More harvest than in 2023, but below average.
How can it impact the internal and international trade of bulk wine?

In a harvest that is much closer to the average of recent years, and that definitely moves away from catastrophic ones like that of 2023, a consequence of frosts, Mendoza ended up reaching 13.9 million quintals. Almost two million more than forecast, and the vineyards of this province became the revelation.

The Big Question

Now,… the big question that the sector is asking is:
“What will happen in the domestic market and will this harvest, slightly above expectations, have any kind of expectation on prices, imports, and sales?”

Originally, it was thought that with large stored stock and a fragile domestic market, export prices would be lower for 2024 wines compared to 2023, especially after the great devaluation of December last year.

However, harvest wines continue with a slightly elevated price, as: – The peso devaluation increased the price of imports, – Energy bills increased 500% between January and June, – And inflation in the first half has eaten away the competitive difference that the devaluation had originally created.

Consequently, the standard price for 2024 Malbec starts at USD 0.85-0.95 / liter, above the price at which the 2023 harvest ended the previous campaign, of USD 0.75-0.85/liter.

According to Bodegas de Argentina, total exports of wine and must from Argentina fell 31.7% throughout 2023, from 370.6 to 253.1 million liters.

Wine exports alone fell 31.2%, a drop led by bulk (-44.7% to 43.1 million liters) ahead of bottled
(-26.6% to 162.2 million liters).

While bulk exports: –To the leading market:
– The United Kingdom, remained stable (-1.4% to 26.7 million liters).
– They fell sharply in the case of the United States (-80.6%).
– Germany (-10.1%).
– France (-51.7%).
– Denmark (-43.1%).
– And Sweden (-18.6%).

Export volumes of bottled still wines to main destinations decreased:

Statistics show that Argentine bottled product is losing market share to competitors from the United States, United Kingdom, and Canada. Meanwhile, INV statistics showed that exports of wine and concentrated must in January-April were 2.2% below the already low figures of 2023.

Domestic consumption continues to suffer amid Argentina’s recession: Bodegas de Argentina statistics show that domestic shipments in January (-9.4%), February (+1%), March (-5.2%), and April (-11.1%) struggled to maintain their already lower levels of 2023.

Doing a bit of Futurology

The official peso, currently at ARS 915/dollar, is expected to suffer another significant devaluation at some point in the second half of the year. But the Milei government is waiting for its economic project to begin bearing fruit and improve Argentine competitiveness without the need to devalue.

Difficult situation, as it could only achieve this with a significant tax reduction, in a context where the government clings to keeping public accounts in order. As in Argentina’s neighboring country, Chile, winter has begun early.

In May, the city of Mendoza has had temperatures close to zero degrees and heavy snowfall throughout the Andes mountain range, much earlier than the official start date of winter, June 21. The border with Chile has been intermittently closed, although, so far, only for a day or two (as of July 3, ’24). The cold conditions allow for a good rest for the vines and the snow layer will be useful for water reserves, but these benefits could be counteracted if the La Niña weather phenomenon returns before the end of winter, as some predict.

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Editorial Lost Valley – Julio 2024 *
Fuentes:: Los Andes – Diario – Informe CIATTI