According to a report from AndesWines.com, more than 40 Argentine wineries and grape-growing operations and 10 in Chile are up for sale – a phenomenon evident in both countries in the last few months.
Despite there being different factors behind the increase in the number of wineries up for sale in Chile and Argentina, we have seen a dramatic increase recently in the number of mergers, comprehensive buy-outs and wineries that have been put up for sale.
A high percentage of those who have inherited wineries or old-vine vineyards have been unable to make money from them because of the competitive nature of the fine-wine market and depressed grape prices.
They also have been unable to invest in the marketing and development of export markets. The resulting stagnation in overseas sales has meant they have had to focus their efforts on the domestic market.
In the case of small, very traditional producers, such as in Chile’s Itata Valley, some have begun to abandon their old vineyards because of the low grape prices offered by the big wineries. Others are selling their grapes almost below cost.
In the case of Limarí and Elqui valleys in Chile, the drought has begun to affect the harvest of these very high quality vineyards. As a result they have begun to reduce their harvest by 20% and have abandoned plans for new plantings.
In Chile, several wineries are for sale such as Viña Encomenderos in the Itata Valley, a family estate winery that has 46 hectares of old-vine Chardonnay and Moscatel de Alejandria. Here in the south of Chile near Bío Bío, many families are selling their properties because of low grape prices.
Another example is Corcoran Gallery Vineyards (pictured) in Pirque, Maipo Valley, which is owned by Madeline Corcoran, an American citizen who developed an exclusive boutique winery with a house to welcome tourists. The high costs of the operation just could not be maintained, despite the winery’s unique position and many awards in international guides.
In Argentina many wineries owned by foreigners not domiciled in the country began to be put up for sale owing to an overstock of bottles in their cellars. They started selling their grapes instead of bottling their wine, according to AndesWines.com’s report.
In areas such as Catamarca, Salta, San Juan, Mendoza and Rio Negro, many investor-owners of wineries are considering the best way forward for their businesses. The challenge of selling and maintaining operations in Argentina has become more difficult with the rise in costs for both goods and labour.
On the other hand, a new sort of investor is arriving in South America. Most of them are funded privately and one partner moves to the particular country. This is the case in LatAmWineCo Ltd, an economic group from Hong Kong that bought a Finca made up of two properties close to each other in the San Rafael area in Argentina that total 11 hectares. They have Chardonnay, Malbec, Bonarda and Syrah and the vines range from four to seven years of age. The local Argentine manager stayed in the operation.
This is the first time Argentine wineries and grape producers are calling upon Chilean investors to keep investing in their operations in Argentina, considering the number of Chilean wineries with Argentine brands. We can see several Chilean winemakers crossing the Andes to bottle an exclusive Malbec.
As is common in both countries, wine producers asked whether their winery is up for sale tend to reply that it is not, though if there is a good offer on the table, they may well consider.
Is this the moment when big Argentine wineries, frustrated by the narrow options offered by their Malbec, will cross the Andes into Chile and buy Chilean wineries so that they incorporate into their wine portfolio a Sauvignon Blanc from Casablanca, Leyda or Bío Bío, maybe a Carmenère from Maule or Curicó or – who knows – a Cabernet Sauvignon from Maipo?
We have seen that Chile has done this for the last 20 years, strengthening their offer by incorporating an Argentine Malbec into their portfolio.
