Outside competition ‘eating up’ Argentina’s market share

Competition from both New World and Old World wines is ‘eating up’ the market share of Argentine wines in Greater China as the market becomes ever more congested.

Guests attending the World Malbec Day and tasting Malbecs in Hong Kong

Argentine wines, which had enjoyed steady growth a few years ago, have been struggling to keep up momentum. In the last couple of years, exports to China and Hong Kong have sagged. In 2016, Argentina was not seen on Hong Kong’s top 10 wine exporting countries list either by volume or by value based on figures from Hong Kong’s Commerce and Economic Development Bureau.

Meanwhile in China, its market share in 2016 only accounted for 1.1%, dwarfed by its South American counterpart Chile’s 9.5% market share in the country, according to figures from China Association for Imports & Exports of Wine and Spirits.

“There are too many choices of wines available in Hong Kong; wines from other wine countries are eating up the share of Argentine wines gradually,” commented Jennifer Luk, a Hong Kong-based wine consultant and Argentine wine educator, after hosting a seminar on Argentine wines on 21 April; part of the World Malbec Day event organised by Wines of Argentina and Consulate General of Argentina in Hong Kong.

Juan Antonio Barreto, consul of the Argentine Consulate in Hong Kong, agreed and added: “There’s a lot of competition from New World wines like Australia. Australia has the main share of the market because of proximity so we will have to double our efforts to make Asian consumers learn about Argentine wines. We also produce fantastic Shiraz!”

In addition to Australian wines, Chilean wines have also cornered a large chunk of the market share as both countries enjoy Free Trade Agreements with China, while Argentina is subject to the 14% tariff.

Jennifer Luk (standing) giving a seminar on Argentine wines

Consumers’ deep-seated perception that Old World wines are better than New World wines has also hindered Argentine wine’s penetration in the market, Luk stated. Furthermore, their interests are not sustained by product availability and visibility, she added, while noting that the level of knowledge and understanding of Argentine wines among consumers has not been raised.

“There’s still a lot of room for Argentine wine. I think the key is to dedicate our limited resources to educate and let consumers know that there’s another wine producing country in South America, particularly Argentina,” added Barreto. “Comparing the price and value with other wine regions in the world, Argentina has a niche to enter the market.”

Argentine wines’ on-trade performance, according to Luca Luise from Amorosso Fine Wines, is strong, thanks to Malbec’s easy-going character, roundness and fruitiness.

“Malbec is a grape variety that can work extremely well especially in on-premises with food and beverages because it’s so rounded, so fruity. It’s a wine you can drink as soon as you open it, but also can age quite well,” he explained. Three of his Malbec wines won top prizes at the Malbec World Day Competition held in conjunction with the wine seminar on 21 April.

His company sells six to 10 containers of Argentine wines a year to the Hong Kong on-trade, he revealed, the second highest performer after Italian wines on his portfolio.

“I think Argentina has been very consistent in the way they market their wines, while Chile started with very cheap wines, and now they are waking up,” Luise added.

“The only thing we can do is to roll out more education programmes and make changes from within,” said Sherry Pei from Wines of Argentina’s China office. The trade organisation is going to unveil new marketing and educational materials in mainland China including a new textbook on Argentine wines for its certification course called the ‘Argentina Wine Traveller Programme’.