Argentine Wine Industry under pressure

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Argentine Wine Industry is in trouble

Lower local consumption, less exports and higher production cost have lead to oversupply problems for most Argentine wine producers.

The government claims devaluation will not help the industry against its competitors which in many cases have already devalued. Ie Australia, Brazil, Chile etc.

Wine sales dropped 7.3% last year according to the Argentine Wine Institute, (INV).

Exports fell 17% and sales to its huge domestic market which is in recession due to a Government default last year decreased 4.14%.

The drop is a consequence of lower wine consumption locally and Internationally. Argentines in 1974 drank 77.2 liters per person per year but that level has dropped 69% over the past four decades to 23 liters per person per year. An huge drop.

Record harvests (last year there was 200,000 more quintals (9,200 tones) than in 2013.

It is estimated there is a glut of 200,000 liters of white wine. In storage locally.

Such a large wine glut would suggest that there is large number of wineries in Argentine. That is no longer true with this year only 414 wineries registered with the INV . This is 55% less than the 918 registries in 2014.

Sadly lack of profitability is leading to lack of investment, which is in turn leading to a drop in the quality of the produced wine and in turn less demand.

Consequently, 35% of this year’s harvest will be juiced rather than made into wine.

The local crisis is part of a trend worldwide of lower wine consuming and the need for more internationally popular varieties. The boom in Malbec production made local producers complacent and they over planted the variety.

Australia and other large exporting nations earlier also suffered the same issues but removed the unpopular varieties and replanted with sought after varieties when this oversupply problem become event.

Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.



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