Focus on Argentina

02 October, 2013

Import delays and hyper-inflation are not what foreign investors are looking for. Across the Andes, Chile does have an unfavourably strong currency for export, but it can at least offer stability. “In a stable country you can have a plan,” says Pulenta. “Here you do not know what’s going on next year. In my working life I have faced big devaluations five or six times. In 2002 it was the worst. It was P1:$1, then the next day it was P3:$1. It’s not that the people do not believe in the wine business here, but every country needs external investment. It’s impossible to be isolated.”

Isolation comes in many forms. Scan the supermarket shelves in Argentina and you will find a huge selection of wines and styles – Malbec, Bonarda, Torrontes, Chardonnay, Cabernet Sauvignon, Merlot, Cabernet Franc, Sauvignon Blanc will all be there, along with any number of blends – but they will be exclusively Argentinian. “We don’t import wines – for economic reasons we have a closed market,” says INPROTUR’s Valicati. “We have a protection of the local market but the diversity of our own wines is huge.” 

For Luis Torres, wine tourism academic and tour guide at Mendoza’s Salentein, access to other world wines is crucial to Argentina’s ongoing development. “Our oenologists, agri-engineers and students should be allowed to experience imported wines. This would give them a chance to see what the world demands from their wine.

“We can still be nationalistic as well as import technologies and wine. [The protectionism] is to protect wine from flooding in from other countries. But it’s not as if Argentinians will stop drinking Argentinian wine,” he says. 

The counter case

Despite the apparent discontent, there are counter arguments and supporters of government policy. One of the effects of increased costs is a wine industry that pays its workers a fair wage – not something that could have been said in years gone by. “Five years ago the biggest cost was grapes and wood, today it is labour – this indicates a maturity in the industry, that it cares about its human resource,” says Alejandro Vigil, winemaker of Catena Zapata. 

Secondly, with unfavourable exchange rates and therefore reduced margins, volume wine is unprofitable to export, so Argentina’s reputation will continue to be one of quality. “It helps the image of Argentinian wine – it keeps the quality high and it’s like a filter,” says Bodega Vistalba’s Pulenta. 

According to Wines of Argentina, in 2012, the average price of Argentinian Wines in the US, its largest market was $39.08 per 9-litre case – which translates as about $10 a bottle in retail. In context, the average price for Chilean wines is around $5 less, with some dropping south of $25 a case. 

“The reality is that Argentina always operated in segments above $37 a box, which is profitable anywhere in the world,” says Vigil. “This sets us apart from the segment which is Chile nowadays, especially $22 the box. Our idea is to compete in premium and super-premium segments. 

“Lower-segment competitiveness is currently difficult unless we make deep structural changes, for example plant Malbec in more productive areas allowing us to lower costs of production. We cannot make wines of $20 the box with grapes from Uco Valley.”





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