Argentina exports up by over 40% - decanter.com - the route to all good wine

Argentinian wine exports are up by over 40% in the first two months of this year – while a drop in domestic consumption is causing concern.

Statistics from the government's National Wine Institute show that in the first two months of 2008 wine exports rose 40% over last year in value and 27% in volume. In February alone, exports grew 52% in dollar value.

Exequiel Barros of the Mendoza consulting firm Caucasia Wine Thinking told decanter.com that export trends indicate Argentina will likely boost wine exports from US$470m in 2007 to as much as US$850m by 2010.

'Argentina has a lot of margin for growth if you look at its production capacity. The price of the wines is going up: this year the price is about 8% higher than in 2007,' said Barros.

At the same time, a substantial fall in wine shipments within Argentina in March – down 30% from last year – coupled with rising production costs and inflation, has some Argentine wine producers worried about short-term prospects.

The sharp drop in shipments was due in large measure to a farmer strike that led to road blockades.

But with about 80% of production in the world's fifth-largest wine producer destined for domestic consumption, some winemakers are concerned. The average amount of wine consumed per capita by Argentinians 18 years or older has fallen 38.8% over the last five years.

In addition, rising inflation is contributing to a steep hike in labor and agri-chemical expenses this year. And because of hail and excessive rains, officials said the recently concluded 2008 wine harvest is down 10% in volume.

Still, foreign investment has not slowed. Several Chilean winemakers have recently announced plans to ramp up their investments, such as Santa Carolina, which plans to double its Argentine production capacity this year.

'Argentina continues to be the most economical wine region on the planet. Chilean companies can buy more with their dollars on this side of the Andes,' said Daniel Lopez Roca, director of Argentinewines.com.