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Latin American Wine on Terra Firma in U.S.

Written By: Max Frumes on March 16, 2010 No Comment

Jacquelyn Ryan/MEDILL

Tough economic times don’t stop Americans from drinking their wine – but tight budgets may have consumers looking Latin for the best (or most) wine for their dollar.

The U.S. consumed a record 753 million gallons of wine in the heart of the recession in 2008, according to the Wine Institute. It is still on track to become the largest consumer of wine in the world by 2012, according to the latest U.S. Wine Market Forecast. “The economic recession had little impact on the US wine industry as consumers saved funds to enjoy wines at home,” the report says.

But cheaper imports from countries such as Chile, Argentina and Australia are killing U.S. winery margins, Bloomberg has reported.

Though tough for the U.S. wine market, it’s not a bad thing for consumers.

“Really low-priced wines give the consumer a huge opportunity to try a lot of different wines,” says Erica Witte. Witte is co-founder of a Chicago-based wine shop Poison Cup, which aims to educate Chicagoans about all the varieties of wine available.

Between 1991 and 2008 the dollar value of U.S. retail wine sales rose every year, almost tripling in that time. Yet last year, salesof U.S. wines dropped by 3.3 percent, to $29 billion, as prices were driven down by wine from Chile, Argentina, Australia, and elsewhere, Bloomberg reported, citing an analysis by wine industry consultant Gomberg, Fredrikson & Associates.

As a result, a total of 30 wineries are for sale in California, Oregon and Washington, according to Bloomberg — more than ever before.

A similar fate has not befallen Illinois vintners, however, according to Bill McCartney, executive director of the Illinois Grape Growers and Vintners Association.

“Honestly, Illinois wineries are doing OK,” says McCartney. McCartney, who doesn’t drink foreign wines but instead gets his fix from the 86 wineries scattered throughout Illinois. He believes sometimes consumers sacrifice quality for price.

“If you want quality you buy Illinois, if you want something cheap you buy Latin America,” says McCartney.

Another challenge presents itself to Illinois wine: getting people to know it exists. You’ll notice that no major chains or even local stores in Chicago carry much if any Illinois wine and Chicago is the state’s biggest wine market.

“People don’t look at Illinois as a wine-growing state,” says McCartney. He said Illinois is one of the largest wine-consuming states in the nation, but lags far behind in production numbers. According to the U.S. Tax & Trade Bureaus, the state has 103 wineries compared with 2,593 for California, which produces roughly 90 percent of the wine in the U.S.

Even with the prolific production of wine within the U.S., it is still one of the largest importers of the elixir in the world, importing 845,000 tons of wine in 2007, according to the U.S. Food and Agriculture Organization.  Contributing to our fix, Argentina and Chile exported a respective 365,000 and 1.16 million gallons of wine that year, a 20 percent and 145 percent year-over-year increase, respectively.

Meanwhile, the U.S. had not been keeping pace with increased foreign production for much of the decade, as it experienced a 10.28 jump in wine production from 2000 to 2006, for 2.36 billion liters produced.

Comparatively, Argentina soared 14.5 percent to 1.54 billion liters; and Australia just exploded by 93.2 percent to 1.43 billion liters, as did Chile up 67 percent to 850 million liters, according to the Wine Institute.

Last year alone, Chile’s wine shipments were up 17.6 percent, according to the industry trade group Wines of Chile, though the dollar value of sales were flat at $1.4 billion. This compares with California, whose shipments declined by 4 million cases in 2009, the first drop in 16 years, according to the Los Angeles Times, also citing Gomberg, Fredrikson & Associates.

Even though the earthquake in Chile caused substantial damage, it’s not supposed to slow business and may even help boost sales as the world pays attention to the country’s plight. Still, Chile estimated a loss of 125 million liters of wine with a value of approximately $250 million, according to winery-funded group Wines of Chile, which represent 95 percent of the Chilean wine industry.

Though she believes some great wine is coming from those regions, Witte, whose wine store will be giving classes on Malbecs next week, is wary of wine that becomes too cheap.

“You definitely have to be careful with wines in $6 to $10 range,” Witte says. “There’s got to be a good reason where wines are getting down to that level.”

She recommends getting to know your local wine shop owner whose taste you trust before delving into the world of cheap Latin American wines.

Witte says that the appetite for foreign wines has increased, in large part thanks to the Malbec, and consumers are even looking to move up the scale to more expensive varietals.

“Now that people have finally discovered foreign wines and can find Argentina and Chile on a map, they’re looking at higher end,” says Witte.

Two recommendations from Witte:

  • The nice earthy Terra Rosa Malbec, which you can pick up for $14.
  • Valdivieso for $20, which wine expert Robert Parker scored that as a 96 or a 94, which is outstanding to extraordinary.

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