2011 Mendoza Harvest and Reflections on the State of the Industry

Hello everyone,
I don’t consider myself a “blogger” so I don’t update this very often. Nor, does there seem to be enough time in the day to allow to get to this as much as I’d like. However from time to time the need does seem to arise. Either someone surprises me by saying “hey you haven’t written anything for a while, why not?” or something happens that tends to grind in the back of my mind until I attempt to express it here or in private email form. So here goes, what’s on my mind, North American Summer 2011.

I am just finishing my harvest stay down here at Bodega Calle. It was our 10th harvest. I cannot believe it and I was kinda surprised to realize this, (I was at Vina Altair in Chile when I asked them how many harvests they had done, Ana Maria the expert winemaker there told me, “this is our 10th harvest, we started in 2002” to which I replied, “gosh, I guess this is our 10th harvest in Mendoza too”). 10 years. Wow, what a ride. We haven’t yet had any kind of big party to celebrate. We just keep our heads down and keep working. Seems to be our character. Eventually we will have to organize something…

I personally have been involved with 13 harvests in Mendoza. I have seen better harvests than others, but Mendoza generally delivers on the promise. Not at all like other major growing areas in the world. That said, to understand harvests in Mendoza think of a tuning device that has 4-5 knobs. One for early harvest frosts, one for dry, scorching summer heat, one for hail, and one for harvest time rain. If you want to throw in one for Zonda, the super-blustery winds that happen from time to time that can blow off grape flowers, then we could throw that in too.

2011 the knob was way up on spring frosts in Valle de Uco. Up on Zonda, way up, then suddenly down on heat, up on severe hail in Valle de Uco and Agrelo, and down on harvest rains. What we got was a very reduced crop in Valle de Uco and parts of Lujan de Cuyo, (Agrelo). Grapes came in substantially late because of the cool, dry harvest conditions. Because of the reduced yields in Valle de Uco, quality was very good with deep black red colors that were out of this world. Lujan, did not have its best year. Not a bad year by any means, but not the best. Yields were standard, and the early hot summer heat seemed to last too long for quality’s sake in Lujan. Once the nights got cooler, it was too late to really help things.

I guess you could say that it was a bit of a “global warming” harvest. Intense climatic episodes, with lower altitudes getting blasted too much for their own good with summer heat, albeit that the duration of the heat wasn’t as long as feared.

We’ll see how it all goes from here. Despite what I said, we have a lot of great quality wine (having bought lots of good fruit this year), to watch going forward. We were generally pleased with everything and glad to have another harvest under our belt.

The climatic conditions of harvest this year had a huge impact on grape prices once you factored in demand for Malbec grapes. Throw cronic double digit Argentine inflation into the mix and the continued weak dollar and you got a pretty tricky situation for everyone. On the bright side, it means Argentines will get what they want, diversity in sales. As Malbec prices move up, the consumer world will be willing to purchase lower priced, other varietal wines when they can get equal quality non-Malbec wines for a few dollars less on the shelf.

The silver lining may be indeed that Argentina firmly evolves beyond the “one-varietal” “one-hit-wonder” status that it seems to have laid before itself. I won’t say I know the content of John Gillespie‘s speech at the Foro Vitivinicula in Sept this year, but the title I understand has something to do with a consumer’s willingness to “trade-down” when prices of their favorite wines go up in price. Basically, wine drinkers are only brand or varietal loyal to a point. Wine drinking is generally about exploration and if your staple wine gets too expensive then that is a good reason to try something new!

In almost 14 years being involved in Argentina, Malbec was the most expensive per kilo on average than ever before; and I mean in real dollar terms too. Just to get a snapshot of what I am dealing with: Malbec grape prices were up almost 50% this year; and this after a string of years of grape prices increase. Bottles have effectively doubled in price in 12 months. As have cardboard boxes, and labels. Labor? Remember the stereotype that Latin America had cheap labor? Forget about it. Now, Argentina’s minimum wage is nearly that of the USA. Would have anyone thought this would happen so soon? The decision for wineries this year is a true ‘rock and a hard place’ proposition: Make no money this year at the winery or mark up prices, and risk having the consumer, “trade down” and stop buying your product. Not a fun place to be.

Such a tight spot unfortunately brings out the corruption in those that it comes naturally to. In Argentina, wineries that have been in business many years have an accumulated “number” of Malbec volume built up. Understand that in Argentina, if it comes in as “Malbec” and goes out in a red blend and not as “Malbec” the Malbec volume “number” stays on the winery books. Very useful in this time of high prices and high demand that you might have a little bit of Merlot and Cab laying around and want to export it as “Malbec” to one of the more price point conscious importers looking for a deal.

Therefore, beware those $6.99-9.99 wines marked as “Malbec” on the front label. I would say that it is virtually impossible to make a 100% varietal Malbec wine these days at the above prices confronted with the real costs associated with making such a product. If the wine isn’t on close out or from a vintage dating prior to 2010 then forget about it. It isn’t pure Malbec my friends.

Good Malbec starts at about $14.99 retail these days, still a great deal. Things start to get interesting at about $18.99 and above. Still a deal when these wines compete with the best wines of the world. Unfortunately, Malbec is no longer “cheap” so who knows what is about to happen to volume. At only about 2% of the import market, one would think that continued growth is probable, (especially since Australian Shiraz grew to be about 7% of the same market) . But like everything from Argentina over the last 80 years, it is the Argentine’s (READ lousy Government) themselves that seem to always mess up a good thing. So muchachos, where do we go from here?

Another thing I have been working on this year is a film with Sky Pinnick of Rage Films on the Boom of Malbec. It will be called Boom Varietal we think, (see http://www.Boomvarietal.com). It hopes to explore and answer this question.

Finally, unlike most other boutique importers of Argentine wines, we have always sought to sell more than Malbec and we have always sought to sell more than wines from Argentina. We sell wines from 4 Latin American countries now and have successfully created niches for them. We sell a diversity of different varietal wines from Argentina and have done so since the beginning. I think that Malbec will remain important for us as a business and for wine drinkers around the world. However, now more than any other time before, it makes sense to explore other wines from Argentina, not to mention all the great wines to be discovered in Chile, Uruguay, Mexico and beyond.

Happy tasting!
Kirk

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