Argentina article 180x180 - Argentina’s export potential

Last week, CEO Lulie Halstead and Brazil Country Manager Rodrigo Lanari spoke to a packed audience of Argentinean wine producers about market trends in the US and Brazil and how Argentinian wines can perform well in these markets

The current political and economic situation in Argentina is tumultuous. President Macri defied the odds to be elected as the first unambiguous conservative president in late 2015, championing free markets and relaxed government control. However, Argentina and its currency have yet to recover from the ongoing currency crisis. Recently, the country asked for a debt renegotiation with the International Monetary Fund (IMF), and the results of presidential primaries suggested that Macri may lose in October’s general election, provoking the Peso to sink and inflation to take off.

That being said, it isn’t all bad news for the Argentinian wine trade. Following two difficult, low-yielding harvests in 2016 and 2017, the country is now back in good shape to compete internationally. Argentinian wines are typically both high in quality and offer good value for money, which therefore makes them attractive to consumers and the global supply chain alike. There are also a growing number of young and talented Argentinian winemakers exploring new regions, soils and varieties of wine, not afraid to bring fresh ideas to the industry. Paradoxically, because the domestic market is slow, and the currency has dropped in value, Argentina is in a much stronger position to compete in international markets and reap the rewards of this innovation. In addition, as 80% of Argentinian wine is sold domestically, this is clearly a growing area of interest and opportunity for Argentinian producers.

As part of a programme to offer new information and tools to members of the Argentinian wine industry, Wines of Argentina – the body that promotes Argentinian wines abroad – organised the workshop ‘Wine market trends: How and why the wine scene is changing with focus in the US and Brazil markets’. Both Wine Intelligence CEO Lulie Halstead (who specialises in the US market) and I (Country Manager for Brazil) were invited to present at the workshop, which took place at Bodegas Caro in Mendoza in front of a sold-out audience of around 100 guests. Unsurprisingly, the focus was on Brazil and the US as these are the countries with the highest number of drinkers of Argentinian wine (13.6m in US and 11.2m in Brazil).

A key insight to come out of the workshop is that Argentina has been very successful in its positioning of Malbec in both domestic and international markets. But with a global trend of cognitive offloading, where people know less and less about wine varietals due to the information readily available via their mobile phones, one main question facing producers is how can Argentina be distinctive without relying on a single wine variety? The answer, as discussed by Lulie, the audience and I, may be found in a mix of promoting all the wines Argentina has to offer (Torrontés, Cabernet Sauvignon and Chardonnay, and also some other interesting varieties such as Cabernet Franc and Bonarda) whilst still recognising Malbec to be the most popular and established variety.

Another point that was discussed was the need to show value across the entire distribution chain, (especially in the case of the US). It is now important to have a good presence on the digital ecosystem, especially in the case of Brazil, where a quarter of consumers buy wine online. Another strength for exporting to Brazil is the proximity of the two countries as there is a growing number of Brazilian tourists visiting Argentina and many of them visiting wineries.

In the US particularly, Argentina is not yet a strong category (as in the case of many other imported origins as 75% of the US market is domestic wines). Therefore, Argentinean wines have not occupied a clear space on shelves, with the exception of Malbec which anchors a typically modest Argentinean range in US retailers. The truth of the US market is also that there are plenty of bottles competing to be sold in that 25% of imports, and commercially minded retailers will shop around to ensure that their imports range offers the best margins.

The insights discussed at the event align with more general global trends of rising visual impact, maturing consumers and health and moderation impacting the consumption of wine. To compete in a crowded market, strong brands remain an extremely important choice cue for consumers when selecting wines. This will therefore be an area in which Argentina needs to focus its efforts in order to infiltrate international markets.

Despite the social and political uncertainty in the country, Lulie and I both came back feeling positive about the growing interest and engagement of industry members that we spoke to during our visit. One particular comment stood out: Argentina has two of the most important ingredients for a successful market, “the right people and the right place”.


We’d like to thank Wines of Argentina for organising another great event and the Argentinean International Investment Agency for making it possible.

 

Rodrigo 2 250x300 - Argentina’s export potentialImage reading latest newsAuthor: Rodrigo Lanari & Alice Brockman-More

Email: Rodrigo@wineintelligence.com and AliceBM@wineintelligence.com

 

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