ARGENTINA: Variety show

As Argentina picks up on international vinous trends, so consumers are beginning to warm towards the category. Fionnuala Synnott examines the country’s diverse offering

Rosé wine is growing. This, in itself, is not news, but, in the context of the Argentine category, it is. Statistics from Caucasia Wine Thinking show that volume sales of rosé wine have doubled in the past year, from 1,527 9-litre cases to 3,136. This growth is in keeping with market trends but is also driven by Argentina’s use of varietals. Malbec produces more supple, fruit-driven rosés, which appeal to the modern-day consumer. “Concerning rosé, the category is growing and there are excellent conditions in Argentina to produce such a wine, using different grapes such as Malbec and Shiraz,” says Ricardo Rebelo, vice president and CEO, Finca Flichman.

Meanwhile, volume sales of Pinot Grigio are increasing rapidly. This is unsurprising, given consumer demand for the varietal, but it indicates that Argentina is in touch with the market and is picking up on consumer trends in a way that it hasn’t before. “As a country,
we are developing a better understanding of what type of wines and styles are preferred by consumers. The growth in sales seems to have been driven by increased interest and desire from the consumer, and by the professional approval Argentina has received for its wines from both the trade and wine press,” explains Walter Carol, export director for La Riojana cooperative. “Argentina is definitely picking up on trends, witness the growth of rosé,” adds Wines of Argentina’s James Forbes.

According to José Alberto Zuccardi, director of the Familia Zuccardi winery, Argentina is quicker to react to the market because its attitude is more international. “It’s not just commercial people, oenologists and agronomists are also thinking in a different way. 15 years ago, they were just focused on the domestic market. Now, they are considering the whole picture. It has changed totally.” Greg Wilkins, director of Brand Phoenix, has noted a more UK-friendly approach. “Before, Argentina was exporting principally to North America and its wine styles were made accordingly. Now, knowledge of the UK market has transferred back into the wines in Argentina.”

However, some producers believe that, rather than Argentina becoming more marketing savvy, it is consumers that are becoming more comfortable with the category. Finca Flichman’s Rebelo  comments: “In the last couple of years, Argentina has improved the quality and consistency [of its wines] as well as making its offer more and more attractive to the consumer.” Pablo Ghiorzi, export manager at Finca Las Moras, attributes this heightened consumer awareness to tourism: “Argentina has become the new hotspot for British tourists, which has helped to increase awareness of Argentine wine in the UK.”

Although there is no doubt that Argentina is more switched on commercially, it cannot respond to all of consumers’ current demands. “Mendoza is a key area for Argentina but, with 25ºC at night and 45ºC during the day, it is not a prime climate for growing light, crisp, Sauvignon Blanc, Pinot Grigio or Pinot Noir,” observes John Osborne, national account manager at PLB. People are therefore looking to Patagonia where temperatures are lower and strong winds make for a longer ripening season. “But the costs of bringing the fruit from Patagonia to Buenos Aires are very high and the wines are not delivering at the price. I haven’t seen anything that knocks the spots off other countries,” he continues.

Majestic Malbec
Although rosé is an obvious crowd pleaser, the most popular Argentine wine is red. According to Maria Ines Pina, UK brand manager at Trivento, this is down to new consumers entering the category via Malbec. “Malbec is still driving the category. It is the entrance to Argentina.” Amelia Nolan, MD, Argento, agrees: “There is a growing understanding and awareness of what Argentina is capable of. People have started to understand Malbec and its connection with Argentina.”

UK consumers, now familiar with Malbec, are slowly beginning to realise that Argentina has other varieties. Ghiorzi, of Finca Las Moras, says: “Argentina is now coming into its own as a mainstream wine region. Consumers are becoming more aware of the strengths of key grape varieties.”

“Argentina is Malbec and Torrontés but it is also diversity,” says Zuccardi. Carol, at La Riojana, agrees: “Argentina is different and offers diversity. We can offer the consumer a never-ending range of different blends and styles.” The downside to diversity is that consumers can get confused and are not always familiar with what’s on offer. This is the case with indigenous varietals such as Torrontés, which Graham Cox, sales director at HBJ, describes as “a bit too exciting for the UK palate to be drunk in any quantity”. So far, the grape has only been successful (in the UK market), when blended with either Chenin Blanc or Chardonnay. Brand Phoenix’s Wilkins explains: “Torrontés has potential as consumers are getting into more aromatic wines that are naturally lower in alcohol. But consumers still need the security of a known varietal.” A single varietal may be more successful at the higher end of the market. Both Trapiche and Trivento are hoping to introduce a premium Torrontés in the near future. But Rebelo, at Finca Flichman, thinks there isn’t enough quality Torrontés being made: “Torrontés is a grape that promises a lot aromatically but in the mouth can be disappointing. There are a few interesting Torrontés from Argentina, but you cannot build a category with a few wines. The remaining ones have no international potential.”

Argentina has a wide range of varieties on offer, including the fashionable Pinot Grigio. But those in the know dismiss this as a temporary blip. Argento’s Nolan comments: “Of course, we are seeing growth of Pinot Grigio and rosé but the growth of Malbec is more important for Argentina.” Rebelo does not see great potential either: “Pinot Grigio is becoming relevant, as a niche approach, but Argentina has a small percentage of hectares planted with this grape, which makes it impossible to foresee future growth for this varietal.”

In fact, producers see greater potential for Sauvignon Blanc than Pinot Grigio, despite competition from other countries. Rebelo comments: “In forthcoming years, Sauvignon Blanc will become an interesting variety for Argentina, especially if it’s from the higher altitudes. It seems there is space for Sauvignon Blanc from Tupungato. This is not a generic Maracujá jammy fruity Sauvignon, but a sophisticated one.” According to Cox, at HBJ, Sauvignon Blanc in Argentina has good varietal character with intense, tropical, rich fruit, due to longer ripening on the vine at altitude in Mendoza. “Argentina’s big challenge is to knock the big hitters, such as New Zealand, off their perch”. However, Ghiorzi, at Finca Las Moras, does not think competition is an issue: “Consumers are always looking for variations of their favourite grape varieties, and are willing to try those from different countries, so there will always be room for more competition.” In fact, Las Moras’ Black Label Sauvignon Blanc has just been listed in Morrisons.

Argento, the brand responsible for driving growth of the Argentine category, launched a Sauvignon Blanc in its Tarquino range. Nolan still sees potential for growth. “Obviously, New Zealand and Chile have done an amazing job but they have opened up an enormous category with great potential.” One of the advantages of Argentine Sauvignon is that it is cost effective. Forbes, at Wines of Argentina, says: “Argentina can bring in Sauvignon Blanc cheaper than New Zealand.”

When it comes to the competition, Matias Bauza, PR manager at Salentein, is philosophical: “Coming out with a Sauvignon Blanc means you have to compete with great producers like France and New Zealand. However, we have the opportunity to grow this varietal at high altitudes. This gives Argentina the competitive edge needed to measure itself against the benchmarks of these countries.” Ensuring the consumer is informed about the great quality of Sauvignon Blanc that Argentina can produce, especially at high altitudes in Mendoza, is therefore vital.  

But others think that focusing on Sauvignon Blanc, at this stage, would be a mistake for Argentina. Zuccardi comments: “At the moment, Sauvignon Blanc is not one of our strong varietals. I’m not saying there’s no future for it but it should not be our main focus.” La Riojana’s Carol agrees: “I see potential for growth for Sauvignon Blanc, but I believe we can only really grow in the categories where we are strong and in the categories where we already have an advantage. For me, the category that has the best potential for growth is Torrontés”.

Beautiful Bonarda
Bonarda is another varietal little known outside Argentina. Although often used as a cheap means of injecting fruit into blends, Bonarda may have a future as a single varietal. Ghiorzi,  says: “Bonarda is a real easy-drinking wine, this style will always have a future among UK consumers. Bonarda is a natural progression for Merlot drinkers, and, as awareness of the grape increases, a trend will start to develop.” Rebelo adds: “Bonarda has great potential. In the past, it was used to support blends coming from vineyards with higher yields, but now some companies, like us, are working more and more on the grape and the potential really exists.” HBJ sells 100 cases a year of its Broquel Bonarda to the on-trade, largely thanks to its “huge structure and rich fruit”. Zuccardi  also thinks Bonarda has a future as a varietal wine. “We use 1979 plantings from a zone in Zaragossa in our Serie A. Bonarda can be very elegant when the vines have balanced themselves but you have to wait for the vine to stabilise itself in order to get good concentration. Bonarda doesn’t have an image among international consumers, so there is still everything to play for.”

But PLB’s Osborne thinks this lack of image means Bonarda can only be successful as part of a blend: “Bonarda is great, and is very juicy when young. It is fantastically appealing to UK consumers. But calling it Bonarda doesn’t do anything for it – it needs another vehicle to trade into.” Wilkins agrees. He thinks the only way to introduce it successfully is to blend it with a well-known varietal. “Bonarda has a role to play in shifting bottles but Argentina won’t base its sales on it.”

Argento’s Nolan observes: “Bonarda could be the next Malbec, but we have to get Malbec right first.” With so much diversity, it is tempting for Argentine producers to try and bring all of their offerings to market at once. But this, says Nolan, would be a mistake. “Categories that have one or two varietals have been successful. If New Zealand hadn’t focused on Sauvignon Blanc it might not be where it is today.” Consumers are only beginning to learn about Argentina. “With 1.5% market share, Argentina has a long way to go to build up the category. We are still small and have to remain focused. It’s OK to have diversity at higher price points, especially for on-trade customers, but as far as getting the message to a broad base of consumers, we have to have one key message – Malbec.”

Turning point
Argentina has obviously made significant steps in improving the quality of its varietal wines and raising their profile. But despite having a diverse range of well-made wines, Argentina’s key competitive advantage, in the UK at least, remains its low cost base. Osborne comments: “As the RRP of wines from Chile, Australia, New Zealand and France goes up, buyers will still have to service the value end of the market, as this is where consumers will move to. Argentina can do that value end well. If it can grasp the value end of the market it can create loyalty with good quality wines around £4-£5.”

But this does not mean growth in the category will be fuelled by unsustainable pricing. “Past growth spikes were driven by very low price points but, going forward, we will see more balanced growth with brands becoming stronger and more sustainable”, says Wilkins at Brand Phoenix. Forbes, of Wines of Argentina, agrees: “Most companies are seeing an increase in average price to a proper sustainable level.”

Bauza, at Salentein, thinks we are at “a turning point in the development of the Argentine category”. He adds: “We have watched Argentina develop steadily over time by simply serving continuing worldwide demand. In general, the worldwide interest in Argentine wines has progressed a lot in the last few years. The UK has definitely played a positive part in this growth. From January to May this year there has been a 7.6% increase in exported cases to the UK compared with the same period last year.” Forbes adds: “Retailers are picking up on trends and exploiting them leading to new listings in grocers and multiple specialists. On an anecdotal level, people know more about the country and are going out there. We are at an interesting stage of our development.”

In fact, Brand Phoenix’s Wilkins believes the category’s potential outstrips its current growth. “It’s all about getting the message across and placing greater emphasis on Argentina’s diversity of wine styles.”

db © August 2008