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What is wine’s “hot spot” in Latin America?

July 11, 2012 by Redacción | in Exports, News

Which is the price point in markets in which wine consumption growth is one the fastest in the world? And, what are Argentina’s advantages and disadvantages in these destinations?

A successful business round with Latin American importers, organized by Wines of Argentina, was carried out in Mendoza and San Juan, with great participation from wineries. Countless updated data about markets was collected from this exchange.

Colombia, a market oversupplied with wine labels

In the last ten years, wine consumption in this country has trebled, going from 0.5 liters to 1.5, according to a report by Federación Nacional de Comerciantes (National Traders Federation). Bogotá is the main commercial center (66.2%), followed by Cali (54.4%) and Medellín (46.9%).

Three wine suppliers have divided Colombia up; Chile with 57%, Argentina 33%, and Spain and other countries 10%. Julio Eduardo Rueda, a high-end wine importer in Bogotá and owner of a chain of wine shops, explained that “at the moment, there is an overwhelming oversupply of wine labels that is bringing down the market value.”

Currently, Colombia imports USD 43 million, 250 thousand cases at an average price of USD FOB 29 per case. Therefore, the game is played in the court of the USD 8-9 segment.

With respect to the wines tasted in Argentina, Rueda said that what amazed him the most was the Cabernet:  “you have a winning ticket with this variety. It is extraordinary.”

The report produced by Caucasia for Wines of Argentina indicates that wine exports to Colombia amounted to USD FOB 1,806,668 in the first four months of 2012. As regards average value of 9-liter cases, it reached USD 39.82, suggesting an increment of 13.17% with respect to the same period of 2011.

Peru, concerned about the situation in Argentina

In Peru, wine is the second largest market of alcoholic beverages after beer. Today, consumption grows at an annual rate of 10%.

Luis Carlos Solorzano, a wine importer in Peru working at Distribuciones Andinas Ilimitadas, highlighted: “In Peru, Argentine wine is first by value, while Chile is the first exporter by volume. Peru is a really competitive market; European wines have an amazing price, and we are flooded with Chilean wines.”

He also said that he “was surprised at the quality and development of varieties such as the Viognier, Bonarda and Malbec that are highlighting the difference between regions.”

Today, the ‘hot spot’ in Peru is in the retail price that ranges from USD 4 to 7 per bottle; the other strong segment is the USD 8-10 range. These are the segments that reflect volume figures.  “Chile is better positioned than Argentina as regards volume. Concha y Toro is a great player in restaurants with its inexpensive, easy to drink and fruity wines at USD 5; a lot of European tourists ask for these types of wines,” the importer commented.

Another ‘hot spot’ in Peru is sweet wine (called Borogoña by Peruvians) at a low price.

According to Caucasia, the average price of Argentine wine exported to Peru in this year’s first four months was USD 39.48 the case.

Panama, a high-end market that goes for expansion

Though the Republic of Panama is a small country, with a population of 3 million, wine consumption has trebled in the last five years.

Jorge Ramos, of Latin Luxe, explained that the company is looking for wines for exclusive costumers in Panama. “We are dedicating half a year to introduce Spanish wines that have plenty of opportunities right now, and we are thinking about taking with us some high-value Argentine brands from small wineries in order to start a gradual development; we have access to many places where to sell top-end wines of around USD 200. I’m very much interested in Flechas de los Andes’ wines (the name Baron Benjamin Rothschild carries considerable weight) and Finca Decero’s wines,” he commented.

So, what is wine’s ‘hot spot’ in Panama? Undoubtedly, it is in the on trade, in restaurants and first-class hotels, and for high-end wines, Chef Willy Diggelmann’s cellar, The Wine Bar.

This way, Argentina exported in the first months of the year at an average price of FOB USD 52.30 the 9-liter case, presenting an increase by 25.27% compared to the same period of the last year.

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