Beverage Dynamics

Beverage Dynamics July-August 2016

Beverage Dynamics is the largest national business magazine devoted exclusively to the needs of off-premise beverage alcohol retailers, from single liquor stores to big box chains, through coverage of the latest trends in wine, beer and spirits.

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www.beveragedynamics.com July/August 2016 • Beverage Dynamics 31 A fter decades of explosive growth fueled by fierce com- petition for low-end market share, South America's wine industry is maturing into a new phase. Argentina and Chile are now major players, ranking fifth and sixth respectively among the world's top wine producers. With prices steadily rising in step with improvements in quality, wines from both nations are muscling their way into premium tiers currently dominated by California, France and Italy. South America's third and fourth largest producers, Brazil and Uruguay, may lag far behind, but both are following the same South American playbook that has proven so successful for their neighbors: leveraging fruit-friendly terrain and low-cost agriculture to gain their own recognition abroad. Wine-savvy visitors to South America quickly realize that no continent has geography and climate more conducive to grape-growing. The valleys and plateaus that frame the Andes feature cloud-free skies in the growing season that reduce the need for pest control or disease prevention. Factor in easy access to affordable irrigation and modest land and labor costs, and it becomes clear why other countries find it hard to compete in terms of wine quality for the dollar. With the 2016 Olympics kicking off this summer, all eyes will once again be on a major international sporting event in Brazil, but this time with a lot more American teams and Amer- ican fans. This provides retailers with the perfect opportunity to upgrade their South American selection to reflect the growing diversity and exceptional quality to be found. This is particularly true for Chile and Argentina: the classics like Argentine Malbec and Chilean Cabernet Sauvignon are hitting their stride and exploring flavor profiles that are distinc- tively South American, just as ambitious new appellations and unexpected grape varieties are broadening the style options on both flanks of the Andes. And for those re- luctant to add a new country to their product mix, 2016 provides the best possible rationale for opening the door to Brazil and neighboring Uruguay. CLIMBING OUT OF THE BARGAIN BIN South American wines earned their current market share by delivering unexpectedly high quality for surprisingly low prices, particularly in Bordelais reds like Cabernet Sauvignon and Mal- bec. Moving forward, value will certainly remain central to the South American identity, but rather than viewing Chilean and Argentine wines as a "less than $10" compromise for lesser oc- casions, wine drinkers are increasingly seeing these countries as sources of greater mileage for each dollar spent on finer wines at price points from $15 to $30 and beyond. "In our South American offerings, we are seeing the most suc- cess in the premium tier," says Dennis Kreps, a founding partner of Quintessential Wines, which represents only family-owned wineries. "Malbecs from proven sub-zones, like San Rafael, Maipú and Uco Valley may cost more than Mendoza bottlings, but they offer exceptional value. On the Chilean side, interest in cooler-climate appellations and premium whites is growing." To get a sense of what the future holds in Chile and Argen- tina, it's helpful to have some historical context; both countries seduced Americans with great wines at low prices, but in different ways and for different reasons. When Chilean wines burst onto the scene in the nineties, it was not by chance, but the result of South American Exceptionalism BY MARNIE OLD

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