Argentina is arguably one of the leading nations in the wine business. Since the beginning of the 20th century when vast amounts of natural resources were realized by the European colonizers, this nation has managed to become one of the wealthiest nations in the word. Also, the initiation of a political revolution in 2015 after Mauricio Macri ascended into office further contributed to the advancement of the wine industry. Ironically, wineries in Argentina are more focused on the exportation of their wine products rather than satisfying the domestic market which end up being serviced by imported wine. The reason behind this, is based on the idea that wine is imported into the nation at a cost of $0.5 per liter compared to the $3.32 charged on each liter exported to other nations (Maffioli, Gibbons & Rossi, 2018). My business, which is situated within the United States plans to rely on the wine industry in Argentina owing to the great potential it has.
Toledo winery, situated in the rich suburbs of the United States is among the leading retail merchants in the wine business. The business plans on becoming one of the renowned wine stores in the country. Also, the Company plans on establishing products that are distinct from those produced by competitors with an intention of acquiring a significant share of the market. Besides, this business seeks to initiate quality inventory and favorable prices for consumers in addition to excellent customer service experience for all. The mission of this business is to create the best quality of wine products in the industry.
Wine has for long been revered owing to its ability to fit into a wide variety of occasions compared to other drinks. For example, wine can be served as drink for socializing with friends, as an aperitif or as an accompaniment to a three course meal (Humphreys & Carpenter, 2018). This explains why the U.S is specifically concerned with the wine business. In 2016, the United States was ranked as the fourth largest producer of wine in the world with a capacity of 23.9 million hectoliters (Humphreys & Carpenter, 2018). The state of California accounts for the region which contributes the greatest portion of the American wine. For example, in 2016, California accounted for 90 percent of all the wine produced within the United States (Humphreys & Carpenter, 2018). During the same year, the average wine consumption in the country was 2.94 gallons which had increased from 2.34 gallons in 2015 (Humphreys & Carpenter, 2018). This increase shows that the potential for the wine market is increasing within the country making it one of the best places to initiate a wine business as will be illustrated in the next section.
It is also necessary to note that the wine represents one of the most lucrative businesses in the United States. In 2017, for instance, the total wine sales amounted to $62.7 billion (Humphreys & Carpenter, 2018). Also, wine shipments from California accounted for 66% of all the wine produced within the U.S. In addition to this, the number of wineries increased by 9% to 9654 (Barthelemy, 2017). The leading states in relation to wine are California, Washington, New York and Texas. The volume of wine exported to other countries, nevertheless, decreased by 7.9% which can be attributed to the increased consumption of wine domestically (Barthelemy, 2017). The potential that the U.S holds in relation to wine is such that, currently, up to 40% of individuals within the country consume wine. The baby boomers aged between 53 and 71 years are the greatest consumers followed closely by the millennials who are 23 to 40 years old (Barthelemy, 2017). Despite the great potential that the U.S holds in the wine business, importing wine from Argentina is likely to add more value to the business as will be proven below.
One of the greatest strengths of importing wines from Argentina is the fact that Argentina is the host country to one of the most revered brands in the industry, Malbec. In this case, it is highly likely that the business will be in a position to attract more clients upon learning about the availability of the highly potent brand. Besides, the aforementioned brand, wine enthusiasts believe that Argentina produces the best wine in the world. This is, therefore, likely to be an added advantage to the winery. Argentina also has favorable policies pertaining to the importation of wine compared to other nations hence making it one of the best places to import from. The nation also has some of the best wine experts thus ensuring only quality wine is exported to other countries. Regardless of these advantages, there are a number of shortcomings that are likely to be encountered as a result of importing Argentine wine products. For instance, the price charged on importation of wine from Argentina is higher than that in other countries such as Spain thus leading the importer to charge higher prices for the commodity which competes with other domestic products being sold for relatively lower prices. Secondly, the wine industry in Argentina is likely to be faced with challenges resulting from lack of water in vineyards in the near future. This could lead to shortages especially in a scenario where demand for wine becomes higher within the U.S. Also, if imported wine fails to meet the set standards within the United States chances are high that it will be rejected thus leading to great losses.
Finally, based on the above analysis, it is apparent that the Argentine industry presents the most viable markets for wine importation for Toledo winery. This is due to the fact that it is highly acclaimed within this business and also, Argentina is the home of Malbec, one of the most recognized international wine brands. The American industry has done fairly well in the wine business although it is possible for improvements to be made. Also, in future, Toledo can opt for other markets such as Spain which offer high quality wine at lower costs. At the moment, however, it would be advisable for the business to focus on making progress in a bid to ascertain increased annual revenue which will later on create room for future advancements.
Barthelemy, J. (2017). The impact of technical consultants on the quality of their clients' products: Evidence from the B ordeaux wine industry. Strategic Management Journal, 38(5), 1174-1190.
Humphreys, A., & Carpenter, G. S. (2018). Status Games: Market Driving through Social Influence in the US Wine Industry. Journal of Marketing.
Maffioli, A., Gibbons, M. A., & Rossi, M. (2018). Support Program for Small Producers of the Wine Industry in Argentina (PROVIAR) and Provincial Agricultural Services Program (PROSAP).
Staricco, J. I., & Ponte, S. (2015). Quality regimes in agro-food industries: A regulation theory reading of Fair Trade wine in Argentina. Journal of Rural Studies, 38, 65-76.
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