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A toast to mendocinos

I propose a Malbec glass of wine toast to all mendocinos entrepreneurs who are making this miracle a reality!

In spite of the horrendous US recession which was extended to many corners of the world, Mendoza and its wineries keeps crashing its own exports benchmarks when it comes to varietal wines. A recently published article in a main argentine journal mentions that fine wine exports are growing at an annual rate of 17%. This is not the case of other types of wines, namely the ones that are less sophisticated. Although a good chunk of the rise in exports relates to Spain, Brazil seems to keep expanding their taste for the good life.

According to the “Ministerio de Desarrollo, Industria y Comercio Exterior de Brasil”, imports have grown close to 33% in dollar terms in the first 8 months of this year. More than half of this increase was due to higher volume. Lucas Lowi with Bodegas Chandon believes that growth is happening around the high end products and not so much at the lower end. The immediate conclusion is that brazilian consumers are willing to pay up to drink it in. And this trend towards more sophisticated product lines can be seen in other segments and in different brands as well. Evidently, Brazil’s continued economic growth has been good to an ever expanding middle class.

Alejando Panighini, export manager for Bodegas Norton, also remarked that about 60% of business with Brazil is based on wines that are FOB priced in the range of $26, completely changing the trading style of prior years. He then mentioned that Norton Malbec DOC and Perdriel were seeing renewed growth as brands in the brazilian market.

According to a research conducted by the Oficina Económica y Comercial de la Embajada de España en Brasilia imports are tagged at around u$d 165 millions a year and about 50% of this represents imports from Argentina and Chile. Not a surprise, considering a population of 190 million in a country that continues to offer great growth prospects going forward.

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Now in the US

The world boom in wine tourism will have you believe that this is a surging and innovative field where fortunes are being created daily. However, at least in the US, any resemblance to such scenario is purely coincidental.

A recent article in Businessweek (October 25/31) details the adventures -and struggles- of more than a few smaller wineries and vineyards. The essence of the article seems to be that this activity is being promoted by local governments with the hope that they can create a small niche industry that revolves around tourism. That is, wine tours that supposedly help create -in turn- more jobs, support local farming and eventually also help increase tax receipts.

The unaware visitor would happily walk the trails of these beautiful vineyards without ever suspecting that sustaining such venture is the invisible hand of the government which keeps sweeping under the rug whatever red is found in the wineries/vineyards’ accounting books.

Some quick stats look impressive: all 50 states now have wineries. Alaska 13 of their own and even Hawai has 5. Since 1975 the number of wineries has grown from a mere 574 to 6,500 today. What is even more impressive is that very few make money. Some wineries interviewed for the piece stated they have never seen a profit in over 2 decades or more. Such commitment to the land is hard to explain unless receiving a check from the government as an aid becomes the ultimate experience.

Which brings me to Argentina and Mendoza wineries. There was a time when -on site- you could just ring any winery to see if there was anyone at the local office, jump on your bicycle and ride to the nearest one for a short FREE visit. It is all organized tours now. I would not say “big business” but business nonetheless. Here, I hardly doubt that this segment is in the same disarray as in the US although I am pretty sure that somewhere, somehow local government aid also falls through the corporate cracks.

Or are these government cracks?

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