AAWE, Economics Dept, New York University, 19 W 4th St, 6Fl., New York NY 10012aawe@wine-economics.org

AAWE Working Paper No. 136 – Business

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AAWE Working Paper No. 136 – Business

WINE MARKET REGULATION IN ARGENTINA:
PAST AND FUTURE IMPACTS

Alejandro Gennari, Jimena Estrella Orrego and Leonardo Santoni

Introduction

The origins of the Argentinean wine industry can be traced to the Spanish colonial period and the establishment of the Virreinato del Rio de la Plata. However, the emergence of the modern wine industry is explained by the Italian and Spanish immigration of the late XIX century and by the contribution of European specialists hired by emergent Schools of Agriculture such as the Faculty of Agrarian Science from the National University of Cuyo, as it is known nowadays. The planting of French varieties (Cabernet Sauvignon, Merlot, Tannat and especially Malbec), Italian varieties (Barbera, Nebbiolo, Sangiovese, Bonarda) and Spanish ones (Tempranillo, Semillón, Pedro Giménez) took place simultaneously with the introduction of the railway in the provinces of Mendoza and San Juan thus favoring immigration and the diffusion of new growing and wine-making techniques. The irrigation system and water management organization also began at the time, giving a key contribution to the wine industry emergence. Big family wineries of Italian (Giol, Gargantini, Tittarelli, Cavagnaro, Filippini, Rutini, etc) and Spanish (Escorihuela, Arizu, Goyenechea, etc) origins were born, grew and consolidated in this period.
During the XX century the Argentinean wine industry experienced periods of expansion triggered by the credence on an unlimited domestic market and periods of intense crisis with disastrous consequences for wineries and grape growers. Public regulations were present in these fluctuations aiming at reducing the negative impacts of recession or aiming at profiting from the expansion period. Wineries, grape growers, governors and congress men gave shape with their actions to the wine industry with diverse impact in the economy of the main wine producing regions: Mendoza and San Juan. Implemented regulations include: temporary plantation prohibitions, tax-breaks programs for specific vine varieties, regulations for sales quantity, public acquisition of grapes and wine for ulterior elimination or distillation, among others. Most of these initiatives only had short term effects thus constantly required new measures. This extensive regulation constitutes a vast experience for all agri-food chains and for the whole Argentinean economy, as it illustrates the short-term and long-term advantages and disadvantages of different measures.

This article was written by Karl Storchmann

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