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Low-Priced Malbec Wine May Disappear From Shelves

Bodega Atamisque, a malbec producer in the Uco Valley, Argentina
© Estudio García & Betancourt | Bodega Atamisque, a malbec producer in the Uco Valley, Argentina
Fresh concerns about the effects of new regulations on Argentine wine producers.

The tide of cheap malbec from Argentina may be about to dry up, and not just because of a small 2012 harvest that was down by more than 20 percent.

According to winemaker Paul Hobbs, the Argentine government is imposing protectionist limits on supplies that will make it difficult for wineries to produce quality wines.

"The government says you have to export as much as you import," Hobbs says. "That makes it challenging to bring in top-quality corks, barrels, capsules, and everything else."

This regulation adds another layer of difficulty to rapid inflation estimated at over 20 percent, driving up the cost of labor in a country where good farm workers are not easy to come by.

Hobbs says that the high-quality $10 to $12 Argentine malbecs of recent years are likely to disappear. "You'll see quality suffer, and you'll see some supply drying up."

The government's move follows a long history of protectionism in Argentina that stifled one of the world's largest wine industries until the late 1990s, according to Buenos Aires-based journalist Ian Mount. Businesses can get a 180-day temporary importation license for barrels, corks and capsules, but few new wineries can export an equivalent value of wine in just 180 days.

"The rules will make it just about impossible for new wineries," says Mount. In addition, he believes the leeway enjoyed by individual bureaucrats in interpreting the rules makes it difficult for businesses to have certainty about what will be permitted. And he says so at some personal risk.

"In Argentina, if they don't like your article, you get a call from the tax officer," says Mount, who has written about Argentina for the Wall Street Journal and New York Times.

Reuters reported in August that President Cristina Fernández de Kirchner's government had fined and sued economists who had published a real inflation rate – i.e. one that differed from the official government figure of just over 10 percent. Dairy farmers dumped truckloads of milk in an economic protest. But don't expect malbec to be dumped on the international market.

"Exporters have to give up margins or raise prices," Hobbs says. Watch this space.

 

Related story:

Argentine Wine Dragged Down By Red Tape

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