Has Chile woken up at last?

Do you buy your wine for sheer enjoyment or just by price? The question applies particularly to Chile. Wine drinkers love Chilean wines because they represent value for money. Supermarkets adore them because they can, and do, shift conveyor-belt loads under their own labels. Four in every 10 bottles of Chilean wine are sold under a supermarket label, two out of three in the case of Tesco. But how often do you reach for a bottle of Chilean wine when you want a dinner party treat?

In the late 1970s, the eminent Spanish winemaker Miguel Torres described Chile as "a viticultural paradise". It arrived on the scene not much later than Australia, so how come this enchanting South American sliver of a country, blessed by ocean breezes, bright sunshine and pure Andean water, has failed to live up to expectations? Because the four Is - imagination, innovation, image and identity - are lacking. Chileans have been content to milk their sun-blessed vineyards to feed our habit for affordability.

I can't put my finger on exactly when Chile awoke from its torpor, but its more clear-sighted producers must have twigged that something had to give from around the latter half of the 1990s. In just six years, 50,000 new hectares have been planted, doubling the country's vineyards, which have benefited from better vines and progress in matching grape variety to location.

Another significant step was the establishment last year of a London office. Its director, Michael Cox, formerly with Australian company Yalumba, took a leaf out of the Australian book to help set up the first Chile Annual Wine Awards. Getting the notoriously cagey Chileans to agree to have their wines tasted blind, under international rules, was a coup in itself. The immediate aim was to showcase wines selling for between £4.99-£15. This is where Chile most needs to improve its showing if it is to change perceptions that the wines offer at best value for money.

Even allowing for our comfortable surroundings in Santiago, the medal tally awarded by the six UK and three Chilean judges was impressive: 24 gold medals, 37 silvers and 141 bronzes from a total of 436 wines judged. Sauvignon blancs showed plenty of aromatic varietal character with some luscious tropical fruit flavours and crisp, bone-dry finishes. Chile now needs to go the extra mile to produce sauvignon of world-class quality by sacrificing a degree of quantity for quality. Much the same can be said for chardonnay.

Red wines stole the show with cabernet sauvignon demonstrating that Chile is a potential world-beater in the £5-£15 range. Carmenere, syrah and red blends are all exciting prospects, merlot perhaps less so, with a handful of interesting wines being made from pinot noir, malbec and carignan. One of the most encouraging results was the number of successful newcomers. You may not have yet heard of Chocolan, Viña Siegel, Viña Agustinas, Viña Tabalí, William Cole, Viña Ventisquera and Viña Organica Emiliana, but it won't be long before you do.