Harvest and Bulk Wines Market – Argentina

The consistent rise in prices of Argentine bulk wine signals a potential for imports from Chile. Will there be a repeat of what happened in 2016/2017?

Despite the frost in Mendoza on October 5, 2020, and the rains in March of this year, the 2021 harvest in Argentina is still on track and is expected to be healthy and of good quality. It seems that quantity and prices will be the key factors.

 

Based on the weights of grapes reported to the federal government on April 23, 2021, it seems that this harvest is very similar in quantity to last year’s, which, in turn, was lower than in 2019 and 2018. Specifically:

kg of grapes on the same date[i] 2016 2017 2018 2019 2020 2021
MENDOZA 936,597,037 1,237,059,645 1,581,455,664 1,507,813,018 1,427,670,443 1,493,407,662
SAN JUAN 528,151,957 539,217,254 675,124,833 592,425,557 479,366,110 509,307,253
TOTAL[ii]   1,760,443,883   //1,966,033,915    //2,573,392,518    //2,520,452,931    //2,055,725,509 

[i]  Source: https://www.argentina.gob.ar/inv/cosecha-2021/informes-semanales-de-cosecha-2021

[ii]  The total figures are higher because other regions have intentionally been excluded.

Although grape yield is similar to 2020, the price of Argentine bulk wines is on the rise. Long gone are the US$ 0.20/L – US$ 0.24/L generic red wine prices that were being seen in late 2019 (my last trip to Mendoza) and in most of 2020.  At that time—and for a good part of 2020—the price of an average-quality Malbec was on the order of US$ 0.50/L.

Argentina had been a mecca for quality wines at low (USD) prices. But today, prices are averaging around US$ 0.45/L for generic red and US$ 0.65/L for Malbec, with the same qualities and from the wineries associated with the prices mentioned above.

What is the reason for these price fluctuations?

Some of the causes are the economic crisis, coronavirus, and the printing of money[1], which have all caused inflation to increase. As an example, different local wineries have told me that the price of grapes for generic red rose from ARS 9-12 (2020 harvest) to ARS 30 (2021 harvest). It is important to note that in this equation, the conversion rate for the USD is still controlled by the Argentine government, which—by printing money, as mentioned above—has managed to keep it from falling too much[2]. These aspects, along with a few other factors from the local context, are definitely making the Argentine wine export industry lose competitiveness.

Over a twelve-month period in 2016/2017, Argentina imported 60.5 million litres for USD 43 million[3], and according to INV (Argentina’s Winemaking Institute), 1,097 million litres were sold in this same period. This means that imports equated to 5.5% of the total, meaning that the import of Chilean wine was minor.

So, will we see a repeat of what happened in 2016/2017?

For now, the numbers are not attractive enough to import bulk wines from Chile, but it stands to reason that if the price of wine in Argentina keeps going up, some wineries will be looking across the border as a short-term solution.

 

Pablo Moreno

Agronomist Engineer – Chilean Oenologist

Bulk wine broker at www.masvino.ca

 

[1]  Source: https://www.bbc.com/mundo/noticias-america-latina-56597781

[2]  Source: https://es-us.noticias.yahoo.com/peso-argentino-mantiene-ca%C3%ADda-controlada-162639256.html

[3]  Source: https://www.iprofesional.com/vinos/253854-tras-denuncias-por-importacion-de-vino-chileno-con-agua-grandes-bodegas-salen-a-defenderse