Argentina’s wine producers are playing the long game

Hit with sky-high inflation, political turmoil and a black market for currency, can Argentinian producers hold their nerve? Eloise Feilden investigates. “A POLITICAL earthquake.” These were the words used to describe Javier Milei’s victory in Argentina’s latest presidential race. The libertarian outsider, dubbed “El Loco” (“the madman”) by his critics, promised drastic change for a country which, at the time of his election in 2023, was facing a deep economic crisis. Argentina’s annual inflation rate hit 143% in October of that year, a month before Milei’s win, with 40% of the country’s population living in poverty. Wine producers have been the first to admit the ongoing strain Argentina’s economic circumstances have had on business. The turmoil over the last few years has led to rising production costs and reduced profitability for wineries. “The political and economic landscape in Argentina has certainly presented hurdles,” says Magdalena Pesce, CEO of Wines of Argentina. Anne Bousquet, CEO and co-owner of Domaine Bousquet, adds that the country’s challenges have impacted “everything from the cost of production to our ability to plan long term”. Similarly, according to Mauricio Palacios, general manager of Doña Paula, “managing a wine business with inflationary instability and currency devaluation is very complex”. Pesce says Wines of Argentina, which represents and promotes Argentinian wines worldwide, has done its best to support the wine industry amid the many “complexities” which have plagued the country. “We've worked closely with government bodies to advocate for policies that support the wine industry, including measures to mitigate the impact of economic challenges,” she says. But, with fluctuating exchange rates and skyrocketing inflation, only so much can be done.

RADICAL APPROACH

In the run-up to the 2023 election, Milei’s approach to Argentina’s ongoing hardships was radical. His campaign was supported by fellow right-wing politicians including former Brazilian leader Jair Bolsonaro and US President Donald Trump, who said Milei would “make Argentina great again”. Milei promised he would devalue the Argentinian peso by as much as 50%. The peso had been strictly controlled by the outgoing Peronista government for several years, creating a split economy – while the official exchange rate stood at ARS360 to the US dollar in early December 2023, the unofficial black market ‘blue dollar ’ stood at around ARS960. Ana Lovaglio Balbo, marketing director at Susana Balbo Wines, says that limitations on transferring money abroad brought about before Milei’s rise to power “certainly impacted our ability to promote our wines globally”. “The currency disparity, with a very low export rate and much higher exchange rates when travelling or using credit cards, has made it difficult to maintain financial stability,” she says. Milei delivered on his promise to devalue the peso on his first day in office, much to the relief of wine producers, as the decision favoured products destined for export.

Rachael Pogmore, wine buyer – Americas and Australasia at UK distributor Enotria & Coe, says that, from an outside perspective, “ever since Javier Milei was elected, we’ve seen that the economy is in a much stronger position”, the hope being that this will “lead to more investment in Argentina longer term”. Despite “a lot of challenges to overcome in the short term”, Pogmore says, “from a financial perspective it means that a lot of the wineries are able to use their Argentine bank accounts rather than using offshore banks such as in Uruguay or even in America in US dollars.” But feelings of uncertainty remain. By Pogmore’s estimation, more than 90% of Enotria & Coe’s Argentinian producers still prefer trading in US dollars. “I think it’s definitely a long game and people are not resting just yet,” she says. Milei’s approach to economic policy has given with one hand and taken with the other. He announced plans to increase export duties from 0% to 8% just days after he was sworn in, which would inevitably be a devastating blow to the industry. Wines of Argentina has advocated in the months since to retain the 0% export retention tax.

A year later, the policy is still yet to come into force, but issues have carried on into the leader ’s presidential term, and his economic approach has spelled trouble for the domestic market. VSPT Wine Group, one of the top 20 global wine producers, has two Argentinian brands – La Celia and Graffigna – and is one of the top five producers in the domestic market. Cristián le Dantec is commercial director for Europe, the Middle East and Africa at the South American wine giant. He explains that, although “export incentives have helped alleviate some of the pressures” on business, “inflation and currency challenges persist”, and “local market conditions remain difficult due to ongoing economic pressures on consumers”. Pablo Glöggler, CEO of Bodegas Bianchi, says Milei’s strategy to drive down inflation “came at the cost of a reduced consumption rate that complicated things for the wine and beverages industry” operating in Argentina. Local consumers lack the disposable income to buy wine, Glöggler says, “even though our prices are at an all-time low”.

For Bodegas Bianchi, this has meant the implementation of “radical measures” in light of shrinking sales and profit margins, including reducing staff and driving client sales more heavily. It got to the point of “fighting bottle by bottle in various distribution channels”, Glöggler says.

REMAINING RESILIENT

Producers have remained resilient in spite of it all. For Domaine Bousquet, adaptability has been key. “We’ve leaned into innovation and efficiency, continuously refining our processes to mitigate costs without compromising quality,” says Anne Bousquet. “Additionally, we have strengthened our direct relationships with partners worldwide to create a more robust and flexible business model.” Indeed, the climate in Argentina has necessitated producers doubling down on their exports. Pogmore nods to the “troubled times for some areas of the market and consumers in Argentina”. In comparison, she says, when it comes to markets like the UK and Europe, “a lot of Argentinians are positive about what this year will bring”. Trivento, one of Argentina’s biggest wine brands, has increased its presence in key export markets including the UK, US, Brazil, Canada and Europe “to reduce reliance on the domestic market, which is more susceptible to economic fluctuations”, according to Silvina Barros, head of marketing for the brand.

“While the economic and political landscape in Argentina remains complex, our strategy of diversifying markets, focusing on innovation and building a resilient operation allows us to navigate these challenges while continuing to grow,” she says.

SENSE OF OPTIMISM

Wines of Argentina’s Pesce says the growth of export volumes in recent months has created “a renewed sense of optimism within the industry”. It is undoubtedly an important first step in the right direction. Anne Bousquet says that, while domestic economic conditions are still “a work in progress”, Domaine Bousquet “remain[s] optimistic and proactive, using every opportunity to grow stronger in this environment”. And it is not alone in this positive outlook. VSPT’s le Dantec says the company is “focusing on premium wine production” to mitigate the impact of local headwinds, adding that “commercialisation has helped maintain profitability despite local challenges”. For Dr Laura Catena, fourth-generation vintner at Catena Zapata, the message is simple: “Quality, quality, quality.” “Argentine wine drinkers love their fine wine, and we are grateful for that,” she says, noting that demand is solid despite the country still being in recovery from a recent recession. “The most important thing is to maintain the emerging stability we are currently seeing in the Argentine economy, as this allows us to plan our business in the long term and with greater certainty,” Catena says. As Pogmore puts it, “it’s definitely a long game with Argentina”. But producers are not without hope. Catena’s vision for the future will necessitate more government investment in infrastructure, particularly Argentina’s roads and ports. “Let’s keep in mind that Mendoza, the region that accounts for more than 70% of Argentina’s wine exports, is 1,100km from the port of Buenos Aires and 450km from the nearest Chilean port. Investment in logistics is critical for our sector,” she says. Milei’s approach to economic policy may be drastic, but it’s garnering approval from both the domestic wine industry and its global partners. Pogmore says: “The last six months have really been testament to the success of Milei and the confidence people have with what he’s doing. “I do think that there will be a lot more trust in dealing with Argentina and growing business there.” Recent reports suggested that Argentina’s rate of inflation ended 2024 at 117.8%. This is pretty good going, considering that it peaked at nearly 300% in April 2024. The rate is even forecast to recede into double digits this year, closing out 2025 at 25.9% – a significant step forward for a country of wine producers whose strength remains unwavering in the face of adversity.