The Lands of Malbec and Carmenere

For the Argentine wine industry, it mostly boils down to one word: Malbec.

According to QW Wine Experts, a New York-based consulting firm specializing in imported wines, including the not-for-profit organization Wines of Argentina, Argentine wine exports to the U.S. have increased dramatically in the past 18 years, from a market share of 0.5% in 1995 to 8% in 2013. Says its president, Nora Favelukes, “During this period, its wine industry went through a bold transformation, stepping out of its comfort zone of producing wines for a huge and vibrant domestic market to exporting worldwide.”

As much of this revolution comes courtesy of visionary winemakers and sought-after brands like Trapiche, Bodega Catena Zapata and Achaval-Ferrer, Favelukes says much of the fanfare stems from the “magic of Malbec,” the nation’s star grape. “It is a story of being at the right time in the right place. As American consumers became more adventurous, Argentina’s emblematic grape captured their senses with its purple hues, rich, ripe spicy aromas, flavors of plums and dark cherries and its soft and sweet tannins — and of course, its great price/quality ratio.” Today, she adds, the U.S. is Argentina’s top market, representing 36.78% of their total exports. Malbec alone accounts for close to 5 million cases.

Nick Ramkowsky, partner of importer Vine Connections, remembers when their first container of Malbec landed in 2000. “I would often have trade buyers mention, ‘I don’t need Argentine Malbec; I have Chilean Merlot.’ How things have changed,” he says. “Today, Malbec is synonymous with Argentina and Chilean Merlot is hard to find. Most retailers had a South American section, where Chile and Argentina were mixed together. I would say the tipping point for Argentina was around 2005, 2006. That is when I noticed the consumer went from, ‘What is Malbec?’ to ‘What Malbecs do you have?’’

In terms of popularity, Alamos, imported from Argentina (Mendoza region) by E&J Gallo, is a consumer favorite, selling 915,000 9-liter cases in the U.S. last year, most of them the Alamos Malbec. Part of the brand’s appeal is its value price point, which usually comes in at under $10 a bottle. The brand also includes a Cabernet Sauvignon, a Red Blend (with 60% Malbec), a Chardonnay and a Torrentes. Smaller in volume but increasing its visibility is Doña Paula Wines, also from Mendoza, Argentina. Imported into the U.S. by Trinchero Family Estates, Doña Paula features its Estate tier, with Malbec being its top-selling label. The brand’s Estate portfolio includes three additional varietals (Cabernet Sauvignon, Chardonnay and Torrontés) as well asDoña Paula 2012 Black Edition Red Blend, introduced earlier this year. The Red Blend is comprised of 60% Malbec, 37% Cabernet Sauvignon and 3% Petite Verdot, and is available nationally at a suggested retail price of $14.99.

 

Chilean Makeover

Although Argentina’s wine growth has been impressive in a short amount of time, Chile is facing a different sort of challenge. Ramkowsky says Chilean wine has been a known entity since the 1990s, but primarily in the value sphere. “The efforts needed by Chile are to build a strong image between the $15-$30 retail category. These price points will allow smaller producers to find a balance between needed margin and volumes,” he adds.

The country is doing just that. According to New York-based organization Wines of Chile, they exported a total of 16,276,600 cases to the U.S., making it the fourth largest imported wine by volume, and giving it about 4% of the total U.S. wine market. While Chile represented 8% of the imported category by volume, it was the number one imported bulk wine both by volume and value, accounting for 28% of the imported bulk category. Red Blends and Cabernet Sauvignon take the lead, followed by Sauvignon Blanc, Chardonnay, Pinot Noir and Carmenère. New terroirs, like Elqui and Leyda Valleys in the north, and Bio Bio and Malleco in the south, are also gaining traction.

“Chilean Cabernet Sauvignon is the driving force in Chilean category sales by far, and will remain so for the foreseeable future, the reason being that regardless of the price range, whether $10, $10-$15 or $20-$125, Chilean Cabs over-deliver in taste, quality and consistency from vintage to vintage versus many other Cabernets from more volatile climates around the world — thanks to Chile’s singular geographic location and its corresponding combination of climate and terroir,” says Marc Goodrich, president of Excelsior Wine Company — which distributes wines from Chilean powerhouse Concha y Toro and Argentine subsidiary Trivento.

Palm Bay International’s Michael Preis, brand manager for the behemoth brand Santa Rita, says that “Chile offers an amazing array of varietals and sub-regions that provide exceptional value at every price point, which is a unique proposition coming from one country. Whether it’s Pinot Noir or Sauvignon Blanc from Leyda, Cabernet Sauvignon from Maipo, Carmenère from Colchagua or Cabernet Franc from Pumanque, there are extraordinary terroir-driven varietals being produced in Chile these days.”

Ramkowsky spent two years with his partner amassing a collection of wines that represent “New Chile.” “Our portfolio is the first to represent the diversity of Chile and the next generation of wineries. Chile is mirroring the evolution of California,” he explains. “From large production areas — Central Valley, California and Central Valley, Chile — to more specific regions — Napa Valley and Maipo Valley — to new regions—Sonoma Coast and Leyda — Chile is a country of diversity that is only beginning to be explored.” Among the new rollouts he’s looking forward to: Casa Silva’s “Carmenère Project” and Garcia & Schwaderer’s “Bravado,” a blend of Carignan, Cabernet and Syrah.

 

Engaging the Masses

Santa Rita has seen two years of positive growth above the overall category, an average of 8%-10% a year, according to Preis. The brand just launched a red blend, predominantly Cabernet Franc with Carmenère and Cabernet Sauvignon, called the Hero’s Salute, an ode to the 120 patriots who fought in Chile’s battle of independence. A second blend, the “Secret Reserve” — named for the oversized mirror hanging in the Santa Rita Casa Real Hotel that has witnessed over a century of dinners, dances and “secrets” — will be comprised of Cabernet Sauvignon, Merlot, Syrah, Petit Verdot and Carmenère.

For several years, Banfi’s Emiliana, from Chile, has had a strong on-premise presence. Now it is seeing a natural progression of success at the retail level. In particular, says brand manager Lauren Marano, Emiliana’s Natura line “is enjoying triple-digit growth, outpacing the category in terms of case volume and value dollar growth. Natura has one of the top-performing SKUs in Chile’s hottest varietal categories: Cabernet Sauvignon, Sauvignon Blanc and Malbec.” The recently launched Natura Pinot Noir, carrying a Casablanca Valley designation, is also garnering attention. Additionally, Banfi began a soft rollout in limited markets of Emiliana’s Novas terroir-driven line featuring Sauvignon Blanc from San Antonio Valley, Pinot Noir from Casablanca Valley and Cabernet Sauvignon from Maipo Valley.

Though Baron Philippe Rothschild is known for its French winemaking roots, the group also has long-term experience growing and producing wines in Chile and already had the infrastructure in place, including a production facility, grower partnerships and winemaking team. So, in collaboration with Constellation Brands, Anderra was launched. “We’re still in the Anderra launch ‘honeymoon’ stage, so it’s a very exciting time for the brand. The portfolio’s three varietal offerings — Sauvignon Blanc, Carmenère and Cabernet Sauvignon — are still new to market and generating great buzz and trial with both trade and consumers,” says Laëtitia March‐Nulton, BPHR U.S. export director and brand ambassador.

 

Consumer Discovery

“Today’s consumers, especially those of the Millennial generation, are open to discovering new wine regions. They’re embracing imported wines at a rate faster than we’ve ever seen,” says March-Nulton. What’s interesting, she notes, is that whileCarmenère is the number eight Chilean varietal, “it’s growing faster than both Cabernet Sauvignon and Sauvignon Blanc. It’s an appealing varietal in that it offers a combination of nice fruit with a hint of smoke, and it pairs beautifully with food. It’s a lovely, and intriguing wine.”

Excelsior Wines’ Goodrich agrees this grape has potential. “Carmenère is an intriguing grape and continues to do well. It has opportunity for continued upside potential, particularly among curious Millennial wine consumers, who are interested in learning, trying and experimenting with different wines and grape varieties from around the world. With this group of consumers, education is key. “ Further, Excelsior’s new Decopas Sauvignon Blanc and Malbec, from Mendoza, also have the Millennials in mind with their breezy cartoon-style labels and the tagline “Life is Full of Flavor.”

Chilean brand EPICA attracts Millennials through its four varieties: Red Blend, Cabernet Sauvignon, Sauvignon Blanc and Chardonnay. “In our first two years we depleted over 40,000 cases, which is a 53% sales increase from last year,” says brand director Sebastian Reitze. “The biggest milestone for Chilean wine is that it has brought to the U.S. a more drinkable and approachable wine while keeping true to Chile’s origins” — an ideal combination for Millennials. Now, EPICA is hoping to lure in this demographic once more this fall with the debut of its Malbec from Argentina.

Emiliana’s Natura line appeals to a growing segment of consumers who are inspired by natural, green and organic products. “We feel this is a niche that is still in its infancy, and will increase exponentially due to the entrance into the market of wine-drinking Millennials who share the ethos of Natura’s current consumer: aware and engaged, looking for strong quality:price ratio, but take it a step further in terms of social and environmental responsibility,” says Marano. A partnership with Keep America Beautiful, during September’s National Organic Food Celebration Month, further solidifies the brand’s environmental stance. “This program leverages Natura’s brand essence of pure, natural, responsible and sustainable, and it speaks to our target consumer who embraces the outdoor lifestyle, appreciates their beautiful outdoor spaces and values all things natural,” she notes.

 

In the New World

Larry Challacombe, general manager of Global Vineyard Importers, says that although Argentina’s Malbec remains strong with double-digit growth, other grapes are making the scene competitive. “Carmenère looks like it won’t be the next Malbec — at least not yet — but continues to give Chile a unique selling proposition,” he says. “Most sales are still Cabernet Sauvignon and Chardonnay, but now that more Pinot Noir is planted, and planted in the cooler areas, it is doing well, as are red blends and dry rosés. Look for interesting varieties, often from old vines, such as Carignan, Cabernet Franc, even dry Riesling starting to make some noise.” In his portfolio, Challacombe is most amped for his Apaltagua “Costero” sparkling wine and an impressive Cabernet Franc from Maquis winery “that is complex, delicious and more accessible than most Chinons costing twice as much.” He’s also tackling on-the-rise Uruguay, working with Marichal Wines. “It clearly is still an emerging category with little demand, but the quality is quite good and they have a unique grape in Tannat. It is a long-term project, but it is an exciting country that is making great strides with each successive vintage,” he says.

Chilean wines are in the spotlight at sleek, niche New York retailer Puro Wine. “Interest in New World wines is increasing—not as fast as we like, but it’s growing. This market is very hard since the U.S. is a wine producer and we have to compete with California, Oregon and Washington,” says general manager Franco Dagnino Macari. “The good thing about our store is that the market share here is upside-down compared to the actual market. In Puro Wine small producers sometimes sell more than the typical large wineries. It all depends on how much they use this platform to promote their wines in the U.S.”

Partnerships with retailers have proven boons to brands like Trivento. Its Amado Sur Malbec blend, up 23% from last year, features grilling themed tie-ins and collaborations with grill guru Steven Raichlen and his BBQ University. Additionally, Santa Rita’s global marketing initiative, “The Moment is Yours,” is bolstered by the brand’s second annual “Elevate the Tailgate” activation, highlighting Santa Rita’s role at stadium parties around the country.

Vine Connections’ Ramkowsky says one of his company’s main objectives is to ensure that retailers have dedicated sections for each country. “While this is less of a problem today than ten years ago, it is still very common for there to only be a South America section. One program we have is to offer retailers to reprint a Chile and Argentine sign for their stores. Another program is creating a ‘New Chile’ section in their set. This is to help early adopter retailers a chance to be ahead of their competition, those who are only offering Concha y Toro, San Pedro or Montes,” he says. “Most of our initiatives focus on the category, not just the producers. The idea is to continue growing the size of the pie.”

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