Importing Wine from Argentina
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If you are a citizen of New York, New Jersey, California, Texas, or Florida, and you have purchased a bottle of Cabernet by a vintner called Bodegas Escortihuela, then you are about to experience a fine Cabernet similar to that produced in California's Napa Valley or New York. In some stores, the wine is stocked in the premium sections, which would surprise a native from Argentina, since that is one of the nation's dependable wines, usually consumed by the lower classes who purchase the wine for the equivalent of US $1.50. Why, then, is that bottle you have before you selling for $18 to $24 in the U.S.? This paper will try to answer that question.According to the United States Department of Agriculture (Gain Report AR0043) Argentina is the fourth largest wine producer in the world, and the largest in the Southern Hemisphere. The vintners typically harvest from April through May. Total Argentine wine production in the year 2000 is estimated to reach 13.8 million hectoliters (a hectoliter is 100 liters), a figure that will be down nearly 13 percent from 1999. (1) The Andes-hugging states of Mendoza and San Juan account for 90 percent of the country's total output. Wine exports in 2000 are anticipated to increase, due to the expected greater wine supplies (production plus stocks). Many factors affected the 1999 reduction in exports. They are, in descending order of importance: A) Bad weather for the 1998 crop; B) The fact
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To Customer
End user
VA Chain
30-60
The growing desire for Argentinean wines (richer, more robust, spicy) among ethnic Hispanics and early adaptors in the wine market has created a certain resentment on the part of the American wine producing lobbies. This resentment is the primary cause of the additional tariffs charged by the Alcohol control boards of various states. Table 3 shows these tariffs, in some cases called excise taxes.
Table 3: State Excise Taxes
State
Tariff
Countries charged to
Texas
12
Argentina, Chile, Belgium, Mexico
California
14
Argentina, Brazil, Mexico, France, Italy, Spain
New York
10
Argentina, Chile, Uruguay, Brazil
Discussion
This section will amplify the data presented in Table 2.
Cost in Argentina
Due to a confluence of factors -- cheap land, fertile land, cheap labor, and a recent major importation of technology designed for blending and aging, a two-liter bottle of a Cabernet that would cost $2.20 (estimated) in the United States to produce, can be produced in Argentina for approximately 90 cents. This figure is for the major "dependable" producers (those that have comparable consistencies of grapes and bottlings).
Those manufacturers (w
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Approximate Word count = 1690
Approximate Pages = 7 (250 words per page)
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