The Argentine Wine Industry
The double-edged sword of domestic demand
The development of Argentina's extensive wine industry was both driven and sustained by domestic demand. The countries Spanish and Italian immigrants brought with them a culture of wine consumption that would see a bottle of wine on the table at nearly every meal.
This demand encouraged the rapid development of high-yield vineyards aimed at bulk production to satisfy every-day drinking demands. Varieties such as the 'pink' Criolla Grande and high-yielding Bonarda formed the backbone of the industry, with Malbec grown in smaller quantities.
But while Argentine domestic wine consumption was as high as 90 litres per person, per year, the volume now has fallen considerably to around 40 litres – though compared to, for example, the USA at less than 10 litres and Australia at around 20, this is still a very healthy volume by international standards!
The fall-off in domestic demand, at the same time as the sector was expanding, resulted in a major over-production crisis during the late 1970s and early 1980s. The military and then civilian governments of the time took a range of actions both to limit production and artificially sustain the industry, including taking ownership of massive vineyards. But these steps eventually failed disastrously, and the government-owned companies and others eventually collapsed, leaving vast abandoned vineyards scattered around the Mendoza region.
The deregulation of the early 1990s forced a rationalisation of the industry. But like pruning of the vines themselves, the thinning has spurred a new burst of growth – this time, into production of much higher quality.
Next: A changing industry