Argentina's push for U.S. market share.

While all eyes are on Australia and Chile, Argentina scored a solid 15% gain in the U.S. market in 2004, and continues to score strong gains this year, coming through with a solid 31% gain in February, according to the always-reliable Gomberg-Fredrikson Report.

The United States is

already Argentina's largest export market, accounting for 16% of exports in volume and 21% in value at US$40.65 million, according to Argentine figures. Although those numbers look good, Argentine exporters would like to see their wines taking a larger market share in the U.S. Based on 2004 numbers, Argentina holds only 1.3% of the total import market in the U.S., ranking seventh in both volume and value.

One of the more successful importers, Trapiche Wines, shipped 750,000 cases to the U.S. last year. Brigitte Barreiro, an Argentina-based spokeswoman for Trapiche Wines, said Trapiche's popular Oak Cask line of wines was especially developed for the U.S. market. Oak Cask wines sell at just under $10. In June of last year, Trapiche added an entry level wine called Falling Star at $6. "It is a very important market for us," Barreiro said. "Every effort is made to tailor the wines to the U.S. market."

Salentein, Catena and a few other Argentine producers have made major inroads into the U.S. market at a higher price level, but beyond these individual efforts, the market remains mixed. Wines of Argentina has now launched a semi-generic program to increase market share in the U.S. In June 2004, they hired the Dunn/Robbins Group to implement a three part program, including an advertising campaign in several U.S. wine publications, a series of media trips to Argentina and a series of tasting events within the U.S.

Aileen Robbins said the overall thrust of the program is to raise awareness of Argentine wines. However, as Robbins pointed out, a generic campaign can only do so much. "At some point, someone has to step up and put a wine on the table," she said.

Nora Favelukes, a wine consultant at Quantum Wines in New York, who closely follows South American wines, said Argentina has not yet created an Argentine brand image. "Although the category is growing, it has not had the same strong evolution that the Australians, the New Zealanders or the Spaniards have had in the past few years," she said.

She believes that consumers and the trade are more open to buying Argentine wines at different price-points than Chilean wines, yet overall, Chile has a stronger brand image than Argentina. "On the other hand, Chile has tremendous difficulties in upgrading the trade and consumers toward their high-end wines," she said. "You see many more Argentine brands selling above the $10 mark, but their overall presence in retail stores is minimal compared to Chile."

The Bodegas Salentein wine group is stepping up to play both ends of the market, with its flagship Salentein line priced upwards of $15, and a new line of fruit-forward El Portillo wines at the $10 level. James Faber, vice president of San Francisco Wine Exchange, importer of both lines, said sales were up 30% last year, and he is projecting an increase of about 40% in 2005, which will mark Salentein's third full year in the U.S. market.

Faber said the U.S. is a key market for Salentein. "The goal is to have 20% of total export sales in the U.S.," he said. Salentein is currently in 28 export markets. Faber said a generic campaign is helpful. "But I believe that it is most important for Argentina to focus on consistency in quality and pricing. As Argentine wines grow more popular worldwide, there may be the temptation to do what some other exporting countries have done, which is raise prices. That should be avoided, because both trade and consumers continue to seek out new wines at attractive prices," he said.

One of the first mass market Argentine wines to arrive in the U.S. was Trumpeter, a budget range of wines produced by Familia Rutini Bodega in the Mendoza area, which was introduced into the U.S. in the 1980s. Trumpeter is still a major player, selling at under $10, but Rutini has recently set its sights higher. During a visit to the winery last year, I tasted a new range of Rutini wines that is now available in the U.S. at prices between $18 and $50. Luisa Muir, a marketing manager for the winery, said the wines have been well received. "Our goal is to increase our sales of the premium wines by 15% over the next five years," she said via e-mail.

The Rutini decision to move up the price ladder seems to be the plot line of choice for Argentina. Laura Catena, the daughter of Nicolas Catena, who founded the family winery, said the way to increase the market share of Argentine wines in the U.S. is to keep quality high.

Catena led the way for Argentina in the quality wine market in the early 1990s. Catena was the first to price an Argentine wine at more than $50, and experienced importers are quick to credit Catena with showing the way for Argentine premium wines in the U.S.

"The U.S. is a very competitive market. Our wines will only get better as more wineries get the expertise to make great wines. I am feeling very optimistic about 2005," Laura Catena said.

Running The Numbers

Top 10 Importers
(In millions of 9-liter cases)

                               % of
Country        2003    2004    change

Italy          21.420  20.073   -6
Australia      15.624  18.356  +17
France          8.831   8.228   -7
Chile           5.573   5.776   +4
Spain           2.050   2.474  +21
Germany         1.832   2.012  +10
Argentina       1.451   1.667  +15
New Zealand      .703    .923  +32
South Africa     .508    .700  +38
Portugal         .506    .595  +18

Source: Gomberg-Fredrikson Report

L.W.