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News - 01.07.11

Latin America: Markets for our Wines

The eleven buyers from Colombia, Costa Rica, Guatemala, PerĂº, and Ecuador who visited Argentina and had business meetings at wineries in Mendoza and San Juan returned to their countries, having made a large number of contacts. After several interviews in various wineries, they will now set about analyzing the available options to later place their orders. The Latin American markets offer great opportunities for Argentine wines.

 The eleven buyers from Colombia, Costa Rica, Guatemala, Perú, and Ecuador who visited Argentina and had business meetings at wineries in Mendoza and San Juan returned to their countries, having made a large number of contacts. After several interviews in various wineries, they will now set about analyzing the available options to later place their orders. The Latin American markets offer great opportunities for Argentine wines.

In Colombia, for instance, wine consumption has tripled over the last 10 years, from 0.5 to 1.5 liters, according to a report by the National Federation of Merchants. This is the result of the efforts made by the large supermarket chains and of the growth of the local gastronomy. The penetration of wine into the mid-end consumer market is another important step forward. Only five years ago, wines were mainly consumed by high-end groups. The new scenario opens up novel possibilities for wineries with a portfolio of middle-range wines – in terms of both complexity and price. Recent studies reveal that Colombian consumers prefer red wines, which account for 60.32% of the market. The rest is divided among white, rosé and sparkling wines. Cabernet Sauvignon is the most preferred variety, but this preference responds more to market offer than to acquired taste. In much the same way, Malbec has been gaining popularity since it was introduced into the country, and today boasts the second place. Syrah and Tempranillo have also earned some recognition for themselves.

In Guatemala, a country with a small consumer base ranging between 300 and 350 thousand people, wine consumption has been growing at an annual rate of between 15% and 20%, and has quadrupled over the last 10 years. According to market statistics published by the Bank of Guatemala, wine imports have increased from USD 1.2 million in 1994 to nearly USD 10 million in 2010. Similarly, only ten years ago, 15 international wine brands were available in the market, whereas now that number has increased to 200. This is due to several factors, such as the higher per capita income, the adoption of international consumption trends, the pursuit of healthier lifestyles, business globalization and the growth of tourism, among others.

Costa Rica, in turn, has 4.5 million consumers for whom beer is the most preferred beverage – yet wine is gaining more and more popularity. Imports have shown a 50% growth since 2005, and the annual per capita consumption has increased from 0.5 to 1.5 liters. This is a big step forward for such a small-populated country. Chilean wines lead the popularity list among Costa Rican consumers. However, Argentine wines are steadily gaining ground. Nearly ten years ago, Argentina ranked fifth in popularity. It has now moved up to the second place, outpacing Spanish, French and Italian wines. International tourism has contributed to the growth of wine consumption, since it generates a growing demand for lifestyle products like wine. The boom of gourmet gastronomy has also fostered the rise in wine consumption. Typical wine consumers in this country are mid-end Costa Rican people between 28 and 50 years of age and foreigners, whether they be tourists or foreign residents. The number of visitors, arriving mainly from the United States and Europe, reaches nearly one and a half million per year. They come to enjoy eco tourism. In addition, and for several decades now, Costa Rica has been chosen by many American and European retirees as one of their main relocation venues.

Wines of Argentina talked to Pablo Álvarez Miranda, from the Costa Rican importing and distributing company Sylstore Compañía S.A., founded 10 years ago, and whose business has grown hand in hand with the increasing market presence of Argentine wines.

Pablo Álvarez Miranda pointed out that “this has been an enriching, invaluable experience. Mendoza has a lot of potential, a lot to offer. This is my fourth trip to Argentina and although my company has had the opportunity to represent other brands before, the purpose of my trip is to search for a wider range of labels – in terms of wine categories and quality – to be able to offer more variety to our consumers.” Sylstore Compañía S.A. has its own distribution channels and sells also to restaurants.

Álvarez Miranda added that although Costa Rica is a small market, wine consumption is high due to the large influx of international tourists it receives. “Our middle class is eager to learn about wine and willing to pay for tasting courses. This segment is very interested in getting acquainted with the wine culture. Sometimes we have problems arising from our lack of a pre-existing structure; for example, it would be important to define strategies on how to get information across to consumers.”

Although wine consumption figures in Costa Rica are still low, Argentine wines have a strong foothold in the market: “Thanks to the activities carried out by Wines of Argentina, many wineries have been able to contact us through their distributors. There are already several companies which, with the help of a local importer, are trying to find their place in our market,” reported the importer. Álvarez Miranda describes himself as a flexible and creative person. He strives to attend to the needs of each client, and that is why many companies hire his services: “I’m flexible enough to offer a supermarket the possibility of showcasing a whole product range in record time (including display furniture, market information and the product itself), and this has allowed me to very effectively establish my credentials in the business.”

He said that during this trip “we have seen very interesting things; as I was searching for products to cover a broader segment of consumers I became very interested in sparkling wines.” Álvarez Miranda added that Costa Rica is a nation whose people have a bit of a sweet tooth (as he puts it, “un paladar algo dulcete”) and that “although some of us have developed a liking for premium wines, not everybody is able to really grasp them. So we need to start with wines that are easy to drink, or else, all our efforts will be wasted.” Finally, Álvarez Miranda said: “I think that Neuquén’s idea of producing gentle, easy-to-drink wines to increase their penetration in the market is fascinating. And this, added to the renown of Patagonia, is a very important asset when it comes to introducing new labels in our market.”

Eager to introduce new wines in the Costa Rican market, the importer praised the qualities of Viognier, which has enjoyed great success among both red and white wine lovers. Viognier is “gentle and pleasant in the mouth, and it’s suitable for our climate,” he pointed out. “I’m also interested in Bonarda, and I believe it is a very good idea to explore other varieties in search for a second red country variety option. Although Torrontés is very rich and aromatic, it is still a bit too aggressive to enter our market at this point,” he concluded.

In Cost Rica, the marketing channels include: supermarket chains, restaurants, luxury hotels and some specialized wine shops. It should be noted that this country has a small but booming wine industry. Local projects have continued to develop and have benefited from the good climate, water and topographic conditions of the country. The wine brands La Casa de la Garita, Teber and Don Teófilo are sold in restaurants and some supermarkets. Their retail price is around USD 4 per bottle. When compared to other imported alcoholic beverages, wine imports have shown a 30% annual increase since 2007, outpacing whisky, which is another favorite drink among high-end consumers. Costa Rican wine imports amount to nearly USD 20 million.