{.underline}: Building strong
personal relationship based on personal trust is very important in Chile
and in other Latin American countries towards establishing a strong,
profitable long-term business relationship with a potential distributor
or client. Personally visiting with potential or appointed distributors
and with large clients is the best way to build up sales. Also,
following up, providing good support and consistently responding to
technical inquiries will keep other competitors at bay with a client or
distributor. For example, when a potential Chilean client contacts a
U.S. supplier and requests a quote, the supplier should not ignore the
opportunity and should respond so as to be taken into consideration,
regardless of the value of the order. If not, he will probably not be
contacted again and will not be considered as a possible regular
supplier. Reliable delivery schedules are also a plus. Shipping from the
U.S. is faster than from Europe or Asia, and effective freight
forwarders or brokers can make a difference in earning a better
reputation than other global competitors.

[Try to Match Local Quality, Prices and Margins]{.underline}: Chile is a
very price-conscious and competitive market as a result of being open to
imports from all nations and products with flat-across-the-board tariffs
since the mid-1970's (currently 6%, except for countries with tariff
agreements and free trade agreements with Chile, such as the U.S.
starting Jan. 1, 2004). U.S. products are well known and respected for
their reliable quality control and high food ingredient standards,
especially regarding human health aspects. However, quality standards of
suppliers around the world have been increasing and reaching comparable
levels due in part to automation and modern technology, and it is now
possible to find quality products in most parts of the world. U.S.
producers must either offer top quality products at a competitive price
or compensate with better service, support, warranties, etc. Contacts
regularly emphasize that the quality difference between U.S. food
ingredients and their international competition is seldom large enough
to justify the significantly higher prices charged by U.S. suppliers.
Except for a few very quality-conscious end users such as Nestlé, which
observes very high quality guidelines enforced by the corporate
headquarters especially for product lines such as infant foods and baby
formulas, non-U.S. food ingredient suppliers out-compete U.S. suppliers
on price in Chile. If U.S. suppliers want to compete successfully in
Chile, they must be willing to lower their US.-based profitability
expectations and work with the lower pricing and profit margins common
in the Chilean market.

[Take Advantage of the Window of Opportunity due to Low Dollar Exchange
Rate]{.underline}: On the other hand, the significant drop of the U.S.
Dollar against other currencies during 2003-2004 has made U.S. products
more competitive. A strong effort to take market share away from
competitors in the Chilean market will be more productive during 2004
than when the U.S. Dollar strengthens again, so we encourage U.S. food
ingredient suppliers to explore the Chilean market now.

[Consider Terms of Payment]{.underline}: European suppliers very
commonly grant open accounts and long terms of payment (up to 90 to 120
days). They also enjoy strong support from governmental export promotion
financing. U.S. suppliers should try to move away from letters of credit
towards open accounts as soon as the client's credit worthiness and
payment performance are established. This will lower costs. Taking
advantage of U.S. Government-sponsored export financing or risk
insurance programs will also strengthen the food ingredient exporter's
financial and competitive position.

[Tap into Centralized Purchasing by International
Corporations]{.underline}: When dealing with global or international
food processing companies in Chile, any existing relationship with other
international divisions or with headquarters of that company should be
fully exploited to gain an edge with the Chilean subsidiary. Even
without previous business relationship, approaching headquarters or
subsidiaries in the U.S. is a good way to explore the company's product
and technical requirements and thus potential business opportunities
within that corporation and with its Chilean subsidiary.

[Find a Good Distributor]{.underline}: Unless a sales program in Chile
can be sustained by direct sales to a few large clients (and many
processed food sectors are dominated by a very few such companies), a
local distributor will be a crucial business partner. Chilean clients
expect to be able to deal directly with a local representative for
placing order, voicing complaints and obtaining technical and pre- and
post-sales support. Correct selection of a qualified distributor is of
the highest importance, since the reputation of the U.S. supplier will
rest on the ability of the distributor to provide prompt and reliable
ordering, stocking and delivery services to clients. The distributor's
quality and performance standards should match those of the U.S.
supplier's as closely as possible, and this is often not easy to find in
Chile. Also, when possible, only one distributor with a wide regional
distribution network that covers as many market sectors and regions as
possible should be selected. Appointing more than one distributor can
often result in price wars that minimize profit margins and therefore
marketing or promotional efforts. The availability of qualified
distributors is not large, so a good initial choice is fundamental and
should be a very well thought-out consideration.

[In Twenty Words or Less]{.underline}, the strongest recommendation to
U.S. food ingredient suppliers wanting to enter the Chilean market is to
be as aggressive or committed as European competitors in their
marketing, to make an effort to develop and nurture strong relationships
with good distributors and clients so that the U.S. supplier becomes a
trusted business partner, and then to be willing to compete by limiting
profit margins to the degree necessary and possible while maintaining
quality and service in order to compete, at least in the initial stages
of market penetration. The relationships of trust and open communication
with potential distributors and especially with clients will be the key
to being given the chance to learn about what products are required and
which ones present the best market potential opportunities for that
particular supplier's ingredients.

## B. Market Structure

-   Food ingredient distribution patterns are different for local and
    for imported products, and are changing with time. Local inputs are
    purchased direct from the producer by all but the smallest food
    processors. Imported ingredients are more commonly handled by local
    distributor/representatives or wholly owned subsidiaries for the
    smaller users. Large processors like to import their products
    directly to maximize savings, and deal with the logistics
    themselves.

-   Generally, if sales volumes are not too high, direct imports will
    not be of interest to Chilean buyers as the costs and effort
    required to get an edible product approved are disproportionately
    high. In this case, it is more reasonable to have a local
    representative/distributor to handle the import process, health
    approval and open marketing permitting, marketing and promotion,
    selling and stocking.

-   As food processors seek to rationalize their costs, they are leaning
    more towards direct purchases and away from middlemen with time. As
    the big processors get bigger, they reach economies of scale by
    negotiating direct with the supplier, even on a global scale.
    Logistics companies have become a strong market player in the past
    five years, but they work with finished products and are not
    involved in raw materials. Thus, unlike bigger processors, smaller
    buyers still depend on distributors to manage their stock.

-   The food processors sales generally go mostly to supermarkets,
    followed by traditional retailers and to a small extent to
    institutions (HRI food services). Institutional sales are often
    handled as a separate business by the processors. Smaller
    neighborhood stores have been continuously decreasing in number as
    they cannot match the efficiencies and location advantages of
    market-leading hypermarkets. The supermarket sector is dominated by
    a few chains (see table below). The leading D & S chain agreed to
    buy Carrefour's seven Chilean locations (still included in the table
    to show market shares) and Jumbo acquired the Las Brisas chain in
    December 2003.

  ------------------------------------------ ----------------------------
  Supermarket Chain                          \% Market Share (Sep 2003)

  D&S                                        30.25

  Cencosud (Jumbo)                           19.40

  Unimarc                                    3.58

  San Francisco                              3.22

  Montserrat                                 3.05

  Montecarlo                                 2.68

  Carrefour                                  2.67

  Others                                     35.15
  ------------------------------------------ ----------------------------

[Distribution Channel Diagram]{.underline}

## C. Company Profiles

There are 2,045 corporations in Chile that are registered with the
Chilean Stock Exchange Commission, of which only 474 are open
corporations traded over the counter, and unlike most other countries
only these are required by law to publish financial statements in Chile.

[List of Food Sector Corporations listed in the Stock
Market]{.underline} (therefore, the only ones that are obliged to
publish financial statements or any financial results):

Financial Statements for Years 2001, 2002 and period January -- June
2003

Millions of US Dollars

+--------------------------+-----+------+-----+------+------+-------+
|                          | Pr  | Prof | Pr  | Sa   | Sa   | S     |
|                          | ofi | its, | ofi | les, | les, | ales, |
|                          | ts, | 2002 | ts, | 2001 | 2002 | 2003  |
|                          | 2   |      | 2   |      |      |       |
|                          | 001 | Jan  | 003 | Jan  | Jan  | Jan   |
|                          |     | -Dec |     | -Dec | -Dec | -June |
|                          | J   |      | Ja  |      |      |       |
|                          | an- |      | n-J |      |      |       |
|                          | Dec |      | une |      |      |       |
+--------------------------+-----+------+-----+------+------+-------+
| Exchange rate            | 718 | 71   | 699 | 71   | 71   | 6     |
|                          | .61 | 8.61 | .12 | 8.61 | 8.61 | 99.12 |
+--------------------------+-----+------+-----+------+------+-------+
| C.C.U. (beer, non-alc.   | 5   | 30.7 | 4   | 5    | 4    | 254.4 |
| beverages)               | 5.0 |      | 5.6 | 64.4 | 70.1 |       |
+--------------------------+-----+------+-----+------+------+-------+
| Andina (non-alc.         | 4   | 46.0 | 1   | 7    | 5    | 276.6 |
| beverages)               | 7.4 |      | 0.7 | 56.5 | 59.0 |       |
+--------------------------+-----+------+-----+------+------+-------+
| Empresas Carozzi (pasta, | 2   | 21.1 | 8.7 | 3    | 3    | 192.4 |
| chocolate, cookies,      | 0.2 |      |     | 69.7 | 65.7 |       |
| candies)                 |     |      |     |      |      |       |
+--------------------------+-----+------+-----+------+------+-------+
| Iansa (sugar)            | 5.5 | 17.3 | n/a | 60.1 | 2    | n/a   |
|                          |     |      |     |      | 23.9 |       |
+--------------------------+-----+------+-----+------+------+-------+
| Soprole (milk, dairy     | 1.4 | 6.0  | 4.5 | 2    | 2    | 113.1 |
| products)                |     |      |     | 34.0 | 19.4 |       |
+--------------------------+-----+------+-----+------+------+-------+
| Polar (Coca-Cola))       | 9.1 | 7.6  | 2.3 | n/a  | n/a  | 52.2  |
+--------------------------+-----+------+-----+------+------+-------+
| Watt´s (jams, sauces,    | 5.7 | 0.3  | 1.5 | 2    | 2    | 111.5 |
| soups, etc.)             |     |      |     | 21.4 | 05.1 |       |
+--------------------------+-----+------+-----+------+------+-------+
| Emp. Sta Carolina (\*)   | 7.9 | 2.0  | 1.3 | 2    | 2    | 125.4 |
|                          |     |      |     | 80.3 | 35.6 |       |
+--------------------------+-----+------+-----+------+------+-------+
| Sopraval (turkey         | \-  | \-   | 0.2 | 50.6 | 50.3 | 25.2  |
| growers)                 | 0.1 | 5.2  |     |      |      |       |
+--------------------------+-----+------+-----+------+------+-------+
| Lucchetti (pasta)        | \-  | \-   | \-  | 1    | 1    | 43.3  |
|                          | 9.2 | 51.8 | 1.2 | 35.4 | 17.6 |       |
+--------------------------+-----+------+-----+------+------+-------+
| Procesadora de Leche del | 0.2 | 3.8  | 1.5 | 69.5 | 57.0 | 32.2  |
| Sur                      |     |      |     |      |      |       |
+--------------------------+-----+------+-----+------+------+-------+
| Copefrut (fruit and      | 2.0 | 2.2  | 3.3 | 60.1 | 63.6 | 40.5  |
| juices)                  |     |      |     |      |      |       |
+--------------------------+-----+------+-----+------+------+-------+
| Sofruco (fruit)          | 2.0 | 1.8  | 1.0 | 24.4 | 24.2 | 12.3  |
+--------------------------+-----+------+-----+------+------+-------+
| Jucosa (fruit juices)    | \-  | 0.4  | 0.5 | 20.7 | 16.5 | 9.5   |
|                          | 1.0 |      |     |      |      |       |
+--------------------------+-----+------+-----+------+------+-------+
| Coca-Cola Embonor (1 of  | \-  | \-   | n/a | 3    | 3    | n/a   |
| 3 Coke bottlers)         | 1   | 22.9 |     | 62.9 | 35.1 |       |
|                          | 2.1 |      |     |      |      |       |
+--------------------------+-----+------+-----+------+------+-------+
| TOTAL                    | 14  | 74.0 | 7   | 2,6  | 2,4  | 1,    |
|                          | 2.9 |      | 3.6 | 72.3 | 46.8 | 194.0 |
+--------------------------+-----+------+-----+------+------+-------+
| \*Empresas Santa         |     |      |     |      |      |       |
| Carolina own Santa       |     |      |     |      |      |       |
| Carolina winery, Watt's  |     |      |     |      |      |       |
| (juices, jams),          |     |      |     |      |      |       |
| Loncoleche and Calo      |     |      |     |      |      |       |
| (dairy products),        |     |      |     |      |      |       |
| Superior (margarine and  |     |      |     |      |      |       |
| edible oils), Il         |     |      |     |      |      |       |
| Gastronomico (pastas),   |     |      |     |      |      |       |
| Cecinas Felco (sausage)  |     |      |     |      |      |       |
| and Fehrenberg           |     |      |     |      |      |       |
| (liqueurs). Sales are    |     |      |     |      |      |       |
| 41% dairy prod., 39% oil |     |      |     |      |      |       |
| products, 17% fruit      |     |      |     |      |      |       |
| prod., 2% subsid., 1%    |     |      |     |      |      |       |
| prepared foods and       |     |      |     |      |      |       |
| sausage.                 |     |      |     |      |      |       |
+--------------------------+-----+------+-----+------+------+-------+

**[Descriptions of Chilean Processed Food Sectors and of Key Food
Processing Companies]{.underline}**

The companies profiled in each section are representative of that
sector, and their sizes or sales, end-use channels, production plants
and procurement channels illustrate the Chilean market and procurement
trends.

**1) Red Meats and Poultry Meat**

Chile is a net exporter of white meats (pork, poultry and turkey
products) and importer of red meats. Special meats such as pork jowls
and chicken thighs are in part imported.

Processing plants, with direct links to cattle farmers, are displacing
stockyards in the beef distribution chain. The beef processing industry
is a tight sector, where 50% of the market is controlled by no more than
ten companies with high levels of vertical integration (including Lo
Valledor, Friosa, Carnes D'Arc which recently declared bankruptcy,
Matadero de Temuco and Carnes Ñuble). The poultry sector is also
dominated by two companies, Super Pollo and Ariztia, which are also
vertically integrated, from producing the feed to distributing to the
retailers. Cold cuts are a large market, totaling 246,600 tons in 2002
(178,000 tons just in wieners and sausages). Cecinas San Jorge, PF,
Super, Winter, La Preferida and Llanquihue are the leaders among some 40
sausage and cold cut makers.

[Red Meat Market in Chile, metric tons, 2003]{.underline}

# 

  --------------------- ----------- ----------- ----------- ---------------
  Product               Bovines     Pork        Others      Total Red Meats

  Processed             191.784     365.343     19.935      577.062

  Exported, tons        8.733       77.475      5.106       91.314

  Exported, US\$ FOB    16.406      158.514     16.369      191.290
  thous.                                                    

  Imported, tons        176.159     315         0           176.474

  Imported, US\$ CIF    208.043     1.327       0           209.370
  thous.                                                    

  Consumed, tons        359.210     288.183     14.829      662.222
  --------------------- ----------- ----------- ----------- ---------------

# 

[White Meat Market in Chile, metric tons, 2003]{.underline}

  --------------------- ----------- ----------- ----------- ---------------
  Product               Chickens    Turkey      Other fowl  Total White
                                                            Meats

  Processed             388.736     69.783      5.885       464.404

  Exported, tons        21.848      15.218      0           37.066

  Exported, US\$ FOB    35.371      31.111      90          66.482
  thous.                                                    

  Imported, tons        1.827       5           41          1.873

  Imported, US\$ CIF    1.734       14          85          1.833
  thous.                                                    

  Consumed, tons        368.715     54.569      5.927       429.211

  Source: APA, Chilean                                      
  Poultry Producers'                                        
  Association                                               
  --------------------- ----------- ----------- ----------- ---------------

The trend in meat production and consumption has changed dramatically in
recent years:

[Meats processed, metric tons:]{.underline}

  --------------------- ------------ ------------ ------------ ------------
  Meat type             1990         1995         2000         2003

  Bovines               242,452      257,792      226,364      191,784

  Pork                  123,171      172,410      261,477      365,343

  Poultry               n/a          320,919      438,165      464,405

  Others                25,914       21,134       20,659       19,927

  Source: ODEPA --                                             
  Office of                                                    
  Agricultural Studies                                         
  and Policies,                                                
  Ministry of                                                  
  Agriculture                                                  
  --------------------- ------------ ------------ ------------ ------------

The total 2002 lunchmeat production was 246,605 tons, including sausages
(36.0%), bologna (17.5%), hams (13.5%), spicy sausages (10.0%),
hamburgers (8.0%), pate (5.0%), salami (2.0%) and others (8.0%).

# 

+---------------+--------------+--------------+---------+-------------+
| **Company**   | **Sales      | **End-Use    | **Pro   | **          |
|               | (US\$)**     | Channels**   | duction | Procurement |
| **(Product    |              |              | Locati  | Channels**  |
| Types)**      |              |              | on(s)** |             |
+---------------+--------------+--------------+---------+-------------+
| Agrícola      | \$170        | Retail, HRI  | Chile   | N/A         |
| Ariztía       | million      | and Exports  | (6)     |             |
| (chickens and | sales, \$26  |              |         |             |
| turkey)       | mill.        |              |         |             |
|               | exported,    |              |         |             |
|               | 125,000 tons |              |         |             |
|               | chicken (30% |              |         |             |
|               | of market),  |              |         |             |
|               | 25,000 tons  |              |         |             |
|               | turkey (40%  |              |         |             |
|               | of market)   |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Cecinas La    | N/A          | Retail       | Chile   | Pork:       |
| Preferida     |              |              | (1)     | Direct      |
| (sausage and  |              |              |         | (Local);    |
| cold cuts)    |              |              |         | Bovine:     |
|               |              |              |         | Importers   |
+---------------+--------------+--------------+---------+-------------+
| Cecinas San   | N/A          | Retail       | Chile   | Direct      |
| Jorge         |              |              | (1)     | (Local)     |
| (sausage and  |              |              |         |             |
| cold cuts)    |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Cecinas Super | \$39         | Retail and   | Chile   | Own         |
| (belongs to   | million, 3   | HRI          | (1)     | Production  |
| Agrosuper -   | million      |              |         |             |
| sausage and   | tons, 16%    |              |         |             |
| cold cuts)    | mkt. share   |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Friosa        | N/A          | Retail, HRI  | Chile   | Pork: Own   |
| (bovine       |              | and Exports  | (1)     | Production; |
| sl            |              |              |         | bovine: Own |
| aughterhouse) |              |              |         | Production  |
|               |              |              |         | and Direct  |
|               |              |              |         | (Local);    |
|               |              |              |         | Grains:     |
|               |              |              |         | Importers   |
+---------------+--------------+--------------+---------+-------------+
| Matadero Lo   | \$140        | Retail and   | Chile   | Bovine:     |
| Valledor      | million      | HRI          | (6)     | Direct      |
| (bovine       |              |              |         | (Local);    |
| sl            |              |              |         | Pork: Own   |
| aughterhouse, |              |              |         | Production  |
| largest in    |              |              |         | and         |
| Chile)        |              |              |         | Importers   |
+---------------+--------------+--------------+---------+-------------+
| Productos     | N/A          | Retail and   | Chile   | Pork: Own   |
| Fernández     |              | HRI          | (2)     | Production, |
| (Cecinas PF - |              |              |         | Bovine:     |
| sausage and   |              |              |         | Importers   |
| cold cuts)    |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Sopraval      | \$60         | Retail and   | Chile   | Direct      |
| (turkeys -    | million,     | HRI          | (3)     | (Local and  |
| part of       | 1,200 tons   |              |         | Foreign),   |
| Agrosuper)    |              |              |         | D           |
|               |              |              |         | istributors |
|               |              |              |         | (Local and  |
|               |              |              |         | Foreign)    |
+---------------+--------------+--------------+---------+-------------+
| Super Cerdo   | \$151        | Retail and   | Chile   | Own         |
| (pork - part  | million,     | HRI          | (1)     | Production  |
| of Agrosuper) | 110,000      |              |         |             |
|               | tons, 50%    |              |         |             |
|               | mkt. share   |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Super Pollo   | \$220        | Retail and   | Chile   | Own         |
| (chickens -   | million,     | HRI          | (2)     | Production  |
| part of       | 223,000 tons |              |         |             |
| Agrosuper)    |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+

**2) Edible Fish and Seafood Products**

Chile has the fifth largest fishing industry and frozen and prepared
(canned or fresh) seafood are traditional local consumption and export
products. The Robinson Crusoe brand pioneered the frozen fish sector 40
years ago, and now competes with Geomar, Pacífico del Norte, Pesquera
San José (which has a 55% market share) and others. Salmon and trout
farming is a relatively recent Chilean industry, which started exporting
in 1981 and has now boosted Chile to the No. 2 position as salmon
producer after Norway. Whereas traditional fish preparation requires
little in the way of ingredients, salmon farming generates strong
potential for fish food producers and takes up most of the fishmeal
produced by offshore fisheries.

+---------------+--------------+--------------+---------+-------------+
| **Company**   | **Sales      | **End-Use    | **Pro   | **          |
|               | (US\$)**     | Channels**   | duction | Procurement |
| **(Product    |              |              | Locati  | Channels**  |
| Types)**      |              |              | on(s)** |             |
+---------------+--------------+--------------+---------+-------------+
| Geomar (fish  | N/A          | Exclusive    | Chile   | Direct      |
| products)     |              | distributor  | (1)     | (Local)     |
|               |              | in New York  |         |             |
|               |              | for gourmet  |         |             |
|               |              | stores       |         |             |
+---------------+--------------+--------------+---------+-------------+
| Pesquera San  | 55% market   | Retail and   | Chile   | Own         |
| José (fish    | share        | Exports      | (3)     | Extraction  |
| products)     |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Robinson      | N/A          | Retail       | Chile   | Own         |
| Crusoe (fish  |              |              | (2)     | Extraction  |
| products)     |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+

**3) Dairy Products**

The dairy food processing sector, the nucleus of the dairy industry
production chain, is made up of around 15 companies that run 28 plants
which process 75% of the local milk production and where the leading
five companies buy 90% of the milk (year 2000). These five companies are
Nestlé, Soprole (New Zealand Dairy Board) and Parmalat, of foreign
capital, plus the local Loncoleche and Colun operations. The other
companies are mid-sized or small and most of them produce cheese. The
milk producers are the main suppliers, and supermarkets are the main
retailers. Dairy products, at 7.5%, are the second largest supermarket
perishable sales group after meats.

The ice cream market is over \$100 million and is dominated by Savory
(Nestlé) and Bresler (Unilever).

+---------------+--------------+--------------+---------+-------------+
| **Company**   | **Sales      | **End-Use    | **Pro   | **          |
|               | (US\$)**     | Channels**   | duction | Procurement |
| **(Product    |              |              | Locati  | Channels**  |
| Types)**      |              |              | on(s)** |             |
+---------------+--------------+--------------+---------+-------------+
| Nestle        | 261 tons in  | Retail       | Chile   | Direct      |
| (dairy,       | 2002, 13.3%  |              | (8)     | (Local and  |
| c             | overall      |              |         | Foreign),   |
| onfectionery, | packaged     |              |         | D           |
| cereals,      | food market  |              |         | istributors |
| dehyd. soups) | value share  |              |         | (Local and  |
|               | in 2001      |              |         | Foreign)    |
+---------------+--------------+--------------+---------+-------------+
| Parmalat      | N/A          | Retail and   | Chile   | Direct      |
| (dairy        |              | Exports      | (2)     | (Local and  |
| products)     |              |              |         | Foreign),   |
|               |              |              |         | D           |
|               |              |              |         | istributors |
|               |              |              |         | (Local and  |
|               |              |              |         | Foreign),   |
|               |              |              |         | Importers   |
+---------------+--------------+--------------+---------+-------------+
| Proc. De      | N/A          |              | Chile   | Direct      |
| Leche del Sur |              |              | (3)     | (Local)     |
| (Prolesur, in |              |              |         |             |
| Soprole       |              |              |         |             |
| holding -     |              |              |         |             |
| dairy         |              |              |         |             |
| products)     |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Soprole       | N/A          | Retail       | Chile   | N/A         |
| (milk, diary  |              |              | (5)     |             |
| products)     |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+

**4) Prepared Fruit, Prepared Vegetables, Oilseed Products (Sauces, Oils
and Other Frozen, Canned and Dried Products**

Eighty percent of the frozen foods market is composed of corn, peas,
green beans and broad beans. The frozen food market is dominated by a
few companies: Alifrut (represents McCain)- 18,000 tons, 34% market
share; Frutos del Maipo-14,000 tons, 27%; Interagro-8,000 tons, 15%;
Frisac-7,000 tons, 13%; Bonduelle-5,000 tons, 10%. Centauro Bozzolo and
Dos Caballos Pentzke are also well known for canned fruit. Wasil makes
canned vegetables and fruit, jams, sauces and seasonings, and Watt's is
strong in jams. The sauce market is quite attractive. Mayonnaise,
ketchup and mustard are sold at a rate of 27,000 tons or \$50 million
per year. Unilever Bestfoods controls 65% of this market.

+---------------+--------------+--------------+---------+-------------+
| **Company**   | **Sales      | **End-Use    | **Pro   | **          |
|               | (US\$)**     | Channels**   | duction | Procurement |
| **(Product    |              |              | Locati  | Channels**  |
| Types)**      |              |              | on(s)** |             |
+---------------+--------------+--------------+---------+-------------+
| Alifrut       | 18,000 tons, | Retail       | Chile   | N/A         |
| (frozen veg., | 34% fr. vg.  |              | (3)     |             |
| represents    | mkt share    |              |         |             |
| McCain)       |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Bonduelle     | 5,000 tons,  | 90% of       | Chile   | Direct      |
| (frozen       | 10% fr. vg.  | production   | (4)     | (Local);    |
| veg.IANSA)    | mkt share    | is for       | Peru    | Own         |
|               |              | exportation  | (1)     | Production  |
+---------------+--------------+--------------+---------+-------------+
| Centauro      | N/A          | Retail       | Chile   | Direct      |
| Bozzolo       |              |              | (1)     | (Local and  |
| (canned fruit |              |              |         | Foreign)    |
| and           |              |              |         |             |
| vegetables,   |              |              |         |             |
| prepared      |              |              |         |             |
| food)         |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Copefrut      | N/A          | Retail       | Chile   | N/A         |
| (fruit,       |              |              | (4)     |             |
| frozen fruit  |              |              |         |             |
| and juices)   |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Frisac        | 7,000 tons,  | Retail, HRI  | Chile   | Direct      |
| (frozen veg., | 13% fr. vg.  | and Exports  | (1)     | (Local)     |
| fruits,       | mkt share    |              | Ar      |             |
| berries,      |              |              | gentina |             |
| prepared      |              |              | (1)     |             |
| foods)        |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Frutos del    | 14,000 tons, | Retail       |         | Direct      |
| Maipo (fruit, | 27% fr. vg.  |              |         | (Local)     |
| frozen        | mkt share    |              |         |             |
| blueberries,  |              |              |         |             |
| jams)         |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Interagro     | 8,000 tons,  | Retail       | N/A     | N/A         |
| (frozen veg.) | 15% fr. vg.  |              |         |             |
|               | mkt share    |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Jucosa (fruit | Sales of 25  | Retail       | Chile   | N/A         |
| and juices)   | millions for |              | (1)     |             |
|               | 2001         |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Sofruco       | N/A          | Retail and   | Chile   | Direct      |
| (fruit and    |              | HRI          | (2)     | (Local)     |
| juices)       |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Unilever      |              | Retail       | Global  | Direct      |
| Bestfoods     |              |              | Company | (Local);    |
| (oilseed      |              |              | with    | D           |
| products,     |              |              | direct  | istributors |
| sauces)       |              |              | ope     | (Foreign);  |
|               |              |              | rations | Importers   |
|               |              |              | in 100  |             |
|               |              |              | co      |             |
|               |              |              | untries |             |
+---------------+--------------+--------------+---------+-------------+
| Wasil         | N/A          | Retail       |         |             |
| (sauces,      |              |              |         |             |
| seasonings)   |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Watt\'s       | N/A          | Retail and   | Chile   | Fruit       |
| (jams,        |              | HRI          | (7)     | concentrate |
| sauces,       |              |              |         | from abroad |
| soups, etc.)  |              |              |         | and milk    |
|               |              |              |         | and         |
|               |              |              |         | derivates   |
|               |              |              |         | local       |
+---------------+--------------+--------------+---------+-------------+

**5) Confectionery Products**

The chocolate confectionery industry in Chile is fairly small, as in
most South American countries, as a result of the warm climate and the
preference for savory foods. Annual per capita consumption of chocolates
is 5 Kg, vs. 10 Kg in Europe. The strong seasons for the 25,000 ton
chocolate market are autumn and winter. The total chocolate market is \$
80 million, the cookie market totals \$90 million, and the confectionery
(candy) market trails with \$40 million.

Carozzi (42%) and Nestle (31%) lead the chocolate market, followed by
Arcor (Dos en Uno) with 15%. Nestlé (40%), Carozzi (25%) and Arcor (16%)
lead the cookie market. Calaf is strong in candy (8-10 % of market)
after Ambrosoli (61%, belongs to Carozzi) and Arcor (27%).

+---------------+--------------+--------------+---------+-------------+
| **Company**   | **Sales      | **End-Use    | **Pro   | **          |
|               | (US\$)**     | Channels**   | duction | Procurement |
| **(Product    |              |              | Locati  | Channels**  |
| Types)**      |              |              | on(s)** |             |
+---------------+--------------+--------------+---------+-------------+
| Arcor-Dos en  | N/A          | Retail       | Peru    | Direct      |
| Uno           |              |              | (1)     | (Local and  |
| (c            |              |              | Brazil  | Foreign);   |
| onfectionery) |              |              | (2)     | Importers   |
|               |              |              | Ar      |             |
|               |              |              | gentina |             |
|               |              |              | (30)    |             |
|               |              |              | Chile   |             |
|               |              |              | (2)     |             |
+---------------+--------------+--------------+---------+-------------+
| Carozzi       | \$450        | Retail, HRI  | Chile   | Direct      |
| (pastas,      | millions     | and Exports  | (6)     | (Local and  |
| Costa and     |              |              | Peru    | Foreign)    |
| Ambrosoli     |              |              | (3)     | D           |
| confectionery |              |              | Ar      | istributors |
| brands,       |              |              | gentina | (Local and  |
| sauces,       |              |              | (3)     | Foreign)    |
| dairy)        |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Nestle        | 261 tons in  | Retail       | Chile   | Direct      |
| (dairy,       | 2002, 13.3%  |              | (6)     | (Local and  |
| c             | overall      |              |         | Foreign),   |
| onfectionery, | packaged     |              |         | D           |
| cereals,      | food market  |              |         | istributors |
| dehyd. soups) | value share  |              |         | (Local and  |
|               | in 2001      |              |         | Foreign)    |
+---------------+--------------+--------------+---------+-------------+

**6) Baked Goods**

Chile is the top bread consuming country in the Americas at 220 lbs. per
capita per year second globally only to Germany. Three percent of
personal income is spent on bread, compared to one percent in developed
nations. The Mexican firm Bimbo, which bought out Ideal and Fuchs
companies, dominates the bakery market. Fuchs specializes in whole-grain
and other such breads. Other large bakeries producing more traditional
local breads and baked goods are represented by Panaderías Castaño, Lo
Saldes, Pan Pierre (owned by Bredenmaster), and the bakeries in the
hypermarkets and megamarkets owned by the leading supermarket chains.
Supermarkets cover 30% of the bread market. These are followed by a
large number of smaller neighborhood bakeries that do not have the
purchasing power of the big ones and do not buy their ingredients
direct. Cookies and other baked goods (Dunkin Donuts is present in
Chile) are made by a few large companies, especially McKay (part of
Nestlé, 40% market share and top of mind) and Costa (Carozzi), as well
as imported. But the Chilean cookie market is small compared to bread:
barely 5 lbs. per capita per year compared to over 20 lbs. in the U.S.
and Europe.

+---------------+--------------+--------------+---------+-------------+
| **Company**   | **Sales      | **End-Use    | **Pro   | **          |
|               | (US\$)**     | Channels**   | duction | Procurement |
| **(Product    |              |              | Locati  | Channels**  |
| Types)**      |              |              | on(s)** |             |
+---------------+--------------+--------------+---------+-------------+
| Pan Pierre -  | N/A          | Retail and   | Chile   | Direct      |
| Bredenmaster  |              | HRI          | (1)     | (Local and  |
| Chile (bakery |              |              |         | Foreign)    |
| chain)        |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Panaderías    | N/A          | Retail and   | Chile   | Direct      |
| Castaño       |              | HRI          | (2)     | (Local and  |
| (bakery       |              |              |         | Foreign);   |
| chain)        |              |              |         | D           |
|               |              |              |         | istributors |
|               |              |              |         | (Local);    |
|               |              |              |         | Importers   |
+---------------+--------------+--------------+---------+-------------+
| Panaderías Lo | N/A          | Own Local    | Chile   | Direct      |
| Saldes        |              | Stores       |         | (Local);    |
| (bakery       |              |              |         | D           |
| chain)        |              |              |         | istributors |
|               |              |              |         | (Local)     |
+---------------+--------------+--------------+---------+-------------+

**7) Snack Foods (Savory and Sweet Snacks and Nuts)**

The savory snacks market in Chile grew to around \$120 million in 2002
from sales of 24,000 tons. Frito-Lay controlled over three-quarters of
the market in 2002. The next largest company in the market is Café do
Brasil, with just over 5.4% of sales in 2002. Potato chips are the most
lucrative product category (45% by volume, 49% by value). Souffle
products (19%/19%), extruded snack ("ramitas", 14%/11%) and peanuts
(12%/12%) are also important. Distribution is fairly evenly split among
traditional (42% and supermarket (58%) retail channels. Candies are
dominated by Ambrosoli (Carozzi) and Dos en Uno (Arcor of Argentina).

+---------------+--------------+--------------+---------+-------------+
| **Company**   | **Sales      | **End-Use    | **Pro   | **          |
|               | (US\$)**     | Channels**   | duction | Procurement |
| **(Product    |              |              | Locati  | Channels**  |
| Types)**      |              |              | on(s)** |             |
+---------------+--------------+--------------+---------+-------------+
| Evercrisp     | N/A          |              |         | N/A         |
| (Frito-Lay -  |              |              |         |             |
| snack foods)  |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Gourmet       | N/A          |              |         | N/A         |
| (snack foods) |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| ICB Marcopolo | N/A          | Retail and   | Chile   | Direct      |
| (Café do      |              | HRI          | (3)     | (Local and  |
| Brasil -      |              |              |         | Foreign)    |
| snacks, nuts) |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+

**8) Beverages, Non-Alcoholic**

Chilean homes consumed on average 323 liters of beverage in 2002 (total
of 1,14 1 million liters). The non-alcoholic beverages dominate the
total beverage market, which is distributed through traditional channels
(52%), supermarkets (41%) and consumption in food establishments (7%).
Carbonated beverages make up 55% of the total, followed by beer (15%),
powdered drinks (19%), fruit juices (6%) and mineral water (5%).

Coca-Cola has a 66% soft drink market share, followed by Ecusa
(CCU-Pepsi) with 24%. Coca-Cola also covers 34.6% of the fruit juice
market, closely following Watt's which has a 35.9% share. Soprole is new
in the fruit juice market, with a 9.1% market share.

+---------------+--------------+--------------+---------+-------------+
| **Company**   | **Sales      | **End-Use    | **Pro   | **          |
|               | (US\$)**     | Channels**   | duction | Procurement |
| **(Product    |              |              | Locati  | Channels**  |
| Types)**      |              |              | on(s)** |             |
+---------------+--------------+--------------+---------+-------------+
| Coca-Cola     | \$335        | Retail and   | Chile   | Direct      |
| Embonor (non  | million      | HRI          | (8)     | (Local and  |
| alc.          |              |              | Bolivia | Foreign)    |
| beverages)    |              |              | (6)     |             |
+---------------+--------------+--------------+---------+-------------+
| Embot. Andina | \$559        | Retail       | Chile   | Direct      |
| (Coca-Cola,   | million      |              | (1)     | (Local and  |
| non alc.      |              |              |         | Foreign)    |
| beverages)    |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+
| Embotelladora | N/A          | Retail       | Chile   | Direct      |
| Coca-Cola     |              |              | (3)     | (Local);    |
| Polar (non    |              |              | Ar      | Distr       |
| alc.          |              |              | gentina | istributors |
| beverages)    |              |              | (4)     | (Local);    |
|               |              |              |         | Importers   |
+---------------+--------------+--------------+---------+-------------+

**9) Beverages, Alcoholic**

The Chilean beer and FABs market continues to show positive performance,
despite the economic difficulties that have been felt across the region
in recent times, and is currently at just over 26 liters per head.
Compañía de Cervecerías Unidas (CCU) has an 86% share of the market,
followed by Cervecerías Chile with 12%.

The Chilean wine market totalled \$ 300 million (285 million liters) vs.
the \$523 million (230 million liters) exported in 1999. Both markets,
supplied by nearly 400 vintners, continue growing. The leading vineyards
in the local market are Concha & Toro (Guilisasti family), Santa Rita
(Ricardo Claro), San Pedro (Luksic group), and Santa Carolina (Larrain
family). The same companies mentioned above are the main exporters along
with Viña Tarapaca ex Zavala, Viña Undurraga, Viña Santa Emiliana,, Viña
Santa Helena, Viña Errazuriz, and Viña Montes.

The Pisco producing companies are, Capel, Control and Ruta Norte (recent
CCU startup) which is challenging the leadership of Capel (62% market
share) and Control's (36%) sector leadership. Licores Mitjans and
Fehrenberg (Empresas Santa Carolina) are the leading licqueur
manufacturers competing with abundant imports.

+---------------+--------------+--------------+---------+-------------+
| **Company**   | **Sales      | **End-Use    | **Pro   | **          |
|               | (US\$)**     | Channels**   | duction | Procurement |
| **(Product    |              |              | Locati  | Channels**  |
| Types)**      |              |              | on(s)** |             |
+---------------+--------------+--------------+---------+-------------+
| Viña Concha y | \$130        | Retail, HRI  | Chile   | D           |
| Toro          | million      | and Exports  | (7)     | istributors |
|               |              |              |         | (Local);    |
|               |              |              |         | Importers   |
+---------------+--------------+--------------+---------+-------------+
| Viña Santa    | \$236        | Retail and   | Chile   | D           |
| Carolina Emp. | million      | HRI          | (3)     | istributors |
| Sta. Carolina |              |              |         | (Local);    |
| (wine, also   |              |              |         | Importers   |
| own           |              |              |         |             |
| Loncoleche,   |              |              |         |             |
| Watt\'s,      |              |              |         |             |
| Superior      |              |              |         |             |
| margarines &  |              |              |         |             |
| oils,         |              |              |         |             |
| Fehrenberg    |              |              |         |             |
| licqueurs and |              |              |         |             |
| Felco cold    |              |              |         |             |
| cuts)         |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+

**10) Dry Goods and Condiments (Canned Soup, Dry Mixes, Pasta, Pet Food,
Seasonings)**

Chilean homes spend three dollars per month on pasta. Per capita
consumption is 8.3 Kg per year. The Pasta market in Chile totals 120,000
tons or \$110 million. Carozzi and Lucchetti (the latter recently sold
to Corpora Tres Montes of Chilean capital) dominate the market with
41.0% and 37.6% market shares each, trailed by Parma with 8.2%. Seventy
percent of the pasta is sold through supermarkets, the rest through
traditional retailers.

Canned soup is not as popular in Chile as it is in the US, but powdered
or dehydrated soup in envelopes is very popular. Maggi (Nestle) is the
traditional leader, but others like Naturezza have gained market through
heavy advertising.

The pet food market is developing very strongly at a rate of at least
10-15% over the past 8 to 10 years. It is claimed to be a 120,000
ton-per-year market, which would make it equivalent to the pasta market,
and 86% of pet food is sold through supermarkets. More than 40% of
Santiago households bought dog or cat food during 2002. The market is
dominated by foreign brands, though 60% of pet food is made locally.
Nestlé sells its Purina product imported from Argentina and its locally
made Doko brand, Eukanuba and M&M Mars import from Argentina, and
Nutripro (Champion brand) and Indarroz (Masterdog brand) are made
locally.

Seasonings are mostly imported, and McCormick is one of the well-known
brands. Room is left for other brands, especially ones that meet quality
standards and compete well on price.

+---------------+--------------+--------------+---------+-------------+
| **Company**   | **Sales      | **End-Use    | **Pro   | **          |
|               | (US\$)**     | Channels**   | duction | Procurement |
| **(Product    |              |              | Locati  | Channels**  |
| Types)**      |              |              | on(s)** |             |
+---------------+--------------+--------------+---------+-------------+
| Carozzi       | \$450        | Retail, HRI  | Chile   | Direct      |
| (pastas,      | million      | and Exports  | (6)     | (Local and  |
| c             |              |              | Peru    | Foreign)    |
| onfectionery, |              |              | (3)     | D           |
| sauces,       |              |              | Ar      | istributors |
| dairy)        |              |              | gentina | (Local and  |
|               |              |              | (3)     | Foreign)    |
+---------------+--------------+--------------+---------+-------------+
| Ipal          | N/A          | Retail, HRI  | Chile   | D           |
| (dehydrated   |              | and Exports  | (1)     | istributors |
| soup, dehyd.  |              |              |         | (Foreign);  |
| mashed        |              |              |         | Direct      |
| potatoes)     |              |              |         | (Local)     |
+---------------+--------------+--------------+---------+-------------+
| Lucchetti     | N/A          | Retail, HRI  | Chile   | Direct      |
| (pasta)       |              | and Exports  | (3)     | (Local and  |
|               |              |              |         | Foreign)    |
+---------------+--------------+--------------+---------+-------------+
| TKF Alimentos | N/A          | HRI          | Chile   | Direct      |
| (dehydrated,  |              |              | (1)     | (Local)     |
| powdered      |              |              |         |             |
| foods for     |              |              |         |             |
| retail and    |              |              |         |             |
| institutions) |              |              |         |             |
+---------------+--------------+--------------+---------+-------------+

**11) Specialized Food Ingredients (Additives, Preservatives,
Thickeners, Sweeteners)**

This sector is increasingly controlled by a few companies that have been
acquired by foreign interests. Duas Rodas of Brazil is strong in
coloring agents, etc., as is Inducorn (Corn Products Chile) in
thickeners and other corn products. Lefersa, Chile's main yeast company,
was split among the Swiss Bakels group (pastry ingredients) and the
Dutch DSM group (bakery ingredients). The latter competes with Puratos
Chile, another large bakery, pastry and confectionery industry supplier.

+---------------+--------------+--------------+---------+-------------+
| **Company**   | **Sales      | **End-Use    | **Pro   | **          |
|               | (US\$)**     | Channels**   | duction | Procurement |
| **(Product    |              |              | Locati  | Channels**  |
| Types)**      |              |              | on(s)** |             |
+---------------+--------------+--------------+---------+-------------+
| Biocolor      | N/A          | Food         | Chile   | Direct      |
| Chile         |              | Processor    | (1)     | (Local and  |
| (colors)      |              | Companies    |         | Foreign)    |
|               |              |              |         | D           |
|               |              |              |         | istributors |
|               |              |              |         | (Local and  |
|               |              |              |         | Foreign)    |
+---------------+--------------+--------------+---------+-------------+
| Cramer        | N/A          | Food         | Chile   | Direct      |
| (colors,      |              | Processor    | (2) USA | (Local and  |
| flavorings,   |              | Companies,   | (1)     | Foreign);   |
| thick., etc.) |              | Beverages,   |         | D           |
|               |              | ph           |         | istributors |
|               |              | armaceutical |         | (Local and  |
|               |              | l            |         | Foreign);   |
|               |              | aboratories, |         | Importers   |
|               |              | cosmetics,   |         |             |
|               |              | detergent    |         |             |
|               |              | producers    |         |             |
|               |              | and          |         |             |
|               |              | Households   |         |             |
+---------------+--------------+--------------+---------+-------------+
| Duas Rodas    | N/A          | Directly to  | Brazil  | Direct      |
| Chile (food   |              | food         | (2)     | (Local and  |
| additives)    |              | manufacturer | Chile   | Foreign)    |
|               |              |              | (1)     |             |
|               |              |              | Ar      |             |
|               |              |              | gentina |             |
|               |              |              | (1)     |             |
+---------------+--------------+--------------+---------+-------------+
| Iansa (sugar) | \$224        | Retail and   | Chile   | Tomatoes    |
|               | million      | HRI          | (12)    | and Fruit:  |
|               |              |              | Perú    | Direct      |
|               |              |              | (1)     | (Local);    |
|               |              |              | Brasil  | Own         |
|               |              |              | (1)     | Production; |
|               |              |              |         | Sugar:      |
|               |              |              |         | Importers,  |
|               |              |              |         | Direct      |
|               |              |              |         | (Local)     |
+---------------+--------------+--------------+---------+-------------+
| Puratos de    | N/A          | Bakery,      | Around  | From Head   |
| Chile         |              | s            | the     | Office in   |
| S.A.(bread    |              | upermarkets, | world   | Belgium;    |
| and pasta     |              | breadmaking  | (60)    | Direct      |
| industry      |              | plants       | Chile   | (Local);    |
| ingredients)  |              |              | (2)     | D           |
|               |              |              |         | istributors |
|               |              |              |         | (Foreign)   |
+---------------+--------------+--------------+---------+-------------+

**12) Prepared Meals (Mixed Ingredient "Ready-to-Eat" or "Ready-to-Heat"
Retail and Food Service Meals and Entrees)**

This product type is still not really accepted by the Chilean consumer
as a complete meal, although institutional food services do prepare them
for their market. People would rather go out to eat than heat up a TV
dinner. Consumption is increasing for ready-to-cook foods such as frozen
and canned vegetables, french fries, cannedor frozen prepared foods such
as beans and bacon, etc., but it will take time for the local
idiosyncrasy to accept TV-dinner style prepared meals for the retail
channels.

## D. Sector Trends

-   Between 1974 and 2002, materialized foreign investment totaled US\$
    58.2 billion. Of this amount, almost 90% has entered the country
    since 1990. Although mining is takes the lion's share of this,
    general industry (including food processing) are a significant part.

-   Between 1990 and 1996, the number of food, beverage and tobacco
    companies in Chile that have FDA grew from 41 (2.7% of sector total)
    to 74 (4.5% of sector total), more in number than any other
    manufacturing sector and only surpassed in sector percentage by
    chemical and rubber products and by the metalworking sector.

-   As the market and the economy develop and mature, foreign direct
    investment is shifting from starting up new operations to purchasing
    existing ones.

-   Foreign direct investment has long been present in the Chilean food
    processing industry, with the likes of Nestlé, Coca-Cola, Pepsico,
    the N.Z. Dairy Board, Parmalat and others currently as key players.
    But the bulk of the industry is controlled by large Chilean capital
    companies that are still growing larger through mergers and growth
    into neighboring countries (Brazil, Argentina, Peru, etc.).

-   Some local companies are already producing for exports in addition
    to their local sales. New free trade agreements with the European
    Union and the U.S. will require production to expand and to develop
    new and better products to export into those markets in addition to
    other traditional export markets.

-   Chilean processed food quality standards are in most cases
    world-class and require top quality ingredients, and price will
    continue to be the deciding factor at time of purchase. customer
    service and fast delivery are also important factors as processors
    increasingly deal directly with local and foreign suppliers.

-   The light, or diet, and healthy food trends are gaining momentum as
    obesity is recognized as a widespread and hard-to-control problem at
    all age levels.

-   Organic foods, though not very much in demand here yet, are on the
    rise

-   Easily prepared foods and snacks are growing rapidly as more people
    eat out-of-home and on the run, and less time is available for
    lengthy food preparation at home by a shrinking availability of
    domestic maids.

# Section III. Competition

The leading local products are produce, poultry and pork, a good variety
of seafood (including salmon), fruits and wine. Imported food accounts
for about 10 percent of the local market. Imported products are mainly
beef from Argentina, Brazil and Uruguay, legumes and cereals such as
corn and wheat from Argentina and Canada. Chileans still value freshness
as much as possible but do consume large amounts of frozen food, mostly
local, for storage convenience and year-round availability.

[Chilean Food and Agricultural Product Imports, Jan-Dec 2003, Total
Imports vs. US Imports, by Harmonized Tariff System
chapters]{.underline}

  --------- -------------------------------------- ----------- -------- -------
  Chapter   Description (from Harmonized System    Total,      US,      US, %
            Codes 1997)                            \$CIF x     \$CIF x  
                                                   1000        1000     

            Foods:                                                      

  1         Live animals                           3,654       1,583    43.3%

  2         Meat and edible meat offal             220,716     135      0.1%

  3         Fish, crustaceans & aquatic            7,239       220      3.0%
            invertebrates                                               

  4         Dairy prods; birds eggs; honey; ed.    68,788      2,215    3.2%
            animal pr nesoi                                             

  5         Products of animal origin, nesoi       16,620      1,071    6.4%

  6         Live trees, plants, bulbs etc.; Cut    4,666       318      6.8%
            flowers etc.                                                

  7         Edible vegetables & certain roots &    18,592      1,929    10.4%
            tubers                                                      

  8         Edible fruit & nuts; citrus fruit or   37,667      3,794    10.1%
            melon peel                                                  

  9         Coffee, tea, mate & spices             37,094      428      1.2%

  10        Cereals                                265,646     45,201   17.0%

  11        Milling products; malt; starch;        19,534      508      2.6%
            inulin; wheat gluten                                        

  12        Oil seeds etc.; Misc grain, seed,      60,935      4,325    7.1%
            fruit, plant etc                                            

  13        Lac; gums, resins & other vegetable    9,262       3,270    35.3%
            sap & extract                                               

  14        Vegetable plaiting materials &         184         1        0.5%
            products nesoi                                              

  15        Animal or vegetable fats, oils etc. &  204,349     10,698   5.2%
            waxes                                                       

  16        Edible preparations of meat, fish,     22,295      215      1.0%
            crustaceans etc                                             

  17        Sugars and sugar confectionery         80,205      1,039    1.3%

  18        Cocoa and cocoa preparations           50,061      812      1.6%

  19        Prep cereal, flour, starch or milk;    34,412      2,789    8.1%
            bakers wares                                                

  20        Prep vegetables, fruit, nuts or other  34,542      827      2.4%
            plant parts                                                 

  21        Miscellaneous edible preparations      53,928      11,294   20.9%

            Total Foods                            1,250,389   92,672   6.5%

            Beverages:                                                  

  22        Beverages, spirits and vinegar         44,429      2,276    5.1%
  --------- -------------------------------------- ----------- -------- -------

[Comparative Chilean Food and Agricultural Product Imports, 2003 vs.
2002, Total Imports vs. US Imports, by Harmonized Tariff System
chapters]{.underline}

+------+----------+----------+----------+----------+-------+-------+
| Cha  | 2002     | 2003     | 2002     | 2003     | 2002  | 2003  |
| pter |          |          |          |          |       |       |
|      | Total,   | Total,   | US,      | US,      | US, % | US, % |
|      | \$CIF x  | \$CIF x  | \$CIF x  | \$CIF x  |       |       |
|      | 1000     | 1000     | 1000     | 1000     |       |       |
+------+----------+----------+----------+----------+-------+-------+
| Fo   |          |          |          |          |       |       |
| ods: |          |          |          |          |       |       |
+------+----------+----------+----------+----------+-------+-------+
| 1    | 3,402    | 3,654    | 1,330    | 1,583    | 39.1% | 43.3% |
+------+----------+----------+----------+----------+-------+-------+
| 2    | 177,038  | 220,716  | 180      | 135      | 0.1%  | 0.1%  |
+------+----------+----------+----------+----------+-------+-------+
| 3    | 6,355    | 7,239    | 87       | 220      | 1.4%  | 3.0%  |
+------+----------+----------+----------+----------+-------+-------+
| 4    | 23,870   | 68,788   | 1,744    | 2,215    | 7.3%  | 3.2%  |
+------+----------+----------+----------+----------+-------+-------+
| 5    | 13,127   | 16,620   | 1,236    | 1,071    | 9.4%  | 6.4%  |
+------+----------+----------+----------+----------+-------+-------+
| 6    | 4,018    | 4,666    | 77       | 318      | 1.9%  | 6.8%  |
+------+----------+----------+----------+----------+-------+-------+
| 7    | 16,648   | 18,592   | 2,100    | 1,929    | 12.6% | 10.4% |
+------+----------+----------+----------+----------+-------+-------+
| 8    | 38,735   | 37,667   | 2,011    | 3,794    | 5.2%  | 10.1% |
+------+----------+----------+----------+----------+-------+-------+
| 9    | 37,334   | 37,094   | 150      | 428      | 0.4%  | 1.2%  |
+------+----------+----------+----------+----------+-------+-------+
| 10   | 222,145  | 265,646  | 29,469   | 45,201   | 13.3% | 17.0% |
+------+----------+----------+----------+----------+-------+-------+
| 11   | 15,812   | 19,534   | 575      | 508      | 3.6%  | 2.6%  |
+------+----------+----------+----------+----------+-------+-------+
| 12   | 50,121   | 60,935   | 3,533    | 4,325    | 7.0%  | 7.1%  |
+------+----------+----------+----------+----------+-------+-------+
| 13   | 8,170    | 9,262    | 2,906    | 3,270    | 35.6% | 35.3% |
+------+----------+----------+----------+----------+-------+-------+
| 14   | 185      | 184      | 26       | 1        | 14.1% | 0.5%  |
+------+----------+----------+----------+----------+-------+-------+
| 15   | 158,418  | 204,349  | 4,134    | 10,698   | 2.6%  | 5.2%  |
+------+----------+----------+----------+----------+-------+-------+
| 16   | 21,202   | 22,295   | 611      | 215      | 2.9%  | 1.0%  |
+------+----------+----------+----------+----------+-------+-------+
| 17   | 88,090   | 80,205   | 1,555    | 1,039    | 1.8%  | 1.3%  |
+------+----------+----------+----------+----------+-------+-------+
| 18   | 47,450   | 50,061   | 1,535    | 812      | 3.2%  | 1.6%  |
+------+----------+----------+----------+----------+-------+-------+
| 19   | 30,295   | 34,412   | 2,857    | 2,789    | 9.4%  | 8.1%  |
+------+----------+----------+----------+----------+-------+-------+
| 20   | 32,755   | 34,542   | 2,058    | 827      | 6.3%  | 2.4%  |
+------+----------+----------+----------+----------+-------+-------+
| 21   | 58,931   | 53,928   | 11,902   | 11,294   | 20.2% | 20.9% |
+------+----------+----------+----------+----------+-------+-------+
| To   | 1        | 1        | 68,746   | 92,672   | 6.5%  | 6.5%  |
| tal: | ,050,699 | ,250,389 |          |          |       |       |
+------+----------+----------+----------+----------+-------+-------+
| B    |          |          |          |          |       |       |
| ev.: |          |          |          |          |       |       |
+------+----------+----------+----------+----------+-------+-------+
| 22   | 39,811   | 44,429   | 3,176    | 2,276    | 8.0%  | 5.1%  |
+------+----------+----------+----------+----------+-------+-------+

[Principal Competing Countries of Origin for Selected Chapters, Jan-Dec
2003]{.underline}

  --------- -------------------------------------------------------------
  Chapter   Main Competitors - Percent of Total Imports

  2         Brazil -- 74.7%, Argentina -- 15.2%, Uruguay -- 9.3%, Spain
            -- 0.4%

  4         Argentina -- 41.7%, Uruguay -- 23.5%, Canada -- 6.3%, Ireland
            -- 3.8%

  7         Canada -- 53.4%, China -- 11.1%, Argentina -- 11.0%, USA --
            10.4%, Peru -- 3.5%

  8         Ecuador -- 75.0%, USA -- 10.1%, Argentina -- 6.2%, Brazil --
            1.3%

  9         Brazil -- 31.6%, Argentina -- 20.9%, Sri Lanka -- 20.5%,
            Ecuador -- 4.3%

  10        Argentina -- 51.0%, USA -- 17.4%, Canada -- 11.2%, Thailand
            -- 9.4%

  11        Argentina -- 29.7%, Germany -- 16.6%, Uruguay -- 16.4%,
            Holland -- 10.9%

  12        Argentina -- 53.0%, Paraguay -- 15.5%, USA -- 7.1%, New
            Zealand -- 2.5%

  15        Argentina -- 64.2%, Peru -- 18.1%, USA -- 5.2%, Brazil --
            2.5%

  16        Ecuador -- 64.6%, Thailand -- 16.3%, Brazil -- 3.9%, Uruguay
            -- 3.5%

  17        Argentina -- 48.0%, Colombia -- 23.0%, Brazil -- 13.3%,
            Guatemala -- 8.1%

  18        Brazil -- 30.2%, Argentina -- 28.9%, Ecuador -- 15.0%,
            Holland -- 2.8%

  19        Argentina -- 37.6%, Mexico -- 11.9%, Peru -- 11.5%, Brazil --
            9.8%

  20        Argentina -- 42.1%, Thailand -- 12.3%, Brazil -- 10.8%;
            Ecuador -- 6.2%

  21        USA -- 20.9%, Brazil -- 19.5%, Colombia -- 13.9%, Argentina
            -- 11.8%

  22        UK -- 33.2%, Argentina -- 21.4%, Ireland -- 6.2%, Venezuela
            -- 6.1%
  --------- -------------------------------------------------------------

# Section IV. Best Product Prospects

We feel that it is crucial to stress that, especially in the case of
U.S. suppliers, how to sell effectively in Chile is at least as
important as determining which ingredients have market potential.
Sources mentioned that U.S. producers of food ingredients (as is also
true for other product categories) often have small market shares
because their European, Asian and other competitors are better marketers
and develop and follow more refined and persistent sales strategies.
U.S. food ingredient suppliers should research the market, communicate
directly and actively with large clients, follow through on quote
requests and fix long-term sales strategies on local prices and profit
margins (among other factors) which are usually lower than those in the
U.S.

A. [Products Present in the Market Which Have Good Sales
Potential]{.underline} - The U.S. food ingredients that have good market
potential can be observed in the table below. In general, the food
ingredients with the strongest market potential for U.S. producers are
those that require fairly advanced processing technology and high
quality standards. These products include coloring agents, flavorings,
aromas, stabilizers and chemicals, certain dairy derivatives (weigh,
etc.), spices and others. Less sophisticated products like dairy
products are normally more competitive from nearby sources (e.g.
Argentina, Brazil), but the U.S. has a strong chance with new-to-market
products.

B. [Products Not Present in Significant Quantities Which Have Good Sales
Potential]{.underline} - U.S. products that are still fairly unknown in
the market but are being introduced by food chains such as T.G.I.
Friday's or Tony Roma's, such as specialty cheeses and other
ingredients, including sauces, have a good potential as the market
continues becoming more global.

C. [Products Not Present Because They Face Significant
Barriers]{.underline} - There are very few products not present in the
market because of significant barriers. The main one is chicken because
the Agricultural and Livestock Service has a non-specific Salmonella
count that makes it difficult to import poultry. Fresh meats in general
are much more difficult to import than frozen or packaged processed
meats for health regulation reasons. Three other products -- sugar and
sugar solutions, wheat and wheat flower, and oilseeds and their
derivatives -- have a protective tariff treatment to protect Chilean
producers against subsidized imports. This will end soon in compliance
with WTO requirements.

The table below includes best prospects where U.S. producers are already
in the market, and others where they should be able to compete if a
stronger marketing effort is made.

[Key Food Ingredients with Potential for US Producers, Principal
Competing Countries, Jan-Dec 2003]{.underline}

+-------+----------------+------+------+----+------------------------+
| **HS  | **Product**    | **To | **U  | *  | **Main Competing       |
| C     |                | tal, | S,** | *U | Countries**            |
| ode** |                | US\$ |      | S, |                        |
|       |                | CIF  | **   | Mk |                        |
|       |                | x10  | US\$ | t. |                        |
|       |                | 00** | CIF  | S  |                        |
|       |                |      | x10  | ha |                        |
|       |                |      | 00** | re |                        |
|       |                |      |      | ** |                        |
+-------+----------------+------+------+----+------------------------+
| 0402  | Powdered milk  | 15   | 0.0  | 0. | Uruguay-43%, Argentina |
| .1000 | with 1.5% or   | ,000 |      | 0% | 28%, Canada 19%,       |
|       | less fat       |      |      |    | Germany 3%             |
+-------+----------------+------+------+----+------------------------+
| 0402  | Powdered milk  | 28   | 0.0  | 0. | Argentina-59%, Uruguay |
| .2118 | with 26% or    | ,284 |      | 0% | 22%, Ireland 8%, New   |
|       | more fat       |      |      |    | Zealand 12%            |
+-------+----------------+------+------+----+------------------------+
| 0404  | Whey           | 3    | 7    | 1  | Argentina 31%, France  |
| .1000 |                | ,933 | 06.3 | 8. | 23%,                   |
|       |                |      |      | 0% |                        |
|       |                |      |      |    | USA 18 %, New Zealand  |
|       |                |      |      |    | 12%                    |
+-------+----------------+------+------+----+------------------------+
| 0406  | Mozzarella     | 1    | 0.0  | 1. | Argentina-58%, Brazil  |
| .1030 | cheese         | ,727 |      | 4% | 34%, Uruguay 8%,       |
|       |                |      |      |    | Australia 0%           |
+-------+----------------+------+------+----+------------------------+
| 0406  | Gouda cheese   | 3    | 0.4  | 0. | Argentina-84%, Germany |
| .9010 |                | ,958 |      | 0% | 11%, New Zealand 9%,   |
|       |                |      |      |    | Uruguay 1%             |
+-------+----------------+------+------+----+------------------------+
| 0406  | Cheese, other  | 940  | 61.8 | 6. | France-18%,            |
| .9090 |                |      |      | 6% | Holland-15%,           |
|       |                |      |      |    | Argentina-14%,         |
|       |                |      |      |    | Germany-14%            |
+-------+----------------+------+------+----+------------------------+
| 1001  | Durum wheat    | 17   | 0.0  | 0. | Canada-99.9%,          |
| .1000 |                | ,856 |      | 0% | Argentina 0.1%         |
+-------+----------------+------+------+----+------------------------+
| 1001  | Wheat other    | 63   | 38,8 | 6  | USA-61%,               |
| .9000 | than Durum     | ,588 | 53.3 | 1. | Argentina-24%,         |
|       |                |      |      | 1% | Canada-15%,            |
+-------+----------------+------+------+----+------------------------+
| 1108  | Corn starch    | 1    | 2    | 1  | Argentina-86%,         |
| .1200 |                | ,801 | 01.7 | 1. | USA-11%, Brazil-1%,    |
|       |                |      |      | 2% | France-1%              |
+-------+----------------+------+------+----+------------------------+
| 1109  | Wheat gluten   | 6    | 0.0  | 0. | Germany-49%,           |
| .0000 |                | ,253 |      | 0% | Holland-26%,           |
|       |                |      |      |    | France-15%, Argentina  |
|       |                |      |      |    | 6%                     |
+-------+----------------+------+------+----+------------------------+
| 1502  | Animal fat,    | 3    | 4    | 1  | Uruguay-70%, USA-16%,  |
| .0010 | rendered       | ,003 | 88.9 | 6. | Argentina-14%          |
|       |                |      |      | 3% |                        |
+-------+----------------+------+------+----+------------------------+
| 1504  | Fish-liver     | 46   | 9,4  | 2  | Peru-80%, USA-20%      |
| .2010 | oils, not      | ,268 | 05.1 | 0. |                        |
|       | refined        |      |      | 3% |                        |
+-------+----------------+------+------+----+------------------------+
| 1509  | Olive oils,    | 1    | 0.0  | 0. | Spain-61%,             |
| .9000 | not virgin     | ,193 |      | 0% | Argentina-38%,         |
|       |                |      |      |    | Siria-0.6%, Italy 0.6% |
+-------+----------------+------+------+----+------------------------+
| 1516  | Vegetable fats | 2    | 0.7  | 0. | Holland-38%,           |
| .2010 | and their      | ,681 |      | 3% | Ecuador-25%,           |
|       | fractions      |      |      |    | Denmark-13%,           |
|       |                |      |      |    | Colombia-7%            |
+-------+----------------+------+------+----+------------------------+
| 1516  | Vegetable      | 5    | 93.7 | 1. | Sweden-18%,            |
| .2020 | shortening     | ,463 |      | 7% | Denmark-16%,           |
|       |                |      |      |    | Colombia-16%,          |
|       |                |      |      |    | Singapore-14%          |
+-------+----------------+------+------+----+------------------------+
| 1517  | Vegetable oil  | 40   | 15.4 | 0. | Argentina-98%,         |
| .9010 | mixtures, not  | ,818 |      | 0% | Uruguay-2%, USA 0.0%   |
|       | refined        |      |      |    |                        |
+-------+----------------+------+------+----+------------------------+
| 1517  | Vegetable oil  | 59   | 9.2  | 0. | Argentina-100%,        |
| .9020 | mixtures,      | ,304 |      | 0% | France-0.0%,           |
|       | refined        |      |      |    | Brazil-0.0%, USA-0.0%  |
+-------+----------------+------+------+----+------------------------+
| 1517  | Mixes of       | 4    | 1    | 3. | Argentina-80%,         |
| .9090 | animal with or | ,034 | 50.2 | 7% | Brazil-4%, USA-4%,     |
|       | without        |      |      |    | Spain-4%               |
|       | vegetable oils |      |      |    |                        |
|       | and fats       |      |      |    |                        |
+-------+----------------+------+------+----+------------------------+
| 1701  | Refined cane   | 46   | 0.1  | 0. | Argentina-37%,         |
| .9910 | sugar          | ,540 |      | 0% | Colombia-30%,          |
|       |                |      |      |    | Brazil-18%,            |
|       |                |      |      |    | Guatemala-14%          |
+-------+----------------+------+------+----+------------------------+
| 1702  | Glucose and    | 1    | 1    | 6. | Argentina-66%,         |
| .3000 | glucose syrup, | ,960 | 16.8 | 0% | France-18%, USA-6%,    |
|       | without        |      |      |    | Italy-3%               |
|       | fructose       |      |      |    |                        |
+-------+----------------+------+------+----+------------------------+
| 1702  | Other sugars   | 1    | 21.9 | 1. | Argentina-35%,         |
| .9090 |                | ,844 |      | 2% | Belgium-33%,           |
|       |                |      |      |    | Brazil-24%, China-3%   |
+-------+----------------+------+------+----+------------------------+
| 1805  | Cocoa powder,  | 12   | 12.2 | 0. | Ecuador-40%,           |
| .0000 | not containing | ,534 |      | 1% | Brazil-18%,            |
|       | sugar or       |      |      |    | Holland-9%, China-7%   |
|       | sweeteners     |      |      |    |                        |
+-------+----------------+------+------+----+------------------------+
| 1806  | Cocoa powder   | 2    | 7.2  | 0. | Brazil-83%,            |
| .1010 | with sugar or  | ,421 |      | 3% | Colombia-17%,          |
|       | sweeteners     |      |      |    | USA-0.3%,              |
|       | over 90% by    |      |      |    | Argentina-0.2%         |
|       | weight         |      |      |    |                        |
+-------+----------------+------+------+----+------------------------+
| 1905  | Bakery or      | 2    | 3    | 1  | Argentina-42%,         |
| .9090 | pastry         | ,198 | 82.2 | 7. | USA-17%, Canada-11%,   |
|       | products nesoi |      |      | 4% | Brazil-8%              |
+-------+----------------+------+------+----+------------------------+
| 2106  | Protein        | 4    | 3,7  | 7  | USA-76%, Brazil-16%,   |
| .1010 | concentrates,  | ,923 | 20.6 | 5. | New Zealand-6%,        |
|       | not textured   |      |      | 6% | Finland-1%             |
+-------+----------------+------+------+----+------------------------+
| 2106  | Edible         | 26   | 4,7  | 1  | Brazil-26%, USA-18%,   |
| .9090 | preparations   | ,735 | 92.5 | 7. | Colombia-14%,          |
|       | nesoi          |      |      | 9% | Argentina-8%           |
+-------+----------------+------+------+----+------------------------+

[Comparative Table, Key Food Ingredients with Potential for US
Producers, 2003 vs. 2002]{.underline}

+---------+---------+---------+---------+---------+---------+---------+
| **HS    | *       | *       | *       | *       | *       | *       |
| Code**  | *2002** | *2003** | *2002** | *2003** | *2002** | *2003** |
|         |         |         |         |         |         |         |
|         | **      | **      | **US**  | **US**  | **US**  | **US**  |
|         | Total** | Total** |         |         |         |         |
|         |         |         | **US\$  | **US\$  | *       | *       |
|         | **      | **US\$  | CIF     | CIF     | *Market | *Market |
|         | US\$CIF | CIF     | x1000** | x1000** | Share** | Share** |
|         | x1000** | x1000** |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 04      | 7,807   | 15,000  | 0.0     | 0.0     | 0.0%    | 0.0%    |
| 02.1000 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 04      | 3,093   | 28,284  | 0.0     | 0.0     | 0.0%    | 0.0%    |
| 02.2118 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 04      | 1,704   | 3,933   | 385.5   | 706.3   | 22.6%   | 18.0%   |
| 04.1000 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 04      | 1,118   | 1,727   | 16.2    | 0.0     | 1.4%    | 1.4%    |
| 06.1030 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 04      | 2,755   | 3,958   | 35.7    | 0.4     | 1.3%    | 0.0%    |
| 06.9010 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 04      | 1,323   | 940     | 576.1   | 61.8    | 43.5%   | 6.6%    |
| 06.9090 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 10      | 19,429  | 17,856  | 199.1   | 0.0     | 1.0%    | 0.0%    |
| 01.1000 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 10      | 30,221  | 63,588  | 1       | 3       | 60.1%   | 61.1%   |
| 01.9000 |         |         | 8,175.4 | 8,853.3 |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 11      | 2,122   | 1,801   | 356.6   | 201.7   | 16.8%   | 11.2%   |
| 08.1200 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 11      | 4,687   | 6,253   | 0.0     | 0.0     | 0.0%    | 0.0%    |
| 09.0000 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 15      | 3,307   | 3,003   | 238.3   | 488.9   | 7.2%    | 16.3%   |
| 02.0010 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 15      | 15,709  | 46,268  | 2,905.6 | 9,405.1 | 18.5%   | 20.3%   |
| 04.2010 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 15      | 901     | 1,193   | 0.7     | 0.0     | 0.1%    | 0.0%    |
| 09.9000 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 15      | 5,881   | 2,681   | 0.0     | 0.7     | 0.0%    | 0.3%    |
| 16.2010 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 15      | 4,682   | 5,463   | 134.2   | 93.7    | 2.9%    | 1.7%    |
| 16.2020 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 15      | 85,103  | 40,818  | 0.0     | 15.4    | 0.0%    | 0.0%    |
| 17.9010 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 15      | 28,644  | 59,304  | 16.5    | 9.2     | 0.1%    | 0.0%    |
| 17.9020 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 15      | 2,088   | 4,034   | 0.0     | 150.2   | 0.0%    | 3.7%    |
| 17.9090 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 17      | 49,734  | 46,540  | 125.2   | 0.1     | 0.3%    | 0.0%    |
| 01.9910 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 17      | 2,014   | 1,960   | 55.3    | 116.8   | 2.7%    | 6.0%    |
| 02.3000 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 17      | 1,284   | 1,844   | 14.2    | 21.9    | 1.1%    | 1.2%    |
| 02.9090 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 18      | 11,630  | 12,534  | 133.8   | 12.2    | 1.2%    | 0.1%    |
| 05.0000 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 18      | 3,270   | 2,421   | 12.9    | 7.2     | 0.4%    | 0.3%    |
| 06.1010 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 19      | 1,828   | 2,198   | 295.1   | 382.2   | 16.1%   | 17.4%   |
| 05.9090 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 21      | 5,886   | 4,923   | 4,122.3 | 3,720.6 | 70.0%   | 75.6%   |
| 06.1010 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 21      | 27,237  | 26,735  | 4,841.8 | 4,792.5 | 17.8%   | 17.9%   |
| 06.9090 |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| NOTE:   |         |         |         |         |         |         |
| The     |         |         |         |         |         |         |
| Customs |         |         |         |         |         |         |
| Data    |         |         |         |         |         |         |
| pr      |         |         |         |         |         |         |
| esented |         |         |         |         |         |         |
| in the  |         |         |         |         |         |         |
| tables  |         |         |         |         |         |         |
| above   |         |         |         |         |         |         |
| can be  |         |         |         |         |         |         |
| o       |         |         |         |         |         |         |
| btained |         |         |         |         |         |         |
| for any |         |         |         |         |         |         |
| p       |         |         |         |         |         |         |
| roduct, |         |         |         |         |         |         |
| i       |         |         |         |         |         |         |
| mporter |         |         |         |         |         |         |
| or      |         |         |         |         |         |         |
| recent  |         |         |         |         |         |         |
| time    |         |         |         |         |         |         |
| period  |         |         |         |         |         |         |
| through |         |         |         |         |         |         |
| the     |         |         |         |         |         |         |
| U.S.    |         |         |         |         |         |         |
| Com     |         |         |         |         |         |         |
| mercial |         |         |         |         |         |         |
| Service |         |         |         |         |         |         |
| S       |         |         |         |         |         |         |
| antiago |         |         |         |         |         |         |
| post by |         |         |         |         |         |         |
| con     |         |         |         |         |         |         |
| tacting |         |         |         |         |         |         |
| the     |         |         |         |         |         |         |
| S       |         |         |         |         |         |         |
| antiago |         |         |         |         |         |         |
| Foreign |         |         |         |         |         |         |
| Agric   |         |         |         |         |         |         |
| ultural |         |         |         |         |         |         |
| Service |         |         |         |         |         |         |
| office. |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+

Wheat - Per capita wheat consumption is 140 kilograms per year. Chileans
are largest consumers of bread in the Western Hemisphere. Although wheat
production in Chile increased significantly over the past decade, due to
a combination of increased seeded area and improved yields, imports from
the U.S. could grow as the tariffs for U.S. wheat drop and the
protective tariffs against wheat flower are dephased as mandated by the
WTO.

Pulse and Special Crops - During the past decade, Chile\'s production of
pulse and special crops decreased significantly and imports increased.
Dry peas and lentils, for example, were previously grown domestically in
fairly large quantities but are now mostly imported. Though a large
portion of pulse or dried legumes has been coming from Canada, the new
U.S.-Chile FTA is expected to make U.S. suppliers more competitive in
the Chilean market.

Dairy products and ingredients (such as whey as mentioned above) from
the U.S. have good potential, as do confectionery and baking
ingredients. High-quality glazes were one such product.

# Section V. Post Contact and Further Information

Mailing Address:

Office of Agricultural Affairs

U.S. Embassy Santiago

Unit 4118

APO AA 34033-4118

Street Address:

Office of Agricultural Affairs

Embajada de los EE.UU.

Andres Bello 2800

Las Condes

Santiago, Chile

Phone: 56-2-330-3704

Fax: 56-2-330-3203

Email: agsantiago@usda.gov

Web Sites:

[http://www.usembassy.cl;]() U.S. Embassy Santiago homepage. First click
on "English Version" at top right and look under "Food & Agriculture",
then click on "Documents" or "Attache Reports" for research reports, and
other pages for trade leads, contacts in Chile and more.

[http://www.fas.usda.gov;]() Foreign Agricultural Service homepage.