Argentina's Wine Industry Faces Internal and External Challenges, with 1,100 Vineyards Already Closed

How AI and Young Consumers Are Reshaping the Argentine Wine Market

Argentina’s once-thriving wine industry is facing its most severe crisis in over 15 years: domestic consumption has hit a historic low, exports continue to decline, and grape production is relatively low.

In the face of this harsh reality, last week hundreds of wine enthusiasts gathered in Argentina’s key wine-producing region of Mendoza to attend the annual “National Wine Harvest Festival.” Guests watched dance performances, enjoyed live music, and voted for the new “Harvest Queen.”

As this festival marked its 90th year, data from the National Institute of Viticulture showed that domestic wine consumption had fallen to its lowest level ever, with per capita consumption expected to drop to 15.7 liters (4.1 gallons) by 2025. In comparison, Argentina’s per capita annual wine consumption once reached as high as 90 liters (24 gallons) in 1970.

Meanwhile, 1,100 vineyards have closed nationwide, and grape planting area has decreased by 3,276 hectares (8,095 acres).

Fabrizio Ruggieri, president of the Argentine Wine Corporation, believes the main reason for the decline in consumption is the “significant decrease in purchasing power” since 2023. He pointed out that this trend is especially evident among low- and middle-income groups, which have traditionally been the main consumers of daily wine.

For Federico Gambera, head of the medium-sized winery Altos Las Hormigas in Mendoza, changing consumption patterns have further intensified the crisis.

Gambera said, “People are no longer drinking wine on a large scale.” He noted that consumers now prioritize the “fit” and value behind the product.

Older generations prefer high-alcohol, full-bodied wines, while younger consumers value traits like “drinkability, freshness, and lightness,” which are more common in white and rosé wines.

Gambera’s 2022 Malbec, “Lovers Malbec,” recently ranked 41st on the global top 100 wines list. However, he pointed out that as early as 2010, his winery began shifting its style from traditional, heavy wines to lighter ones to cater to the preferences of the new generation.

Gambera said, “Everything is changing. If you don’t actively adapt, you’ll be eliminated.”

The U.S. is also experiencing similar shifts: as the older generation of wine drinkers gradually exits the market, the younger generation has not filled the gap. A report from Silicon Valley Bank shows that Millennials and Generation Z have more diverse beverage choices and overall drinking has declined, especially among those under 29.

The international market is also under pressure. According to the National Institute of Viticulture, as the 11th largest wine exporter globally, Argentina’s export volume is projected to fall to 193 million liters (51 million gallons) in 2025, a 6.8% decrease year-over-year, reaching its lowest level since 2004.

Ruggieri pointed out that difficulties in financing, high logistics costs, and external tariffs reducing competitiveness are dragging down Argentina’s export performance. In contrast, neighboring Chile, a competitor in the wine industry, has signed free trade agreements with over 60 economies, allowing it to enjoy near-zero tariffs in markets like China, while Argentina still faces tariffs of 10% to 20% in most markets.

Local producers are also struggling with inflation, such as Gabriel Dvoskin, who owns a 10-hectare Canopus winery producing about 50,000 bottles annually.

Dvoskin exports his wines to 15 countries, with the U.S. being his main market. He admitted that high production costs and persistent inflation in Argentina put his wines at a disadvantage internationally.

Dvoskin said, “Inflation makes our wines more expensive. My French counterparts have much lower costs for bottles, corks, and other raw materials.”

For Gambera, this crisis further confirms an industry rule: product quality cannot be compromised.

Gambera stated, “The current situation is extremely fragile. One wrong move could lead to total failure.” (Fortune China)

Translator: Liu Jinlong

The intellectual property of the content published by Fortune China belongs exclusively to Fortune Media Group and/or related rights holders. Reproduction, excerpting, copying, or mirroring without permission is strictly prohibited.