Harvest Observatory in Argentina
Source: Ciatti

An overview of what to expect from the bulk wine harvest in Argentina.

General Overview:

The bulk wine market in Argentina has shown steady progress. International demand for Malbec remains constant, with transactions for wines from the 2024 harvest at slightly lower prices than those recorded a year ago. The main markets for Argentine Malbec are North America, the United Kingdom, and Australia, while varietals also have a significant presence in Scandinavian tenders. In the domestic market, demand is steadily progressing, partly driven by some wineries’ decision not to purchase grapes from the 2024 harvest this year, opting instead to buy already-produced wines on the bulk market.

Overall, with a national economy in recession and wine sales in key export markets stagnant, demand for bulk wines from Argentina remains on a downward trend. This has resulted in greater availability of varietals, although some wines with smaller planted areas, such as Cabernet and Chardonnay, may be harder to come by.

About the Zondas:

Winter in Mendoza started earlier than usual this year, but also seems to be ending prematurely. From late July to early August, the region has experienced dry, sunny days with temperatures reaching up to 20°C, driven by the warm Zonda winds descending from the Andes.

This early end to winter could accelerate the vine growth cycle, increasing the risk of frost damage. This has occurred in each of the last 4-5 years, affecting the total grape production in Argentina to varying degrees, which has dropped from an average of 2.5 million metric tons to around 2.0 million tons.

What is The Zonda Wind?

Prices & Exchange Rates:

Export prices have remained stable so far, although they could change towards the end of the year depending on various factors such as possible frosts, local inflation, the exchange rate of the peso, and the level of unsold inventories in wineries.

One of the critical factors to watch is the Argentine peso exchange rate. The government has maintained a “controlled slide” policy with a monthly depreciation of the peso against the dollar of approximately 2%. However, it faces increasing internal and external pressures, from investors and agricultural sectors to the International Monetary Fund (IMF), to let the peso float freely and align it with the unofficial “blue” exchange rate, currently at ARS 1,270+ per dollar (as of September 10, 2024). A devaluation of the peso to its real value could be key in the government’s economic reform agenda to boost investment and export growth. However, it seems the government will opt to maintain controls until securing a new IMF loan.

Key Points:

• Argentina has adequate stock levels for most wines, including all qualities of Malbec.
• International demand remains stable, led by Malbec. Export prices are stable but could fall by the end of the year if the Argentine peso adjusts outside its “controlled slide” policy against the dollar.
• Zonda winds have brought warm, dry weather to Mendoza earlier than expected, potentially accelerating the vine growth cycle and increasing the risk of frost damage.

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LOST VALLEY Bulk Wine / NEWSLETTER – August 2024 *