Chile’s economy is expected to grow 5 percent in 2013, among the highest rates in Latin America, due to rising commodity prices and higher consumer spending.

A leading copper producer, Chile is benefiting from higher prices for the red metal, up 19 percent in the past year. In 2012, foreign direct investment in Chile rose 53 percent, the seventh-largest increase worldwide. And most of this foreign money went into Chile’s mining sector.

Mining is extremely capital-intensive, and companies don’t put capital at risk unless they expect good returns. So the new investment in Chile’s mines is a clear vote of confidence in the global economic recovery.

This, in turn, is creating new jobs and pushing incomes higher for the average Chilean. As a result, consumer spending in the country has been increasing over the past several years.

While it’s tough to tap into Chilean mining directly, it’s an energyintensive business. Consequently, investing in major regional electricity producers is a backdoor way of gaining exposure to the mining industry, while also taking advantage of surging consumer demand.

Empresa Nacional de Electricidad (NYSE: EOC), Chile’s largest electric utility, was privatized in the 1980s. It’s now more than twice the size of its two closest competitors. And while Chile accounts for about half of Empresa’s business, it also has operations in Argentina, Brazil, Columbia and Peru.

The stock was flat for most of 2012, as drier weather caused reduced water flow through Empresa’s dams. Since more than 60 percent of Empresa’s output comes from hydroelectric power, the utility was forced to buy energy in the spot market, boosting its operating costs.

But the weather is expected to normalize this year, allowing Empresa to get back to business as usual. And business is booming. With electricity demand in Empresa’s territories expected to double again in the coming decade, the utility plans to double its generation capacity during the next 10 years.

Since December, Empresa’s stock has started to move up, to a recent price of $51. That’s still off from the 52-week high of $56, and a reasonable 14 times the 2013 earnings estimates.

Letting it Flow

Vina Concha y Toro (NYSE: VCO), Latin America’s largest wine producer, is a more speculative play on Chile’s economic growth. Contracting with thousands of different growers, and producing about 43,000 barrels of wine annually, VCO has gained traction globally because its wines are good deals relative to low-end European, American and Australian/New Zealand fare.

In 2011, VCO acquired California’s Fetzer Vineyards for $234 million, making its US segment 22 percent of overall revenue, up from 12 percent. Exports have doubled since 2005. And due to VCO’s focus on premium wines, the average export price per bottle is rising, to around $2.40 recently.

VCO’s share price is down about 8 percent during the past 12 months on weak earnings. But earnings and profit margins are expected to improve this year.

A bumper 2012 harvest in Chile. This is driving prices down for grapes and bulk wine, resulting in lower input costs for VCO. About 65 percent of the company’s production is from grapes bought from some 8,000 different growers. Also, this year VCO expects to be fully recovered from the 2010 earthquake in Chile that destroyed 125 million liters of wine across the industry.

Expansion into Asia. VCO was recently deriving 33 percent of its sales from Europe, down from 38 percent, while Asian sales had risen to 8 percent. Between 2005 and 2011, VCO tripled its sales to Asia, to some 1.8 million cases, and in 2010 opened a regional office in Singapore.

Domestic demand picking up. Despite the country’s impressive wine output, Chileans have historically opted for beer as they’ve become more affluent. But this is changing. Wine consumption in the country is now around 19 liters per capita annually and rising.

For fourth-quarter 2012, VCO reported a 9 percent rise in sales, to $284 million, on a 12 percent gain in exports. Trading recently for around $40, VCO shares are priced at about 20 times 2012 earnings, which is the four-year average for the company.