Market Watch, April 2018

58 MARKET WATCH MARKETWATCHMAG COM APRIL 2018PHOTO BY TK TKshipments of Argentine wines in recent years High inflation and a challenging busi ness environment are also impacting pricing strategies for the U S market Inflation continues to be an issue in Argentina with recent figures showing that the new govern ment is far from achieving the reduced infla tion targets they announced last year Lo Prete says Higher energy costs will continue to drive prices up in Argentina Dollar to peso rates are more favorable to exporters today than in recent years and are helping to offset local cost increases Conditions are better than they used to be Guarachi contends Its hard to resolve a problem theyve had for decades and get back to normal low inflation he says But at the least the government is more aware and theyre making work easier for exporters Hedges agrees noting Since the new pro business govern ment has come in things have gotten better But inflation is still at around 20 which makes it tricky to maintain pric ing He adds that Vino Del Sol has been holding the line Regional And Varietal TrendsFirst brought to Argentina in 1852 Malbec is by far the coun trys most planted varietal with about 76600 acres of vineyard plantings across the country according to trade group Wines of Argentina Exports of Argentine Malbec to the U S peaked in 2014 at more than 65 million 9 liter case shipments accord ing to Impact Databank In 2016 shipments increased only slightly to 63 million cases but still are way up from 2006 when Malbec shipments to the U S totaled less than 1 million cases Argentina stretches about 2300 miles north to south and has vineyards in about two thirds of that expanse The coun trys wine grape plantings range from Malbec and Cabernet Sauvignon in northern regions like Jujuy Salta and Catamarca to Pinot Noir and Chardonnay in Patagonia and other southern Diego Lo Prete general manager and senior vice president of The Winebow Groups MundoVino division says the data shows a continued slump for lower end Malbec Declines are largely being driven by the under 10 commercial brands as the trade weeds out the opportunistic Argentine wine producers who flooded the market over the past decade but have no long term strategy Lo Prete explains But were seeing healthy growth among solid producers like Catena and El Enemigo which play in the premium price segments with high quality wines and distinct sustainable strategies for the U S market Kyle Meyer co owner of Wine Exchange in Santa Ana Cali fornia says the signs are good Were seeing lots of movement on wines under 30 he says There are many new players on the scene and recognition of their quality for money A recent spate of short harvests could help propel the move to higher price points The harvest in 2016 was the second smallest in 50 years and 2017 was the smallest says Vino del Sols Hedges noting the sharp decline in bulk Winemaking in Argentina is driven by location Brands like Kaiken Wines fields pictured top left barrel room top right and MundoVinos Bodega Catena Zapata daughter and father pair Laura and Nicolas Catena above are based in Mendoza Argentinas flagship region and the heart of the countrys Malbec production