The challenges for Argentine wine in a world in crisis

Maximiliano Hernández Toso, new president of Wines of Argentina, analyzed the challenges facing the sector in a context marked by the pandemic

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“It is undoubtedly a difficult time. But I am receiving an institution that did its homework well. It is different from entering a time of crisis and finding problems. Here there is human capital and financial resources. So it will be easier,” he summarizes. Maximiliano Hernández Toso, brand new president of Wines of Argentina, entity that promotes national wine in world markets.

Hernández Toso, who is co-founder and director of WHT Partners, the local economic group that owns the wineries Riglos and Huarpe, it happens like this in his position to Alberto Arizu. And he comes to the presidency of WOfA at a key moment for the industry, fraught with uncertainty.

The future of strategic markets for Argentina, beginning with the United States, the United Kingdom, Brazil and China, following the Covid-19 and the uncertainty about the world economy and industries vital to the came, as is the hotel, gastronomy and tourism in general, requires, more than ever, to be creative and optimize resources.

The pandemic also makes it impossible to travel and visit importers and clients. So there is also another obstacle to continue delving into the argentine wines in these fundamental countries for local viticulture.

How to act in this context? In dialogue with iProfessional, the new president of WOfA He stressed that “we are experiencing a time of very great changes and projecting something is extremely difficult, but I consider that, when we get out of quarantine and advance in what they call the ‘new normal’, there will be interesting opportunities for argentine wines

“Wines of Chile, for example, is projecting a 20% drop for this year. Exports never fell so much. On the other hand, our sales to the world were hammered in the first four-month period compared to last year. And I think that if we manage to stay in the United States, we can aspire to keep our total exports tied. ”

In this sense, he points out that in the United States “the sale by supermarkets is moving a lot and the online channel is also very strong, to the point that there are distributors who are not enough.”

Wines of Argentina will promote the promotion of national wine through the online channel

“The key is uncertainty, but the objective is to start to have a quantitative growth in exports. It is not impossible. That is the challenge for this industry: to grow in quantities, because since 2011 sales to the world have been stagnant due to various issues, such as the competitiveness and the crops with very low volumes that have occurred in recent years. Yes, a great effort was made and there was a lot of growth in price and positioning, something very important. But the goal we have is already in 2021 to see results at the quantitative”.

Regarding the “how”, Hernández Toso affirmed that from WOfA “we are going to focus more than ever on the digital world. We are living through a time of profound changes and that forces us to look for opportunities”.

“The positive thing is that for many years WOfA has been gaining experience in the digital field and now we are promoting all that learning, with talks given by experts on wines from Argentina, courses and trainings. In fact, this year we already held Malbec World Day with a 100% online format. In addition, this year we will be working on virtual reality projects. So ultimately, what we should do is continue on that path, “he explained.

The near future of the emblematic strain

And what performance is expected for Malbec in the United States? The emblematic strain of Argentina continues to comfortably lead the rankings, accounting for more than 50% of exports from local wineries. However, in recent years, numerous reports indicated that the fever for this variety was fading.

“The emergence of Malbec was the most important novelty of the last 20 years in the world of came. I would say that no fashion is forever, but I would not affirm that it lost its shine. Today Malbec is consolidated as a mainstream variety. Now we are focused on communicating more the diversity of Malbec, a more difficult message to take to the world, “he said.

“Today Malbec is consolidated as a mainstream variety”, says the WOfA president

Help for exporters

As for the difficulties that exporters face today, Hernández Toso focused on the exchange rate problem: “Today we sell abroad with a tremendous effort and they pay the official less 3 pesos per dollar in withholdings. That is, you have one dollar around $ 60. And any promotional action you want to pay abroad, you have to pay with the PAIS Tax. It is a serious problem when thinking about increasing investments. ”

To this, the manager adds financing problems: “In New Zealand, Australia or the United States, wineries are well leveraged and can access loans at 2% for 30 years. Here you have to invest with your own capital, from the utilities. And if you have less profits, it means that you have less investment. ”

Regarding the funds for the promotion of came In international markets, there is a historical reality and that is that WOfA must compete against other entities that have a budget 5 or 6 times greater, even more.

“We have a budget of 4 million dollars and 80% are contributions from the wineries themselves. Thus, it is complex to grow in the short term. But, in parallel, you have a government that is renegotiating its debt, which must deal with problems such as poverty, unemployment and the pandemic. Now it is difficult to think of more resources, but you have to look at this with a strategic vision: came is the tip of the iceberg of all foods: behind the came comes the meat, the fish, the olive oil. So it is an investment that is not only profitable for wineries; it is also profitable in social terms to invest in promoting came

And what could be a solution? For the president of WOfA, beyond the context is complex, if a part of the export duties were returned and they could be invested in promotion, “we would have about 3,000 million pesos. We would be playing in another category, like Australia and some European countries, which invest millions in communication.

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