Regional Manager Report: David Kingsbury on Argentina and Chile
David Kingsbury reports directly from South America where he is ideally placed to give his on the ground assessment of the 2020 vintage and what impact it is likely to have on pricing and supply for the year ahead.
What is the expected 2020 harvest/ vintage looking like for
10 to 15% down because of dry conditions and isolated hail storms. Currently undergoing warm and hot periods interspersed with some heavy rainfall. The winemakers will need to be careful of Peronospera and Botrytis.
The Peronists took over in December and they have a history of controlling and manipulating the market and money exchange, so there is some uncertainty there. The China situation is a worry in Argentina, as it is in all producing countries. While the cosecha will be lower than the average, there are still high levels of stock on hand, and with uncertainties in China, prices are likely to remain stable crossing into the 2020 vintage. That is to say, probably still the best value wine in the world.
10 to 15% down due to drier conditions. Stock on hand is high so prices are likely to remain stable. Some rains now starting to happen. Isolated pockets of frost were experienced.
Any particular regions and varietals likely to be particularly strong in terms of volume?
San Juan is looking at higher volumes, so high volumes of traditionally higher bearing vineyard for bulk and entry level programs.
Talca and Curico left untouched by frosts and are looking to have a vintage most like the long term average.
Any areas of concern in terms of volume for certain regions and specific varietals?
Drier conditions were general across Argentina and so the shortfall will be across the board. Hail storms were isolated to Valle de Uco and in the higher parts, of some of the new premium vineyards have been affected. The quality will depend on the conditions from now on and the ability to control disease in the vineyards - pHs will be high
Shortfall will be across the board due to drier conditions. The areas mostly affected by frost were Colchagua and Casablanca. So some high level Pinot, Chardonnay and Sauvignon Blanc has been lost. Some Merlot too. Pinot and Sauvignon Blanc have seen high demand so the frost could make those two varieties difficult in 2020.
What impact is that going to have in terms of overall prices for bulk and bottled wines?
Shortfall, situation in China, a shorter vintage in Spain and high stock on hand will probably be a roughly net influence and so prices will probably remain stable. Pinot Noir and Sauvignon will probably rise.
Shortfall, situation in China, a shorter vintage in Spain and high stock on hand will probably be a roughly net influence and so prices will probably remain stable.
Any varieties that are going to see particular changes in price?
Malbec will continue to fetch premium prices over other varietals. Generics will still be low priced.
Generics will remain high and not have a great differential to lower priced varietals. Pinot Noir and Sauvignon Blanc prices will rise.
What advice do you have for international buyers looking to get the best value for bulk and bottled wine?
Argentina will continue to offer the best price/quality ratio at the lower levels than other competing countries. However, it is critical to pick reputable producers and monitor drawdowns.
Generics will not be a good buy where transport costs are significant. Chile, however, remains very competitive for varietal and reserve level wines throughout their typical varietal mix: Merlot, Cabernet Sauvignon, Carmenere, Sauvignon Blanc, Chardonnay.
How was 2019 in terms of quality and availability for bulk and bottled wine? *
A good year in general, volumes good but demand dropped compared to production, leaving 300m litres surplus going into vintage.
Porducers paid higher pices for grapes in 2019 expecting a buoyant market. The market dropped for supply/demand reasons and the producers are now trying to get through their surpluses. It is doubtful that current prices would cover the embedded grape cost.
What is the situation for carry over stock into 2020 for bulk and bottled?
High, but mostly at the lower levels, a lot of liquidation around the US$0.20 mark.
High, except Pinot Noir and Sauvignon Blanc and reserve levels, but varietal level is still in tank.
Any particular changes in terms of exports and which countries are buying more/less wine from...
Some big trades going into Australia, transport prices still a bit inhibitive into Europe at the lower levels. Uncertainty on possible measures by the government to tax exports or retain taxes.
Stable, tending to trade with existing and long term partners.
For more information, contact your VINEX Regional Manager here