Required Report - public distribution

**Date:** 6/9/2004

**GAIN Report Number:** AR4032

AR4032

**Argentina**

**Wine**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Robert K. Hoff

U.S. Embassy

**Prepared by:**

Francisco Pirovano

**Report Highlights:**

The excellent grape crop of calendar year (CY) 2004, in terms of both
quantity and quality, is similar to those of the previous two harvests.
The outlook for the wine industry for CY 2004 is bright, since exports
and domestic consumption of high quality wines are forecast to continue
to increase and international prices are expected to be higher than in
CY 2003. Imports are still being discouraged buy the devalued currency,
which makes purchases viable only on exceptional bases.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Buenos Aires \[AR1\]

\[AR\]

Table of Contents

[Section I. Situation and Outlook 3](#section-i.-situation-and-outlook)

[Production 3](#production)

[**Grape Production 3**](#grape-production)

[**Wine and Must Production 4**](#wine-and-must-production)

[**Wine Quality 4**](#wine-quality)

[Consumption 4](#consumption)

[Trade 5](#trade)

[**Import requirements 6**](#import-requirements)

[Factors Affecting the Industry Structure
8](#factors-affecting-the-industry-structure)

[**International Prices 8**](#international-prices)

[**Domestic prices 8**](#domestic-prices)

[**Costs of production 9**](#costs-of-production)

[**Investments 9**](#investments)

[**Policy 9**](#policy)

[**Varieties 10**](#varieties)

[Marketing 10](#marketing)

[Non-traditional wine businesses 11](#non-traditional-wine-businesses)

[Section II. Statistical Tables 12](#section-ii.-statistical-tables)

# Section I. Situation and Outlook

After many years of producing large quantities of wine of average
quality, Argentina's movement in the direction of production of
fine/premium wines is gaining strength. Today, the variety of Argentine
wines offered in the international market is growing due to a
significant influx of domestic and foreign investments, and strong
international demand.

With 210,000 hectares of vineyards, Argentina occupies the tenth place
among the world grape grower countries. However, when it comes to wine
production, Argentina is the fifth largest producer after France, Italy,
Spain, and the United States.

Before the 1990s, the Argentine vineyards did not take advantage of the
latest technological developments. Grape production of up to 10,000
metric tons (MT) was used as the principal input for poor quality table
wines, traded in bulk, and consumed domestically in Buenos Aires and its
suburbs. Vineyards were given flood irrigation and most of the wine was
produced in cement tanks leaving the oak barrels only for small amounts
of selected wines.

Grapes used for table wine shared space with varieties of fine wine such
as Cabernet Sauvignon, Merlot, and above all, Malbec, a variety
introduced to Mendoza Province in 1860 from Burdeos, France. This
variety became so well adapted to the environment, that today it has
become Argentina's signature wine.

In the 1990s, the total investments of US\$1.3 billion changed the wine
industry in Argentina. New agronomic techniques such as drip irrigation,
and enological changes such as the use of stainless steel tanks, cold
storage, and oak barrels, were introduced on a large scale. One of the
goals was to attain better grape quality by limiting production.

The Argentine Government (GOA) has also contributed to this
transformation process through regulations issued by the National Wine
Institute (NWI). The NWI, is the institution in charge of ensuring that
all grapes derived products, imported or domestically produced, are
genuine, and are fit for human consumption. Regarding the export market,
the INV carries out procedures to comply with the import requirements of
the destination countries. The INV also keeps the statistics related to
the Argentine wine industry.

# Production

## Grape Production

Although the specialists in the industry believe that the 2003 and 2004
crops did not surpass the quality of the 2002 harvest, once again the
right combination of good weather conditions in the whole grape
production area throughout the growing season of 2003/2004, together
with the improved agronomic techniques applied on the fields, resulted
in the third consecutive good harvest.

A severe drought during the April-December 2003 period in the central
and western portion of Argentina affected all the wine production
regions. This region has a semi-desert climate. (Grape production is not
based on rainfall but on irrigation, which in turn, depends on melted
snow from the Andes). The lack of humidity during the first stages of
the plant's vegetative period made transpiration more intense, enhancing
plant metabolism, which resulted in red grapes with higher sugar and
phenols concentration, and white grapes with more flavor. Lower minimum
temperatures resulted in large differences between day and night
temperature in February, March and April, which enabled clusters to be
enriched with flavors and tannins. Another key climatic event were the
intense hot summer days with a strong hot wind called "Zonda" blowing
from the Andes during December 2003. This provoked damages in most
vineyards that faced the west, which lost between 60 and 70 percent of
their leaves.

Regarding production volumes, grapes delivered for crushing for the
production of wine and must in calendar year (CY) 2004 are expected to
increase 10 percent to 2,556,500 MT compared with the 2,221,800 MT
delivered in CY 2003.

## Wine and Must Production

Overall wine production in CY 2004 is forecast at 14,600,000 hectoliters
(HL), 10 percent higher than the 13,225,000 HL produced in CY 2003. In
CY 2003, 6.2 million HL of white wine and 6.3 million HL red and rose
wine were produced. Production of other categories such as regional,
sweet natural, ritual, and fermented must, were at 712,000 HL. Must
production in CY 2004 is estimated at 4,600,000 HL while in CY 2003
4,380,000 HL.

## Wine Quality 

CY 2003 and CY 2004 were characterized by a benign dry and hot climate,
which resulted in a very healthy crop without the presence of
cryptogrammic diseases. As a result, again in CY 2004 Argentina will be
able to offer the world wine of excellent quality in almost all the
varieties produced in CY 2002, CY 2003 and CY 2004.

# Consumption

Breaking the negative trend of the past 15 years, the per capita
consumption of wine grew 2.4 percent in CY 2003 to 33.7 liters per
capita due to the affordability of the high quality wines.

Wine domestic consumption in CY 2003 was 12.3 million HL, a three
percent increase compared with the 12 million HL consumed in CY 2002.
Comparing the figures from CY 2002 and CY 2003, it is possible to see a
change in the wine consumption structure in Argentina. While table wine
consumption continued to decrease, for fine/premium wines, domestic
consumption grew 20 percent in CY 2003. Out of the 12.3 million HL of
wine sold in the domestic market in CY 2003, 11.8 million HL were
in-origin bottled and, only 540,000 HL were sold in bulk. The 76 percent
of the fine/premium wine consumed in Argentina is red as is 56 percent
of the table wine, which is domestically consumed.

The media in Argentina have started to talk about a boom in local
consumption of premium/fine wine. Habits and customs of the Argentine
middle class have changed in the past three years. More people are
attending courses on wine and exclusive wine tasting clubs and bars have
more members every year. Some industrial sources assert that what is
happening in Buenos Aires follows the same trend as in Europe and soon
wine will supplant beer as the number one drink consumed by meddle and
upper class.

  -------------------------- ---------------- --------------- ------------
  **Consumption in liters                                     
  per capita**                                                

  **Kind/Year**              **2001**         **2002**        **2003**

  **Premium/Fine**           9.4              8.56            10.88

  **Table**                  26.29            23.89           22.80

  **Others**                 0.58             0.45            0.70

  **Total**                  36.3             32.9            33.68
  -------------------------- ---------------- --------------- ------------

Source: The National Wine Institute
([www.inv.gov.ar](http://www.inv.gov.ar/))

# Trade

Sources in the industry assert that wine export volumes in CY 2004 will
increase 10 percent to 2,000,000 HL compared to CY 2003. Prices are
expected to continue to trend upward at an annual average of US\$190,
US\$40, US\$300 and US\$160 for fine, table, sparkling, and other wines,
respectively. The overall export value for CY 2004 is forecast at
US\$230 million, which will be a new record high and will be 25 percent
up from that of CY 2003.

Overall wine export volumes continue to rise, reaching 1.85 millions
(HL) in CY 2003. In the first three months of CY 2004, all wine export
volumes registered a drop of 14 percent (335,225 HL in Jan-Mar 2003 to
289,988 HL in Feb-Mar 2004) due to the lack of wine in the market. Drops
of 49, 21 and 26 percent were registered for table, fine and sparkling
wines export volumes, respectively. However as new wine was released on
May 17, it is expected that this trend will soon be reversed.

  --------------------------- ------------- ---------- ---------- ------------
  **Export volumes (HL)**                                         

  **Kind/Year**               **2001**      **2002**   **2003**   **2004\***

  **Premium/Fine**            505000        575000     803000     940000

  **Table**                   362000        644000     1000000    1050000

  **Sparkling**               11000         14000      15500      18000

  **Others**                  4000          2300       9400       10000

  **Total**                   882000        1235300    1827900    2018000
  --------------------------- ------------- ---------- ---------- ------------

Source: The National Wine Institute
([www.inv.gov.ar](http://www.inv.gov.ar/))

(\*) FAS Forecast

Due to increases of nearly 25 percent in FOB prices in the beginning of
CY 2004, export values increased 30 percent on average from US\$33
million to US\$42 million in the first three months of CY 2004 compared
to the same period in 2003. In CY 2003 overall export values were at
US\$170 million, which represented a 24 percent increase with respect to
CY 2002. As mentioned in the AR3030 Annual Report, after the 70 percent
peso devaluation, which occurred in February 2002, FOB prices for all
wines fell, affecting exports values considerably. In CY 2003, FOB
Buenos Aires prices continued to decrease; however, due to the 50
percent increase in the export volumes of CY 2003, export values
increased 12 percent with respect to CY 2001.

The top market for Argentine wine continued to be the United States with
US\$34 million followed by the United Kingdom with US\$27 million. Other
good markets were Canada and Brazil with US\$ 11 each, Denmark with
US\$8 million, Netherlands, France and Paraguay with US\$7 million each,
and the Russian Federation with US\$5 million. Export values for
fine/premium wine reached a record high of US\$140 million in CY 2003
outstripping the last record of US\$120 million in CY 2001.

  ------------------ ------------- --------------- ------------ -------------
  **Wine export                                                 
  values (US\$ FOB                                              
  Buenos Aires)**                                               

  **Kind/Year**      **2001**      **2002**        **2003**     **2004\***

  **Premium/Fine**   120000000     103000000       140000000    180000000

  **Table**          22000000      18000000        24500000     42000000

  **Sparkling**      6500000       7100000         5000000      5500000

  **Others**         290000        161000          470000       600000

  **Total**          148790000     128261000       169970000    228100000
  ------------------ ------------- --------------- ------------ -------------

Source: The National Wine Institute
([www.inv.gov.ar](http://www.inv.gov.ar/)) - (\*) FAS Forecast

Exports of must for CY 2004 are forecast to increase to 820,000 HL,
reaching a record high export value of US\$70 million due to the higher
international price in CY 2004 of nearly US\$85 per HL. The total must
export volume in CY 2003 increased 13 percent to 794,000 HL with a FOB
value of US\$56 million, 11 percent higher compared with CY 2002. The
main export market for Argentine must in CY 2003 was the United States
with 321,300 HL (US\$22 million), followed by Japan 82,200 HL (US\$6.7
million), Canada 77,100 HL (US\$5.1 million), and South Africa. Other
important markets were the Russian Federation, Chile, Angola,
Netherlands, Brazil, and France. Also, Canada purchased 3890 HL of
sulfate must at a value of US\$52,000 in CY 2003.

  --------------------------- ----------- ---------- ---------- ------------
  **Must Export volumes                                         
  (HL)**                                                        

  **Kind/Year**               **2001**    **2002**   **2003**   **2004\***

  **Must**                    514300      700000     794000     820000

  **Sulfate must**            7200        47000      3890       N/A

  **Total**                   521500      747000     797890     820000
  --------------------------- ----------- ---------- ---------- ------------

  -------------------------- ----------- ---------- ---------- ------------
  **Must Export values (US\$                                   
  FOB Buenos Aires)**                                          

  **Kind/Year**              **2001**    **2002**   **2003**   **2004\***

  **Must**                   51000000    50000000   56000000   70000000

  **Sulfate must**           124000      858000     52000      N/A

  **Total**                  51124000    50850000   56052000   70000000
  -------------------------- ----------- ---------- ---------- ------------

Source: The National Wine Institute
([www.inv.gov.ar](http://www.inv.gov.ar/))

(\*) FAS Forecast

Industrial sources indicate that the lack of vessels has created a
shipping problem, which resulted in delivery delays of the Argentine
wine. In addition, shipping costs increased 60 percent in CY 2004
compared with the CY 2003 season. For some products, the cost increase
meant the loss of competitiveness, and therefore an evasion of market
share.

For a second straight year, imports of wine remained as low as 2400 HL,
the lowest level in the last ten years. The largest exporting country in
CY 2003 was Spain with 2000 HL of sparkling "Cava" wine.

  ---------------- ------------------------------------------- -----------
  **Import tariffs                                             **%**
  and taxes**                                                  

  **Import         **Outside Mercousr area**                   21.5
  Tariff**                                                     

                   **Inside Mercosur area**                    0

  **Statistical                                                0.5
  tax**                                                        

  **Export tax**                                               5

  **Rebate**                                                   6
  ---------------- ------------------------------------------- -----------

## Import requirements

Registering as a Wine Importer / Certificado de Inscripción como
Productor de Productos Vitivinícolas (SCD. RM. 11 form)

Any person wishing to import wine in Argentina must obtain a
registration number at the National Wine Institute --NWI, (Instituto
Nacional de Vitivinicultura). Then, this registration number will be
requested at every step of the import process. The paperwork must be
carried out at the offices of the NWI. The registration number is
received in 24 hours and is free of charge. The applicant must submit a
SCD.RM.12 form with an attached copy of the registration ticket issued
by the National Tax Office (Administración Nacional de Ingresos
Públicos-AFIP), which must be signed and stamped by the applicant. Then
the NWI will issue and submit to the applicant a certificate with the
registration number.

[One time Import Permit / Guía Unica de Importación (1985 O. y M.
form)]{.underline}

The importer must submit the form 1815-O. y M. in triplicate with the
in-origin analysis certificates issued by an official or officially
approved laboratory as attachments. This is a sworn declaration
submitted by the importer that informs the NWI about the product to be
imported. Through this document, the importer requests the NWI to take
samples of the wine/must in order to test the product according to the
Argentine regulations. This document is needed to transport the wine
from the customs warehouse to the importer's storage facility where
staff from the NWI will take the samples.

The permit indicates the following: name, registration number with the
NWI, and Address of the importer; name and address of the storage
facility; country of origin; port of entry; date of arrival; amount and
kind of product; harvest year; variety; amount and kind of container
(i.e. bottle); total volume in liters; number of analysis in origin; CIF
value; identification key; place and date of submission, signatures and
stamps from the applicant and the officer form the NWI. This permit must
be submitted at least 48 hours before the declared date.

The import permit costs US\$33.00 and the test costs US\$5.00. The
importer must also pay the free sale permit analyses, which price may
vary with the volume to be imported. The Import permit is issued the
same day that the importer submits it and the NWI does not exceed the 7
days since when the samples are taken to deliver the free sale analyses.
The importer keeps two of the three copies, which will be part of the
custom's documentation. Once the customs office has approved the import,
the applicant must submit a signed copy to the NWI together with an
OM-1993 SIM form.

The wine to be imported must be identical to the one produced in
Argentina, and must comply with the Wine Law No 14878 and its
regulations.

**Labeling Requirements**

Imported wines may carry the label of the country of origin. However, an
additional label with the following statements must be added to the
bottle.

-   Wine color (red, white, rose)

-   For sparkling wines sugar content must be specified as follows:

-   Nature (up to 3 grams of sugar per liter)

-   Extra Brut (between 3 and 8 grams per liter)

-   Brut (between 8 and 20 grams per liter)

-   Sec (between 15 and 20 grams per liter)

-   Demi-Sec (between 20 and 60 grams per liter)

-   Sweet (more than 60 grams per liter)

-   Country of origin

-   Name and address of the importer

-   Importer registration number at the NWI.

-   Container (i.e. bottle) capacity expressed in centiliters,
    milliliters or cubic centimeters.

-   Alcoholic content expressed in percentage of the volume.

-   Number of the analysis of free sale. This may be requested in
    advance in order to allow the printing out in origin.

-   The following health statement must be printed on the label: \"drink
    with moderation\"(Beber con moderación) \"Sale prohibited to minors
    under 18 years old\"(Prohibida su venta a menores de 18 años).

**Useful Contact data**

The National Wine Institute -- Instituto Nacional de Vitivinicultura

Headquarter Office

Av. San Martín 430 (5500) Mendoza, Argentina

Tel.: +54 261 521 6672/73

Eml.: <comext@inv.gov.ar> and <export@inv.gov.ar>

www.inv.com.ar

# Factors Affecting the Industry Structure

## International Prices

  ----------------- ----------- ---------- ------------ ------------ ----------- ---------- ------------ ------------ ----------- ---------- ------------ ------------
  **International                                                                                                                                         
  FOB Buenos Aires                                                                                                                                        
  Prices                                                                                                                                                  
  (US\$/HL)**                                                                                                                                             

  **Year**          **CY 2002**                                      **CY 2003**                                      **CY 2004**                         

  **Month/Kind**    **Table**   **Prem**   **Spark.**   **Others**   **Table**   **Prem**   **Spark.**   **Others**   **Table**   **Prem**   **Spark.**   **Others**

  **Jan**           50          227        1,035        241          24          168        334          0            37          188        283          146

  **Feb**           73          221        538          167          17          150        377          30           45          196        281          150

  **Mar**           44          253        666          0            28          202        287          40           42          198        315          187

  **Apr**           38          230        743          49           23          151        399          256                                              

  **May**           60          186        673          0            26          157        299          38                                               

  **Jun**           50          202        349          82           22          204        304          41                                               

  **Jul**           40          181        226          223          26          184        261          55                                               

  **Aug**           15          193        476          79           25          147        309          17                                               

  **Sep**           17          134        310          73           19          179        286          36                                               

  **Oct**           26          141        299          54           23          186        259          206                                              

  **Nov**           32          167        337          41           34          181        358          72                                               

  **Dec**           21          144        357          78           40          182        343          71                                               

  **Average**       39          190        501          91           26          174        318          72           41          194        293          161
  ----------------- ----------- ---------- ------------ ------------ ----------- ---------- ------------ ------------ ----------- ---------- ------------ ------------

Source: The National Wine Institute
([www.inv.gov.ar](http://www.inv.gov.ar/))

## Domestic prices

Wine prices on supermarket shelves have been stable since in CY 2001. In
order to keep prices down, wineries forfeited part of their revenues,
which were taken by a higher production costs.

There are three price bands in the Argentine wine domestic market.
Prices go from US\$1.40-US\$6.70, US\$6.70-US\$16.80 and from
US\$16.80-US\$33.60. A very limited number of brands cost more than
US\$33.60 and up to US\$90.60.

The so-called *ultra premium* wines, whose production never exceeds
100,000 bottles, are primarily (90 percent) destined for the export
market and used to gain prestige in the international market. Wines that
cost from US\$33.6-US\$90.60 are hard to find on supermarket shelves in
Argentina and are typically sold in specialized stores and restaurants.
To exemplify *ultra premium* wines, on of the 5,820 bottles of the Finca
Altamira Malbec produced in CY 2000 by the Achaval Ferrer winery, costs
US\$90.60 and a bottle of the Nieto Sanetiner Bonarda from CY 2000 costs
US\$84.00.

In order to be considered *ultra premium*, a wine has to fulfill certain
requirements. Then, in addition to the limited production, oak barrels
must be used during the aging period, which must be of two years between
barrel and bottle storage. With production costs 60 percent higher than
that of the premium line, more often than not, this business is not
profitable for the winery, but it is useful for marketing positioning.
This market segment represents five percent of the winery sales but 80
percent its image and prestige. These wines have substituted the top
quality imported wines that after the peso devaluation became very
expensive and whose importations dropped considerably.

## Costs of production

Industrial sources informed that the price of the inputs needed for the
wine industry increased between 50 and 60 percent after the peso
devaluation that occurred in February 2002. In addition, the input
suppliers are not able to finance the wineries as they used to do in the
1990s.

## Investments

Foreign and domestic investors continue to pour money into the Argentine
wine industry in CY 2003. The low land prices, the effect of a devalued
currency and the good quality of its wines, have combined to make
Argentina a very attractive country for investments. Wine makers from
Chile, Spain, France, and others have built their own wineries in
Mendoza and San Juan, and contributed to the improvement of this
industry in Argentina.

Domestic investors have realized the potential in the valleys of the
province of Mendoza's neighbor province, San Juan. Reportedly, US\$60
million will be invested to develop a premium wine industry in this
province in CY 2004. Despite all the same varieties of Mendoza, San Juan
lacks the number of quality wines that Mendoza produces, and is a bulk
wine and concentrate producer. In CY 2004, this trend will probably be
reversed. The "Industrial Promotion Regime Program" which exempts some
investment from paying taxes, is encouraging winemakers from other
regions, such as Mendoza and Salta, to built new wineries in San Juan
Province.

Investment in the traditional wine producing province of Mendoza has not
stopped. More than US\$20 million went into new wineries and vineyards
in CY 2003.

## Policy

In 2004, previously rescinded sales taxes on sparkling wines were
unexpectedly reinstated. Wine makers claim that instead of growing 10
percent as expected in CY 2004, domestic sales of sparkling wines will
drop 30 percent because of the reinstated 12 percent sales tax.
According to Bodegas de Argentina, a commercial wine organization,
sparkling wine producers invested more than US\$120 million in order to
improve quality and increase production. There are 1200 wineries
dedicated to these kinds of wines that will be heavily affected by this
tax.

The NWI is the regulatory body for the wine industry in Argentina. As of
May 17 a more stringent government surveillance system has been added to
the list of government controls. Thus, measures such as the
establishment of an alcoholic content of 12.8 percent; date for the
release of new wine, which in CY 2004 was May 17; proportion of must
produced for province, which in CY 2004 was at 24.5 percent, the on site
control of the grapes used to produce wine will be one more duty of the
Institute.

As of May 17, the Argentine Government enforced new labeling
requirements. This will change the way that wine used to be identified
in Argentina. The new labeling requirements only allow mention of the
color of the wine, its variety or blend, and technical data (See
labeling section). Previously, Argentine wine labels could contain other
distinctions such as fine wine and table wine. If the winery wishes to
include the variety name on the label, the NWI will need to supervise
the operation.

The name of the variety on the label will be allowed only if two rules
are abided by: for varietal wines, the grape/wine ratio is 1.3 to 1. In
other words, when 100 liters of wine are produced using 130 Kilograms of
fine grapes, and for non-varietal wines the grape/wine ratio is 1.2
to 1. The second condition is that the wine must contain at least 85
percent of the grape that is claimed. In the case of blends, the
proportion of every grape variety must be mentioned on the label.

Also on May 17, the Argentine Congress passed the new law on Indication
of Origin, Geographical Indications and Certified Denomination of
Origin. This law allows for special geographical features of the origin
of the wine to be mentioned on the label. The NWI, will be in charge of
the surveillance system to ensure the label represents the product in
the bottle.

Finally, on April 20, the NWI issued a rule banning the use of bovine
blood-derived hemoglobin as a clarifying for the winemaking industry.

## Varieties

For the first time in Argentina a varietal wine from Saint Jeannet
grapes will be released in the market. This variety originally from
Asia, was introduced in Southern France by the Greeks. The Benegas
family brought it to Mendoza. Its main characteristic is its late
ripeness and acidity. In the beginning of the 20^th^ century, this wine
was used to enhance the acidity and body of the sparkling wines.

Although San Juan Province is renown for table wine product, high
quality grapes are grown in nearly many of the vineyards in this
Province. As Mendoza is known for Malbec, winemakers in San Juan hope to
be known for Syrah. Another variety that is gaining importance in the
Southern Valleys of Rio Negro and Neuquen in Patagonia, is the Sauvignon
Blanc. The white wine Torrontes is the signature variety in Northwestern
Argentina's Calchaqui valleys of Salta Province and Famatina in La rioja
Province

A new line of kosher wine called Kotel Wines from the Alvear winery will
be release in CY 2004. This Bonarda variety wine follows the strict
kashrut laws and is certified by Orthodox Union of the United States
(OU) and the Adjut Kosher (AJ), following a process called mevushal.
These pasteurized wines are sold in the domestic and international
markets.

# Marketing

The Strategic Plan for the Argentine Wine 2020 (SPWA), provides for the
utilization of US\$15 million in marketing and export promotion. The
goal of this program is to reach sales of US\$2 billion and an
international market share of 10 percent by CY 2020. The objectives of
this plan are: 1) for Argentine variety wines to gain positions in the
northern hemisphere market; 2) to develop the South American market, 3)
to reestablish a market for Argentine table wine, and 4) integrate small
farmers into the wine and concentrate juice business.

At the Provincial level, the ProMendoza Foundation, a private/public
sector entity, has its own export promotion program. A program called
New Export Development, aims at small and medium companies with little
experience in the export market. ProMendoza and the Exportar Foundation
of Buenos Aires have joined a group of 80 wineries in order to hire Dunn
Robins, a consulting firm, in an effort to promote the Argentine wine in
the United States.

Private initiatives to promote Argentine wine multiply every year.
Domestically, Argentine wineries presented their wines in shows such as
Expogourmet and Sitevi Mercosur. In CY 2003, eight wine shows were held
in Buenos Aires versus only one in previous years. Internationally, the
London International Wine and Spirits Fair had 34 Argentine wineries and
the World Wine Market in California gathered 22 Argentine wineries in CY
2004. Due to the great interest showed by the Russian Federation in
Argentine wine, companies from Mendoza will participate in to Prodexpo
and World Food Moscow in CY 2004.

# Non-traditional wine businesses

Small landowners in Mendoza Province have developed a new concept in the
Argentine wine business. The idea of renting out a vineyard row, so that
the tenant will have the right to the grapes and eventually to the wine
produced on her/his row has been a big success in the last years. The
cost of the row includes production, bottling and labeling of the wine.

Another option offered by small vineyard owners is the usage of the oak
barrel. They would offer the usage of an oak barrel that are good for
five years, and depending on the origin (France or the United States)
costs between US\$400 and US\$600. The client must pay for the grapes,
production, bottling and labeling as well as usage of the barrel.

# Section II. Statistical Tables

+------------------+-----+------+------+------+-------+-------+-------+
| PSD Table        |     |      |      |      |       |       |       |
+------------------+-----+------+------+------+-------+-------+-------+
| **Country**      | ### |      |      |      |       |       |       |
|                  | ### |      |      |      |       |       |       |
|                  | ##  |      |      |      |       |       |       |
|                  | Arg |      |      |      |       |       |       |
|                  | ent |      |      |      |       |       |       |
|                  | ina |      |      |      |       |       |       |
+------------------+-----+------+------+------+-------+-------+-------+
| **Commodity**    | W   |      |      |      | **    |       |       |
|                  | ine |      |      |      | (1000 |       |       |
|                  |     |      |      |      | MT)   |       |       |
|                  |     |      |      |      | (1000 |       |       |
|                  |     |      |      |      | HL)** |       |       |
+------------------+-----+------+------+------+-------+-------+-------+
|                  | **  | **R  | **20 | **Es | **2   | **    | **    |
|                  | 200 | evis | 02** | tima | 003** | Forec | UOM** |
|                  | 1** | ed** |      | te** |       | ast** |       |
+------------------+-----+------+------+------+-------+-------+-------+
|                  | **U | **   | **   | **   | *     | *     |       |
|                  | SDA | Post | USDA | Post | *USDA | *Post |       |
|                  | Of  | Esti | Offi | Esti | Off   | Est   |       |
|                  | fic | mate | cial | mate | icial | imate |       |
|                  | ial | \    | \    | \    | \[Ol  | \[Ne  |       |
|                  | \[O | [New | [Old | [New | d\]** | w\]** |       |
|                  | ld\ | \]** | \]** | \]** |       |       |       |
|                  | ]** |      |      |      |       |       |       |
+------------------+-----+------+------+------+-------+-------+-------+
| **Market year    |     | **0  |      | **0  |       | *     | *     |
| begin**          |     | 1/20 |      | 1/20 |       | *01/2 | *MM/Y |
|                  |     | 02** |      | 03** |       | 004** | YYY** |
+------------------+-----+------+------+------+-------+-------+-------+
| **TOTAL Grape    | 2   | 2157 | 2219 | 2218 | 0     | 2556  | (1000 |
| Crush**          | 155 |      |      |      |       |       | MT)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **Begin Stock    | 0   | 0    | 0    | 0    | 0     | 0     | (1000 |
| (Ctrl App)**     |     |      |      |      |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **Begin Stock    | 21  | 2    | 2    | 2    | 0     | 20161 | (1000 |
| (Other)**        | 284 | 1284 | 1270 | 1264 |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **TOTAL          | 21  | 2    | 2    | 2    | 20035 | 20161 | (1000 |
| Beginning        | 284 | 1284 | 1270 | 1264 |       |       | HL)   |
| Stocks**         |     |      |      |      |       |       |       |
+------------------+-----+------+------+------+-------+-------+-------+
| **Prod. from     | 12  | 1    | 1    | 1    | 0     | 14600 | (1000 |
| Wine Grapes**    | 695 | 2695 | 2695 | 3225 |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **Prod. from     | 0   | 0    | 0    | 0    | 0     | 0     | (1000 |
| Tabl Grapes**    |     |      |      |      |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **TOTAL          | 12  | 1    | 1    | 1    | 0     | 14600 | (1000 |
| PRODUCTION**     | 695 | 2695 | 2695 | 3225 |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **Intra-EU       | 0   | 0    | 0    | 0    | 0     | 0     | (1000 |
| Imports**        |     |      |      |      |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **Other          | 23  | 19   | 20   | 24   | 0     | 0     | (1000 |
| Imports**        |     |      |      |      |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **TOTAL          | 23  | 19   | 20   | 24   | 0     | 0     | (1000 |
| Imports**        |     |      |      |      |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **TOTAL SUPPLY** | 34  | 3    | 3    | 3    | 20035 | 34761 | (1000 |
|                  | 002 | 3998 | 3985 | 4513 |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **Intra-EU       | 0   | 0    | 0    | 0    | 0     | 0     | (1000 |
| Exports**        |     |      |      |      |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **Other          | 1   | 1234 | 1450 | 1852 | 0     | 2018  | (1000 |
| Exports**        | 232 |      |      |      |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **TOTAL          | 1   | 1234 | 1450 | 1852 | 0     | 2018  | (1000 |
| Exports**        | 232 |      |      |      |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **D              | 0   | 0    | 0    | 0    | 0     | 0     | (1000 |
| om.Consump(Cntrl |     |      |      |      |       |       | HL)   |
| App)**           |     |      |      |      |       |       |       |
+------------------+-----+------+------+------+-------+-------+-------+
| **Dom.           | 11  | 1    | 1    | 1    | 0     | 13500 | (1000 |
| Consump(Other)** | 500 | 1500 | 2500 | 2500 |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **TOTAL          | 11  | 1    | 1    | 1    | 0     | 13500 | (1000 |
| D                | 500 | 1500 | 2500 | 2500 |       |       | HL)   |
| om.Consumption** |     |      |      |      |       |       |       |
+------------------+-----+------+------+------+-------+-------+-------+
| **End Stocks     | 0   | 0    | 0    | 0    | 0     | 0     | (1000 |
| (Cntrl App)**    |     |      |      |      |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **End Stocks     | 21  | 2    | 2    | 2    | 0     | 19243 | (1000 |
| (Other)**        | 270 | 1264 | 0035 | 0161 |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **TOTAL Ending   | 21  | 2    | 2    | 2    | 0     | 19243 | (1000 |
| Stocks**         | 270 | 1264 | 0035 | 0161 |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+
| **TOTAL          | 34  | 3    | 3    | 3    | 0     | 34761 | (1000 |
| DISTRIBUTION**   | 002 | 3998 | 3985 | 4513 |       |       | HL)   |
+------------------+-----+------+------+------+-------+-------+-------+

  --------------------- ------------------ -------------- ----------------
  Export Trade Matrix                                     

  **Country**           Argentina                         

  **Commodity**         Wine                              

  **Time period**       **CY**             **Units:**     **HL**

  **Exports for:**      **2002**                          **2003**

  **U.S.**              138383             **U.S.**       145412

  **Others**                               **Others**     

  **South Africa**      367522             **South        304221
                                           Africa**       

  **Russian Fed.**      94977              **Russian      279383
                                           Fed.**         

  **Paraguay**          86442              **Paraguay**   192779

  **UK**                120673             **UK**         174608

  **Japan**             45447              **Japan**      65956

  **Brazil**            39576              **Brazil**     59326

  **Canada**            26817              **Canada**     59777

  **Check Rep.**        4249               **Check Rep.** 48788

  **Angola**            1150               **Angola**     48517

  **Uruguay**           16253              **Uruguay**    44877

  **Total for Others**  803106                            1278232

  **Others not Listed** 292920                            428617

  **Grand Total**       1234409                           1852261
  --------------------- ------------------ -------------- ----------------

  -------------------- ------------------ -- --------------- -----------------
  Import Trade Matrix                                        

  **Country**          Argentina                             

  **Commodity**        Wine                                  

  **Time Period**      **CY**                **Units:**      **HL**

  **Imports for:**     **2002**                              **2003**

  **U.S.**             0                     **U.S.**        0

  **Others**                                 **Others**      

  **Spain**            740                   **Spain**       2042

  **Germany**          706                   **Germany**     207

  **Chile**            577                   **Chile**       101

  **France**           135                   **France**      66

  **Italy**            21                    **Italy**       8

  **Uruguay**          0                     **Uruguay**     5

  **Portugal**         193                   ** Portugal**   0

  **Total for Others** 2371                                  2429

  **Others not         0                                     0
  Listed**                                                   

  **Grand Total**      2371                                  2429
  -------------------- ------------------ -- --------------- -----------------

  ----------------- -------------- ------------------- ------------------
  Prices Table                                         

  **Country**       Argentina                          

  **Commodity**     Wine                               

  **Prices in**     **US US\$**    **per uom**         **HL**

                                                       

  **Year**          **2002**       **2003**            **% Change**

  **Jan**           388            132                 -66%

  **Feb**           250            143                 -43%

  **Mar**           241            139                 -42%

  **Apr**           265            207                 -22%

  **May**           230            130                 -43%

  **Jun**           171            143                 -16%

  **Jul**           167            132                 -21%

  **Aug**           191            124                 -35%

  **Sep**           134            130                 -3%

  **Oct**           130            168                 29%

  **Nov**           145            161                 11%

  **Dec**           150            159                 6%
  ----------------- -------------- ------------------- ------------------