Wine Talk

Snooth User: Charles Emilio

Which new world wine exporting country will hold the biggest market share in the USA in 2020??

Posted by Charles Emilio, Feb 1, 2010.

Which new world wine exporting country will hold the biggest market share in the USA in 2020??


Reply by GregT, Feb 1, 2010.


Although if we finally get some nice global warming going, maybe Canada.

Reply by Charles Emilio, Feb 1, 2010.

I believe it will be Argentina.

- Argentina is generally associated as a producer of quality in just about everything they produce, from fashion to food.
- They are located close to the US
- They have a massive land mass and are planting varietals that should be consistent by 2020. Due to the size of the country I would also expect a lot more international investment into the country.

As for the other new world producers,
It appears Australia is up the proverbial creek and I expect them to focus their efforts into China. Chile will gain ground, and so will South Africa...but I think Argentina will be up the top

just my thoughts..

Reply by GregT, Feb 1, 2010.

Charles -

Argentina isn't really "close" to the US when it comes to wine. The wine has to go through Chile then get on a boat and go through the Panama Canal to get to New York. Loading in CA and trucking cross country makes the wine cost much more. Right now we figure on about 2 months to get a container in from Argentina to New York.

A part of those delays are because the government is completely corrupt. Corruption tends to stifle growth. Even worse, the economy is a shambles. The only people who invest are foreigners because anyone in the country w money wants to hide his wealth. In Argentina, wealth is taxed. Anyone with wealth must have exploited the masses, so his wealth gets taxed. The problem is that part of that may be true - Argentina was ruled by the generals and dictators, but they're still angry at the landowners and don't seem to realize, or care, that you can't revile entrepreneurs and at the same time, create a vibrant economy.

As far as the land mass, most of the country is dry and most of it is too hot. They are too close to the equator to be growing grapes, which is why their vineyards are the highest on earth. But that fact means that the largest part of the country isn't going to be producing grapes. The vineyards are clustered on the far west coast.

Finally, they don't have the depth of experience that Australia has. Paul Hobbs or Michel Roland can fly in and look at some new vineyards and tell them how to make wine, but that's not the same as someone who's family has been working the vineyard for over a hundred years. Although grapes were brought to Argentina hundreds of years before Australia, the culture that was established was not the free-wheeling Anglo-Saxon everything goes culture of Australia.

As far as quality - to save their lives, it seems like the Argentines cannot produce a decent cheese. I have some in the fridge right now and I'm trying to figure out exactly what to use it for. Seems weird because they have great ice cream!

Reply by dmcker, Feb 1, 2010.

I'll vote with you, Greg, for Australia. Canada doesn't have the depth of expertise and ingrained dirty-fingernail generation-to-generation commitment that is in that red dirt and blood of Oz, even if global warming continues to get worse. The Aussies know how to grow a whole range of varietals to very high levels of quality, have all sorts of other technical knowhow, and a lot of practical, down-to-earth can-do spirit.

New Zealand is as good a candidate as South Africa, but they still have a long ways to go. Chile is even more likely than Argentina in my mind, because of the progress they've made over the past two decades and because their political situation and economy are more stable and just plain better. If I was putting together a country risk portfolio on all these New World winemaking countries we're discussing right now, Argentina would end up being one of the two riskiest. Australia just needs to sort out its stylistic focus, and deal with the world economy like everyone else. Argentina, on the other hand, has to deal with the political instability behind that corruption, and all the dynamics of flipflop change regarding social and economic policy that may possibly ensue over the next decade or two. And that's only internally, before (or while) having to deal with changes in the world economy.

Reply by Charles Emilio, Feb 1, 2010.

Excellent response Greg. Got me laughing.

I for one am definitely not a fan of Argentine wine (I even made a topic a few months back asking for non-malbec recomendations)

One has to be impressed with their export growth into the US market in the past few years. I believe it's roughly 35% per annum.
The malbec craze seems to be picking up momentum too. If any california producers starting pulling up their cabernet's and planting malbec then the craze will be here to stay and Argentina's position will strengthen as they set the benchmark.

As for the Aussies, I haven;t heard anything positive about them in the past 24 months.

You are probably right though, they will still most likely maintain their market share however I can definitely see Argentina's market share strengthening

Thanks for enlightening me about the Logistical issues.I had assumed it would have taken 4-5 weeks for a container to come up the coast.


Reply by zufrieden, Feb 15, 2010.

Australia has certainly been an engine of growth since the 1990's - doubling production over the past 12 years or so. If the irrigated reclaimed desert and steppe that makes up the major premium wine districts of Australia can withstand the droughts, brushfires and burning ultraviolet radiation of the last few years and withstand even greater onslaughts in future, Australia might still be the ticket. I doubt it, however and would have to go with Argentina and Chile. Here water is less a problem and altitude can substitute for temperate growing conditions.

Yes, political considerations are there, but since when has unstable democracy or even tin-pot dictatorship ever stood in the way of export capitalism? I share the concern over Lake Malbec and would prefer a less rustic red to predominate in the Argentine, but trends have a habit of taking on a life of their own.

Too bad for us, I suppose.

Reply by GregT, Feb 16, 2010.

So here's an update. Boat left Monday, I'll let you know how long it takes to arrive. Should be six weeks to New York. That's AFTER it went thru Chile from Mendoza. And guess what? Prices are going up. They've got crazy inflation so producers have three choices

1) suck it up and take a reduced margin

2) increase prices to make up for currency that is now at a different exchange rate than it was a year ago

3) get cheaper grapes or otherwise cut costs to maintain margins

What people don't realize is that over the past few years, many producers have taken route number 3. They are aided by the amount of juice available, so careful shopping may allow them to keep their quality fairly steady by varying grape sources.

But not everyone can or wants to do that. Last issue of Wine Spectator for example, listed a number of Argentine wines at the $100 level. I don't know who will buy those. The relation of the Argentine economy to that of the rest of the world is not helping them these days.

Zu - as far as export capitalism, I agree. But keep in mind, you aren't necessarily talking about capitalism. The leaning in Argentina is for socialism, which has a way of destroying exports. Of course, I'm not entirely sure they have any idea at all, unfortunately. As far as potential and winemaking ability, I'm with you guys. I just think non-wine related forces will keep Argentina behind the pack. Too bad because a century ago they were something like the fifth wealthiest country in the world.

Here's a recent item:

Reply by Rodolphe Boulanger, Feb 16, 2010.

Are we talking market share by value or volume?

France holds almost a third of the US import wine market by value, but less than 15% by volume. Italy and Spain have pretty equal value to volume ratios. So France's 17% discrepancy between value and volume is made up for by the New World's ~17% discrepancy the other way - Argentina, for example, has 10% of volume, but less than 5% of value. Are the New World countries going to be able to continue their growth in the volume markets? Or will they finally figure out how to crack the high value market in a significant way as the New World consumers of the 1990s and 2000s grow up?

Here's an interesting chart to help those of us who are visual types.

Reply by zufrieden, Feb 16, 2010.

I think that cracking the quality line-up will take time - possibly a generation or more. The growth in consumption overall is being driven by a number of factors including travel, television, the internet, and higher educational attainment. Wine consumption is looked upon as a comparative mark of sophistication not unlike that associated with the ability to quote poetry or appreciate art and fine cuisine.

Since not everyone has an educated sensibility mated with copious amounts of lucre, there is a demand for low to mid-rank wine that provides some upside in terms of the quality to price ratio. While admittedly not everyone can break into the high stakes wine game, that quality to price ratio (rather than value denominated solely in terms of dollars to volume) has an sanguine effect on overall demand - with the exception of that for the very best wines where there is little dispute over top shelf quality.

But there is room for new entries into the high stakes game - we've seen this before in California and Australia. There is no reason why some 100-300 dollar Argentine and Chilean wines can't be competitive with similarly priced products from France and Italy - especially if the quality to price ratio proves ever more important in future (as I believe it will be).

With sufficient investment and seriousness of intent, the quality of South American producers (and yes, there are some) will move away somewhat from the mass market in much the same way that Australia and California did a few decades ago. Masss markets have a habit of shifting to locations of low production. Where is the next wine lake to be excavated? Well, I leave that to you to ponder but India, China and other countries in South America come to mind. We'll just have to wait and see if the market grows sufficiently large to warant such change.

Reply by GregT, Feb 16, 2010.

Interesting question.

France is in a class of its own because people with money and no knowledge want the safe haven of Bordeaux. Buying those is a little like buying Treasuries. Everybody respects them so they must be good. That skews the numbers though. And there are a few people who buy high-end Burgundy, but that market is much smaller. If you take the classified growths/vineyards from those two areas out of the picture, I wonder what the French value/volume looks like. They produce oceans of wine down south and much of those aren't in the $50+ range.

In Argentina, in 2005/6 they had 2.9 metric tons produced, in 2009/10, there were 3.4 metric tons. In terms of juice, there were 6600 thousand hectoliters of white and 8600 thousand hectoliters of red wine produced in 2005, for a total of just over 15.2M. But in 2008/9, there were 5200 and 10,100 respectively, for slightly more, at about 15.9M hectoliters.

In addition, vineyard plantings increased. So what is going on? Why are there more vineyards and more grapes produced, but similar amounts of wine?

Because the government caps the production of wine at around 15M hectoliters, give or take. Mostly give if you grease the right palms. As a result, in Mendoza, only 30 percent of the juice goes to wine production.

As everyone knows, if you cap production below demand, the price goes up. That's why rent control causes higher rents and that's why the government in France is always worrying about yields and doesn't allow new plantings, and that's what the government in Argentina is trying to do, e.g. create artificial shortages to encourage price-gouging.

The problem is that first, there are alternatives, and second, marketing history is on the side of the French. They've been building Brand France since WWII and before, selling themselves and their products as the epitome of chic. So they can collect higher prices in some cases and that's why they can sell their Bordeaux futures. That also helps carry the lower end.

In Argentina, they were just defaulting on their bonds a few years ago. They don't have that same mind-share in the US, and most people who want Argentine wine only want malbec. So life isn't as easy for them. I think they'll kill their business if they try to push prices higher. And higher prices are not going to benefit the economy or the vast majority of producers. There are a few thousand producers. Ten of them account for 21 percent of Argentine wine exports.

Australia on the other hand, is free of those interferences. Thus, while the high-end is suffering right now, I think those folks will pull themselves together nicely.

Reply by Rodolphe Boulanger, Feb 17, 2010.

The average retail price of an imported bottle of wine in the US is still well below $10 (I can't find the latest figures to give a precise figure). The next growth opportunity for New World producers is in the wines above $15 and especially above $20 segment. Sales in these segments have been crushed by the recession, but will come back. Historically, Chile, one of the early New World pioneers of the 1990s has had a hard time getting into this segment in a big way. Then it was the same for Australia. I haven't seen people graduating from Yellowtail to $25 Aussie Shiraz.

The first growth Bordeauxs and top flight Burgundies have enormous prices, but their sales volumes are relatively miniscule. It is the oceans of Sancerre above $20, Pouilly Fuisse above $25, Champagne at $30 to $45 and "intermediate" Bordeaux that is keeping the French wine market (and yours truly) afloat right now.


Reply by zufrieden, Feb 17, 2010.

@RBoulanger. Well, of course the issue of who provides the all-important mid-rank wine - where the quality to price ratio is generally middle-class sensible - is a very, very complex (though fascinating) one. I can't deny that Argentina and Chile are still working on the 15-30 dollar segment in the US and Canada; that's the price point that begins to improve the bottom lines of up-and-coming wineries making it possible to consider production of a premium wine or two. The plain fact of the matter is that the 20 dollar Argentine Malbec (say) does not surpass the quality of the 10 dollar variety with sufficient frequency to warrant a shift in buying by the bottom-feeders. And stagnant wages over the past 15 years in North America have not helped the average household make the switch easier.

And those that graduate to the $25 range will first gravitate toward the growing oceans of A.C. wine like Pouilly-Fuisse as offering the best apparent opportunity of value and class for the dollar. That's sometimes a pity, but is to be expected.

(Incidentally, those oceans of Pouilly-Fuisse and Sancerre may prove a probelm to France in the long term. The same over-extension of production in Champagne and Chablis has brought forth murmurs of disgruntlement about the watering down of once good value and good quality wine. But if this is so, then we might expect some competitors and copiers to sally forth and offer significantly better quality for the same price. It is precisely this kind of market response that I'm hoping for, but perception of quality must change first.)

Finally, with regard to the minuscule but revered production of top flight Bordeaux and Burgundy, this small demand segment will remain intact for years to come unless some tidal wave of scandal, dumbing down of quality or ecological collapse occurs. But I don't see the mere fact of established quality as a barrier to competition from the New World in premium wine production. That premium segment - Old World or New - is very small and self-contained. Most collectors will search the world for anything of quality or interest - regardless of provenance. If they happen to be critics (Parker, par example), they can also create demand for particular styles within the confines of wine-making excellence. So perhaps premium wines will emerge from all creditable wine regions with the passage of a sufficient interval of time.


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