Argentinaknown worldwide for its production of Malbec, faces for the second consecutive year a historic drop in its exports of wine. The Argentine wine industry, which was once the international star with the diffusion of its Malbec around the planet, is now in a critical situation, surpassed by other countries that have been able to offer more attractive proposals to the international market. This article aims to try to decipher the causes of this fall in order to better understand what the appropriate response may be to get out of this crisis that, if not terminal, leaves the industry very hurt.
Fall of Argentine Wine in figures
In 2023, Argentine wine exports fell 31.7% in volume compared to the previous year, continuing a downward trend that had already been observed in 2022. This decline represents one of the most significant falls in the history of Argentine wine exports. The impact has been particularly severe on packaged wine, which has seen a 26.8% decline, while bulk wine fell 44.5%. In 2024, the situation has not improved, with a further drop of 15% compared to 2023, marking a worrying trend of continued decline.
In this context, it is important to highlight that the volume of exports to USA, the main historical market for Argentine wine, has been reduced by half in the last two years. This drop has had a considerable impact on the total value of exports, significantly reducing the income of Argentine wineries. The loss of this key market represents a critical challenge for the industry, as USA It has traditionally been a fundamental destination for Argentine Malbec.
But why do we fall even in our historically model market?
“Don’t get high on your own supply”
The wineries Argentinianespecially those producers of high quality wines that today represent a large part of the market, experienced approximately 3 years of an unexpected situation in the local market.
The pandemic, which brought so many inconveniences in practically most sectors, generated a “boom” in the wine sector that was the country’s equivalent to soybeans at the beginning of the century. Per capita consumption rose to 21 liters, and consumers – in the absence of recreational alternatives – dedicated themselves to exploring gastronomy. There was no post during those years that people did not show on their social networks what wine they consumed, and how they cooked sourdough bread. A few of us are still on a diet.
Faced with this situation where consumers found themselves with a surplus to be able to consume for recreation, and said surplus was mainly oriented towards wine, wine companies found themselves overnight with a market that demanded unexpected quantities, also in high segments of price where the companies were profitable.
It was a party. But the world kept turning. As with soybeans, this opportunity seems not to have been taken advantage of.
While Argentina he enjoyed his summer, Spain and New Zealand, among others, were preparing for the day after. In Argentina With a large local market, export markets were neglected. In addition to this, it is added that in 2023 the climatic and logistical conditions were adverse, but that does not explain having lost half of the external market in two years.
Argentina has not known or been able to develop an effective strategy to counter these challenges and consolidate its market. Lack of marketing innovation, insufficient investment in international promotion and a profitable local market have limited the country’s ability to compete effectively.
In addition to this, we can see in numerous articles and analyzes from different foreign media where they attribute the drop in demand for Argentine wine to a decrease in the perception of quality. Especially among young people.
Wineries and Argentine wine promotion organizations should seriously think about whether they have conveyed the image that Malbec is not a high-quality wine. This perception has led the US market to lean towards other regions that it considers to be of higher quality. Everything would indicate that the lack of a clear and coherent strategy to position Malbec as a premium wine has negatively affected exports.
The campaigns of organizations dedicated to the promotion of Argentine wine in the local market (which should be aligned with those for export in the message) have focused on Argentine wine as a refreshing drink under the motto “refreshment.” Here we could go on for several pages, but I will only limit my advice to creatives with the famous phrase of Benjamin Franklin: “Take advice in wine, but decide later with water”.
International competition and attractive proposals
Despite facing adverse climatic and logistical conditions similar to us, other countries have managed to resist these changes and keep your exports stable through innovations and effective strategies, let’s take the following as an example:
Spain: has improved the quality of its wines and diversified its markets. Spanish wineries have invested in technology to improve production and in marketing to position their wines as premium products. In addition, they have taken advantage of international trade opportunities, signing trade agreements that facilitate exports. The promotion of controlled designations of origin (DOC) and investment in wine tourism have strengthened the image of Spanish wines worldwide. In 2023, Spain continued to increase its exports thanks to these strategies, managing to maintain its position in key markets such as Germany, USA and the Kingdom United.
New Zealand: has recorded record growth in its wine exports, driven mainly by high demand for its traditional Sauvignon Blanc in markets such as USA. They have focused their efforts on sustainability and environmentally friendly farming practices, which has resonated well with current consumer trends. Free trade agreements with United Kingdom and other markets have eliminated trade barriers, facilitating exports and strengthening their international presence. In 2023, New Zeeland saw a 23% increase in the value of its wine exports.
They didn’t invent the wheel, they just used it.
Lessons for Argentina
Argentina should take as an example the strategies of Spain and New Zealand. These countries have not changed their main wine proposals: New Zealand continues to lead with its Sauvignon Blanc, and Spain with their controlled designations of origin. In contrast, I have been surprised that some Argentine winemakers are trying to diversify into things with a dubious possibility of success and with even more dubious high-quality image transmission, for example: “Malbec Blanco” (is it a red grape that perceives itself as white? ?) or focus on white or sparkling wines, deviating from the proven potential of traditional Malbec. The key is to improve perceived quality and develop a coherent strategy that positions Malbec as a high-quality wine. Don’t try to sell anything. The chokeholds never worked.
Conclusion
The fall in Argentine wine exports for the second consecutive year reflects a series of internal and external challenges. Other countries have taken the lead with more attractive proposals and effective market strategies, while Argentina struggles to adapt to the new realities of the global market. To regain its leadership, especially in the malbec segment, Argentina It must innovate, invest in marketing and develop a solid strategy that allows it to consolidate and expand its presence in international markets. We must not deceive ourselves with the excuse that “wine consumption is falling in the world”, falls less than 2% while we have fallen almost 50%.
Without these improvements, the declining trend is likely to continue, further affecting the position of Argentina in the competitive global wine market. An industry that was always an example of creativity and productivity, if it does not take the current situation seriously, will be relegated to once again being an industry that only supplies the local market, which after the pandemic is becoming more impoverished and smaller every day.
* The author is a strategic business consultant.
