Frosts and hailstorms ravage the vineyard in the most delicate stages of production, causing enormous losses in all the wine-growing provinces. Consequently, the harvest volume will be extremely low and, according to market references, the impact on prices for the end consumer will be inevitable.
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According to forecasts of National Institute of Viticulture (INV), over the 2022/2023 season only 15,252,900 quintals of grapes will be harvested, which will represent a drop of 38.7% compared to the average of the last 20 years. As if that weren’t enough, it will be the lowest harvest since records were set.
Just by looking at the figures for the past two decades, you can get a good idea of the extent of the decline in production. The harvest volume for the 2021/2022 season was already considered “low” and now a much larger shrinkage is anticipated.
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In fact, some benchmarks in the industry guarantee that the final figures could be even lower than expected. “In our case, we have defined the INV estimate as “optimistic”, due to the extent of the damage that the vineyards have suffered due to frost, hailstorms and drought, to which adds a downward trend of many vineyards that have not been able to be properly taken care of in recent years and have lost their production capacity,” he commented. Mauro Sosaexecutive director of the Center of Viñateros and Bodegueros del Este (Mendoza).
Also Carlos Fiochetta, director of Argentina Wine Corporation (Coviar) agreed that there is a general consensus that the harvest will be lower, due to frost and hail. “I spoke with producers and wineries in Mendoza, San Juan, the north of the country and Patagonia; everyone agrees that there will be fewer grapes,” he lamented.
The scenario for producers and wineries is alarming, but clear enough. Given the scarcity of grapes, it is inevitable that prices will skyrocket, or at least climb several positions. The unknown is how much they will increase and what impact they will have on consumers’ pockets.
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Martin Hinojosa, president of INV, pointed out that Argentina is on the eve of one of the weakest harvests in recent years and acknowledged that this “generates price movements that will affect the plateau”. However, he assured that the increases will have a limit. “The wine industry is very competitive and cannot increase indiscriminately because consumption is falling. The sector always prioritizes maintaining consumption levels,” he said.
Meanwhile, Sosa explained that it’s very common to see growers who think they have a certain volume of harvest and when it comes to picking the grapes, they realize they don’t even have any. half. “It caused the prices of the grapes to fluctuate over the days,” he pointed out.
“If the supply of grapes continues to be so limited and the stocks of wine so limited (it is estimated that there are six months of technical stock), no doubt this additional cost will affect the price of wine in the gondola. “, remarked the representative of the producers.
Fiochetta agreed and argued that the shortage was indeed going to have an impact on prices, although he said it would be difficult to quantify the extent. “In basic wines, increases will be regulated by the purchasing power of consumers. If we go too far in the price, we will become inaccessible. They will also be conditioned by what the competition is doing, mainly beer, “said the referent of coviar.
“In the middle and high segments, purchasing power will slow down. In these cases, it usually happens that the amount of wine purchased by each consumer decreases, but not the frequency with which they buy,” he added.
Sosa also felt it was “difficult” to estimate a percentage increase in wine on the shelves today, but he agreed that there is some room to apply increases, as substitute drinks – such as beer – have also increased in price. “The problem is that we are in an inflationary context in which we are all involved. We must work so that consumers do not move away from wine, but guarantee that no winery sells wine at a loss,” added Mauro Sosa.
For now, the latest statistics published by the National Institute of Statistics and Censuses (Indec), point out that over the last twelve months the average price of a liter of common wine has increased by 131%, while the liter of beer has increased by 151%. In both cases, they considerably exceeded the general CPI for this period, which was 98.8%.
Apart from that, Carlos Fiochetta added that when we talk about price, we must consider that in addition to the value of the grape, there are many other elements that affect the wine, such as corks, bottles, corks, the tetra brik (in multilaminates), capsules and all kinds of inputs.
In short, market leaders agree that prices will rise and it will be competition and the pockets of consumers themselves that will hold back. At the same time, inflation and ongoing cost increases will continue to weigh on the profitability of the entire production chain.
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