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Demand for Malbec expected to increase by 15%

Source: WineSur.com
By: Gabriela Malizia
04.14.2010

In order to respond to the growing demand, the large exporting companies have expanded their vineyards and installed capacity, especially for the production of Malbec. In 2010, foreign market demand for this emblematic variety is expected to increase by 15% or more.

The good news is that the large exporting wineries have resumed investment activities, in so far as installed capacity, purchases and new implantations is concerned. In light of the increasing demand for Malbec in particular, which shows a 15% growth, planting new Malbec vineyards has become a top priority for the large exporting groups, after more than two years of poor yield with a drop in production of at least 40%, and only 4% annual average growth of new implantations.

Some are thinking about implanting as many as 200 hectares per year; others, 100 or 50. In these cases, Malbec represents between 50% and 75% of the newly implanted area. The way the other varieties are managed depends on the strategy followed by each winery.

What the big ones say

Daniel Pi, Chief Winemaker at Trapiche from Grupo Peñaflor, one of Argentina’s 10 most important exporting wineries, said that his company is planning to implant at least 50 hectares of Malbec per year. Today they are fully devoted to the development of two estates in the Uco Valley (Los Árboles and Altamira), where Malbec predominates. “We expect to reach a total of 100 hectares of Malbec by the end of 2011. We’re planning to keep growing at a rate of 50 hectares per year.”

The Catena Group, in turn, has strongly invested in expanding its Vistaflores winemaking plant since 2006, which at the moment has a capacity of 19 million liters. The Chief Winemaker of the company, Alejandro Vigil, said: “We would like to continue growing but at this point, we’re having some energy supply problems and lack skilled labor. The installed capacity of the Vistaflores winery will be expanded by 4 million liters and a new warehouse will be added to the existing 5000-square-meter storage facility.”

The Catena Family group exported nearly 12 million liters last year. “The Álamos line saw exponential growth, just like the Catena and Saint Felicien lines. We’re now making wine to respond to the demand in 2012, which is expected to amount to 19 million liters. We’re running a risk and investing according to our estimates. We also continue buying vineyards (to produce our premium lines) and we’re implanting between 75 and 80 hectares per year. This year, we’re planning to implant around 200 hectares in Medrano and Anchoris, 75% of which will be implanted with Malbec,” announced Vigil.

More investments

Medium-sized wineries that are among the 15 main exporting wineries in Argentina, such as Navarro Correas, have also expanded their installed capacity. Gaspar Roby, Director of Winemaking and Operations, pointed out that their company has adjusted to the growth in the foreign markets (particularly in United States) by investing in machinery, installed capacity and vineyards. “We’ve developed more than 10 new hectares this year. Over the last 4 years, Diageo Argentina has invested more than 14 million dollars in its wine business, as they’ve bought stainless steel tanks to add 1.5 million liters of installed capacity, two receiving hoppers for red grapes (one of which includes a double belt for grape selection and a gravity system for must production), presses and micro-oxygenation equipment. Part of the investment went to implanting vineyards and incorporating 10 hectares to our cultivated area. Our aim is to expand our installed capacity by adding 3-million-liter stainless steel tanks and continue implanting vineyards during 2010,” said Roby.

Ricardo Rebelo, Finca Flichman’s CEO, pointed out that due to the great foreign market demand for Premium wines, the winery is planning on new investments in vineyards of top quality Malbec. “We’ve decided to plant nearly 80 hectares of Malbec in Tupungato.” Flichman made a huge investment as it bought the winery owned by Pernod Ricard in Perdriel to take its production capacity to more than 6 million kilos.

Other medium-sized wineries use sales methods which differ from those used by the large groups. Norton, which works with only one brand in the foreign markets, expanded its vat capacity by 500 thousand liters last year and will be waiting a bit longer to continue investing since it already has enough capacity to meet the demand. Luis Steindl, the winery’s Operation Manager, explained that “the company’s plan is to build a new nave in the winery, with more room for offices, pumps, filters and bottling. The investment will be carried out in stages, in one, five and ten years’ time.” Norton also expanded its vineyards, implanted 50 new hectares and expects to implant 50 more this year. “Malbec was previously our investment priority. The new vineyards will be implanted with 50% of Malbec, combined with Sauvignon Blanc, Petit Verdot and Cabernet Franc. We also have to compete in other categories; focusing only on Malbec can be very dangerous,” said Steindl.

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