Argentina's exports gain respect and sales

Saturday, December 13, 2003

Several countries are picking away at California's strength in the U.S. wine market, but Argentina, courtesy of some of the lowest costs in the business and rising quality standards, is making the greatest gains globally.

A stabilizing economy helped Argentina's exports to the United States surge nearly 30 percent in the first nine months of 2003 from a year earlier, when there was a credit drought.

U.S. consumers, meanwhile, are increasingly paying more for wine, according to the wine consultancy Motto Kryla Fisher, which is based in St. Helena, California. U.S. sales of California wines priced at more than $15 a bottle rose by more than half, to $2.3 billion, from 1998 to 2002, almost equaling sales for wines costing less than $8, a category in which sales are declining.

From 1996 to 2002 Argentine fine wine sales to the United States quadrupled. With 1 percent of the U.S. market, there is room to rise. "Argentina will undercut the competition with quality wine," said Alfredo Bartholomaus of Billington Imports in Virginia, a U.S. importer of Southern Hemisphere wines.

Wine shipments to the United States shot up almost 30 percent from 1996 to 2000, and imports now make up a quarter of all sales. The global share of "new world" blends, like wine from Chile and Australia, is expected to rise to 27 percent by 2006 from 15 percent in 2000, Rabobank estimates.

Which is where Argentina comes in, as it sheds a reputation as a maker of undistinguished wine. (Argentina is the world's fifth-biggest vintner but used to consume most of its production.) Billington's U.S. sales of Catena-Zapata wine, for example, shot up 25 percent in the first 11 months of 2003. Bottles from the vintner can retail for up to $90.

Most important, Argentina's wine marketing is revving up. French names with marketing and distribution muscle, like Rothschild and Arnault, are backing new Argentine export ventures.

"Argentina can now compete with other progressive wine-making nations on its higher standards," said Roger Dagorn, head sommelier at the Manhattan restaurant Chanterelle, after a tasting trip in Argentina.

Investors are noticing. Last year Donaldson, Lufkin Jenrette, the investment bank that is now part of Credit Suisse First Boston, raised its stake in Peņaflor, an Argentine winemaker that makes the top global export Trapiche, to 93 percent from 20 percent, and it is considering a stock-market listing.

International Herald Tribune