Michael Cimini has noticed something unique about wines from Argentina. Cimini, owner of the 4-location Austin Liquors in Massachusetts, says Argentina doesn’t stand out in the minds of customers. Instead, its leading grape variety steers the conversations. “Not many people ask about Argentina as a producer, only about Malbec as a varietal,” Cimini says, noting that the vast majority of Argentine wine sold in his stores is Malbec. Brooke Sabel, director of wine at Gary’s Wine & Marketplace, which operates five New Jersey locations, says nearly all the Argentine wine sold in her stores is Malbec. “It’s a bit harder to get people out of their comfort zone in this category,” she says.
That’s one of several challenges facing Argentine producers and importers. Along with overreliance on a single grape variety, Argentina is also struggling with three straight difficult vintages, high inflation, and intense competition in the U.S. market. “The outlook doesn’t look so rosy,” admits Alex Guarachi, president and CEO of Guarachi Wine Partners. “It’s more competitive than ever. We need to be leading and thinking outside of the box if we want to be successful in a very complex market.”
Big Brand Challenges
Only three of the market’s top Argentine brands—Trivento, Terrazas de los Andes, and Doña Paula Los Cardos—registered increases in 2017. But those brands are generally below the super-premium level. “Demand has stagnated, but that’s mostly among the lower-priced grocery wines,” notes Matt Hedges, president of Vino del Sol. “There’s still growth at the higher end as consumers trade up.” Charlie Plummer, national sales director for Paul Hobbs Wines, sees a similar scenario. “We’re getting slower growth in the $10-$13 range and an uptick in the $15-$20 range,” he says. “And at the luxury tier, there’s quite a bit of interest.”
“The lower-end wines have slowed a bit,” says Dennis Kreps, owner and national sales manager at Quintessential Wines. “Customers are realizing the value of Malbec blends and Cabernets, mainly in the $15-$30 range. People are starting to see that higher-end Argentine wines are worth twice what the domestic comparisons are.”
Diego Lo Prete, general manager and senior vice president of The Winebow Group’s MundoVino division, says the data shows a continued slump for lower-end Malbec. “Declines are largely being driven by the under-$10 commercial brands as the trade weeds out the opportunistic Argentine wine producers who flooded the market over the past decade but have no long-term strategy,” Lo Prete explains. “But we’re seeing healthy growth among solid producers like Catena and El Enemigo, which play in the premium price segments with high-quality wines and distinct, sustainable strategies for the U.S. market.”
Kyle Meyer, co-owner of Wine Exchange in Santa Ana, California, says the signs are good. “We’re seeing lots of movement on wines under $30,” he says. “There are many new players on the scene, and recognition of their quality for money.”
A recent spate of short harvests could help propel the move to higher price points. “The harvest in 2016 was the second-smallest in 50 years, and 2017 was the smallest,” says Vino del Sol’s Hedges, noting the sharp decline in bulk shipments of Argentine wines in recent years. High inflation and a challenging business environment are also impacting pricing strategies for the U.S. market. “Inflation continues to be an issue in Argentina, with recent figures showing that the new government is far from achieving the reduced inflation targets they announced last year,” Lo Prete says. “Higher energy costs will continue to drive prices up in Argentina. Dollar-to-peso rates are more favorable to exporters today than in recent years and are helping to offset local cost increases.”
Conditions are better than they used to be, Guarachi contends. “It’s hard to resolve a problem they’ve had for decades and get back to normal low inflation,” he says. “But at the least the government is more aware and they’re making work easier for exporters.” Hedges agrees, noting, “Since the new pro-business government has come in, things have gotten better. But inflation is still at around 20%, which makes it tricky to maintain pricing.” He adds that Vino Del Sol has been holding the line.
Regional And Varietal Trends
First brought to Argentina in 1852, Malbec is by far the country’s most-planted varietal, with about 76,600 acres of vineyard plantings across the country, according to trade group Wines of Argentina. Exports of Argentine Malbec to the U.S. peaked in 2014 at more than 6.5 million 9-liter case shipments, according to Impact Databank. In 2016, shipments increased only slightly to 6.3 million cases, but still are way up from 2006, when Malbec shipments to the U.S. totaled less than 1 million cases.
Argentina stretches about 2,300 miles north to south and has vineyards in about two-thirds of that expanse. The country’s wine grape plantings range from Malbec and Cabernet Sauvignon in northern regions like Jujuy, Salta, and Catamarca to Pinot Noir and Chardonnay in Patagonia and other southern regions. Until the 1990s, government regulations stipulated that no vineyard could be established outside the traditional provinces, but the laws have since changed and producers are experimenting with new regions, including near the Atlantic coast and far in the south.
As a result, consumers are starting to explore beyond traditional Malbec expressions. “Most people think they know what they’re getting with Malbec,” says Paulo Villabona, beverage director at Chicago-based Argentine restaurant Folklore. “But new Malbec styles have entered the market, as well as other varieties from different regions in Argentina. There’s a lot of curiosity about them.”
Villabona and his team at Folklore like to showcase labels that reflect the latest trends from Argentine winemakers. Offering about 50 South American, Spanish, and Portuguese wines, their list includes some strong value propositions like Cruzat Cuveé Réserve Extra Brut from Mendoza’s Uco Valley ($45 a 750-ml.), the 2013 Colonial Las Libres Rosé of Bonarda Brut Nature from Mendoza ($45), 2010 Tenuis Pinot Noir from Rio Negro in Patagonia ($50), 2010 Zuccardi Q Tempranillo from Mendoza ($65), and 2012 Colome Malbec from Calchaquí Valley in Salta ($60). While Folklore’s wine list does include value wines such as 2014 Santa Julia Organica Malbec from the Maipu Valley in Mendoza ($5 a glass; $20 a 750-ml.), Villabona says most customers come in looking for something at about $60-$80 a 750-ml.
But the preponderance of Malbec in Argentina means that many U.S. consumers, and some people in the trade, still don’t look to Argentina for varietals other than Malbec. Steven McDonald, wine director at Houston-based Pappas Bros. Steakhouse, is enthusiastic about Argentine wine, devoting an entire page of his wine list to Argentine reds. “We always offer one or two wines from Argentina by the glass,” McDonald says. “And some of our bottle placements move at a pace similar to by-the-glass offerings,” he adds, citing the 2013 Tikal Amorio Malbec ($75 a 750-ml.) and the 2013 Susana Balbo Signature Malbec ($75). “We do get some traction with Cabernet-dominant wines, but it’s going to be a real hand-sell as the diversity grows.”
Indeed, it’s an ongoing struggle for producers and importers, many of whom have been pushing a range of varietals for years. “We’ve tried for 14 years to diversify away from Malbec,” says Vino del Sol’s Hedges. “We put a lot of focus on Torrontés and Bonarda, but they never took off. We’re seeing more success with Cabernet Sauvignon, Cabernet Franc, and red blends.”
Guarachi is focused on ensuring that Argentina moves into other varietals. “We’re working on Cabernet Sauvignon in a big way,” he says. “Cabernet Franc is also doing well, but there isn’t a market for it in the U.S. I truly believe that the industry needs to do more. There are good wines from all over the world, so we can’t just be good—we need to be excellent.”
Plummer of Paul Hobbs says the heightened focus on Cabernet Sauvignon is in part a result of California’s rising Cabernet prices. “People have become comfortable enough with the quality from Argentina that they’re willing to explore,” he adds. “The quality in Argentina is there, and the style is very similar to California’s.”
While Malbec is now being planted in higher elevations across Argentina from Salta to Patagonia, Mendoza remains the heart of its production. The fourth-generation, family-owned Bodegas Valentin Bianchi, which celebrates its 90th anniversary this year, has a long history in the Mendoza region. In 1910, Don Valentin Bianchi emigrated from Italy and settled in San Rafael, in the southernmost part of Mendoza. He opened the winery in 1928 and, in the ensuing years, the winery has gained international attention for its fruit-driven wines.
Valentin Bianchi’s most popular wines include Don Valentin Lacrado—a blend of 34% Cabernet Sauvignon, 33% Malbec, and 33% Merlot—as well as Bianchi Brut sparkling wine, created using the méthode traditionelle; the flagship Enzo Bianchi red blend; premium Famiglia Bianchi wines; New Age frizzante wines; and value-priced Elsa Bianchi range. Since partnering with Napa-based importer Quintessential Wines, the portfolio’s popularity in the U.S. has grown. In addition to its San Rafael estate vineyards, which are at an elevation of about 2,300 to 2,950 feet above sea level, Valentin Bianchi also produces from a new estate in the Uco Valley.
About two years ago, Quintessential began importing another Mendoza-based winery with deep roots in the region, Pascual Toso. Founded in 1890 in the Maipu sub-region, the family-owned winery exports Malbec, Cabernet Sauvignon, and Syrah varietals in its Alta super-premium tier, a Malbec and Cabernet in the premium Reserva line, and a Chardonnay, Malbec, and Cabernet in the value-priced Estate tier. Pascual Toso’s most popular wine in the U.S. is the Estate Malbec ($14 a 750-ml.). “Mendoza has a continental climate, with the Andes Mountains to the west and the Atlantic Ocean more than 650 miles to the east,” says Felipe Stahlschmidt, chief winemaker at Pascual Toso. “The altitude of our vineyards is another important factor, rising from 2,000-5,200 feet above sea level.”
For three decades, Paul Hobbs has been a key player in building the Argentine category. Hobbs established the Viña Cobos winery in Mendoza two decades ago, with importer Paul Hobbs Selections now focused primarily on the wines he creates in Mendoza. Viña Cobos produces a range of styles and price points, from the introductory Felino range ($20-$22 a 750-ml.), which is the largest tier by volume in the U.S., to the Bramare Vineyard Series and Bramare Vineyard Designate series, as well as the luxury small-production Cobos wines. But the company notes that while the sub-$15 pricing tier is struggling in the U.S., wines above $15 a bottle are thriving as consumer education grows.
Regions like Tupungato and high-elevation areas like Patagonia and Salta are starting to rise in prominence. “Winemakers in Argentina are moving away from overly fruity Malbecs to wines with more minerality and better balance and acidity,” says Folklore’s Villabona, who says he’s recently tried Argentine Barbera and Petit Verdot. “There’s a lot of Old World style with New World approachability.”
Although they grow a much smaller proportion of the country’s grapes than Mendoza does, both Patagonia and Salta are starting to raise their profile. Paul Hobbs Selections imports El Porvenir de Cafayate, based in Salta, as well as Alto Limay from Patagonia. “In Patagonia, you’re seeing a lot of talk and excitement about Pinot Noir,” says Michelle Schromm, sales and marketing ambassador for Paul Hobbs Selections. “Salta, in the north, has some of the best-quality Torrontés in the country.”
Kaiken Wines was founded in the late 1990s by Aurelio Montes, Sr., winemaker and founding partner of Chiles’ Viña Montes, after visiting the Mendoza region. Kaiken—which refers to the wild geese that fly over Patagonia between the two countries—includes the top-selling Estate Reserva Malbec ($12 a 750-ml.) and Ultra Malbec ($20), and the small production Mai ($70), a 100% Malbec wine sourced from 125-year-old vines.
In general, Argentine winemakers have begun to focus far more on the growing sophistication of U.S. wine consumers. “There was a time a few years ago when things were pretty tough for Argentine wines over $20, with only a few exceptions,” says Kreps of Quintessential. “Now they’re moving from the wine list to the retail shelf, and retailers are getting behind them.”