Vintage conditions push Argentine wine producers to premiumise

31st July, 2017 by Patrick Schmitt

Smaller-than-average vintages are forcing Argentine wine producers to move into more premium segments, according to Trapiche’s Duncan Keen.

2016 was the smallest vintage in Argentina for 54 years

During an interview with the drinks business at Vinexpo Bordeaux last month, Keen, who is marketing manager for the major Argentine wine brand, said that an extremely small harvest in 2016 is speeding up Trapiche’s aim to sell wine at higher prices, particularly in the UK and USA.

“2016 was the shortest vintage in Argentina for 54 years – it was 40% below the average – and this year is also short: we don’t have the final numbers yet but we believe it will be between 15-20% below average, because when the vineyards are so harshly hit they don’t recover in volumes the following year,” he said, referring to late spring frosts that dramatically reduced yields last year.

The low-level of supply was not an issue for wine quality, however, with Keen describing both last year’s vintage and the current one in Argentina as “excellent”, with the reduced yields ensuring wines of concentration.

And it is this combination of low volumes and high quality has meant that Trapiche is “accelerating the plans we had for premiumising”, he stated.

“You could think that smaller volumes and rising costs was a bad story, but we thought, let’s take advantage of this,” he said, referring to Trapiche’s decision to target higher price segments in retail, as well as restaurants.

“The difficult conditions have forced us to accelerate our path to premiumise,” he added.

Consequently Trapiche has been focusing on wines with a free-on-board (FOB) case price of more than US$100, according to Keen, which means those bottles with a $15-25 price in US retail and wines that sell for £10 or more in the UK off-trade.

Comparing Argentina’s position in the world of wine with neighbouring Chile, Keen told db that Argentina must concentrate on higher-priced products. “Argentina can’t compete with Chile on price – the country has far more free-trade agreements, for instance, Chile doesn’t pay tax on wines exported to China or Europe, and we do,” he said, adding, “We believe Argentina has a strategic need to premiumise.”

He also said that he believed there was a great opportunity at the moment for Argentina at higher prices.

“There is a new generation entering the wine market at higher prices than their parents did,” he recorded, suggesting that people were more open to buying pricier products.

He also identified a chance to succeed in the US due to rising retail and restaurant prices of Californian Cabernet, particularly from Napa, which was creating a gap in the market for good Cabernet below $25 – something that he has already discussed with db

Then, turning his attention to the UK, he said that Argentina risked losing money on wine if it failed to move upmarket.

“With the currency devaluation of the pound we must premiumise; in the long term Argentina can’t make money below £5-6 in the UK,” he said.

Finally, he told db that Trapiche was trying to entice sommeliers with more small-scale winemaking projects.

“We need to generate more awareness for Argentina among sommeliers, so we started targeting them last year with lots of small-scale projects; wines that will surprise them,” he said.

Among these are wines from Argentina’s Atlantic coast, where Trapiche has around 25 hectares of vineyards in an area called Chapadmalal.

As previously reported by db, Trapiche the first Argentine company to plant vines in the area when it moved into Chapadmalal 8 years ago. The plantings are the first Argentine coastal viticultural project.

To make it easier for sommeliers in Europe to get hold of such smaller-volume and rarer Argentine wines, Trapiche has now started selling some of its produce to this community of wine professionals directly, storing its more niche labels in a warehouse in Germany.

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One Response to “Vintage conditions push Argentine wine producers to premiumise”

  1. Premiumise. This word has to join enter the annals of Dreadful Words. That said, the articles in the Drinks business are well written and very informative. Thank you and well done, Robin.

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