Stateways

StateWays-July/August 2016

StateWays is the only magazine exclusively covering the control state system within the beverage alcohol industry, with annual updates from liquor control commissions and alcohol control boards and yearly fiscal reporting from control jurisdictions

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StateWays | www.stateways.com | July/August 2016 34 rgentina and Chile are now major players, rank- ing fi fth 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 pre- mium tiers currently dominated by California, France and Italy. South America's third and fourth largest pro- ducers, Brazil and Uruguay, may lag far behind, but both are following the same South Ameri- can 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 fi nd 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 American fans. This provides retailers with the perfect oppor- tunity to upgrade their South American selection to refl ect the growing diversity and exceptional quality to be found. This is particularly true for Chile and Argentina: the classics like Argentine Malbec and Chil- ean Cabernet Sauvignon are hitting their stride and exploring fl avor profi les that are distinctively South American, just as ambitious new appellations and unexpected grape varieties are broadening the style options on both fl anks of the Andes. And for those reluctant to add a new country to their prod- uct 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 fi ner 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 Argentina, it's help- ful to have some historical context; both countries seduced Americans with great wines at low prices, but in different ways and for different reasons. When Chil- ean wines burst onto the scene in the nineties, it was not by chance, but the result of a coordinated national initiative to increase wine exports. Chile was already a fresh fruit powerhouse, and classic French grapes had been cultivated since the mid-nineteenth century. However, a small "WE ARE SEEING THE RETURN OF INTERNATIONAL INVESTORS INTERESTED IN MAKING GOOD WINES IN THE $12 TO $20 RANGE AND HIGHER." —Roberto Luka, founder of Mendoza's Finca Sophenia and a former president of Wines of Argentina

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