warehouse turnover hits worst level in more than a decade

A survey by the Wine Area consultancy warned that the fall of the domestic market and a low export performance hit the sector

The wine industry is going through a 2020 complex. From Bodegas de Argentina they have been warning about the problems they face to complete the harvest, in a context in which the general quarantine has been declared.

In addition, the drop in sales due to the closure of bars and restaurants, domestically, and the contraction of key markets at the international level, starting with China, suggests that 2020 will be a year to be forgotten.

This discouraging scenario adds to a negative 2019 in financial terms for the sector.

This is warned by a report by Javier Merino, director of the consultancy Wine Area: “The wine industry ended 2019 poorly in sales with a significant drop in profitability. All the companies’ budget predictions boded well for 2020 for those that had a significant portion of their sales abroad but today, at the end of March, everything it seems to be falling apart, or worse, it’s very difficult to predict. ”

According to the expert, the billing of the sector, measured in constant value currency of December 2019, reached a little more than 100 billion pesos, almost 1.7 billion dollars according to an estimate of the Wine Area.

“It is a lower figure than that of the years prior to 2008 after having been between 15% and 20% higher. The main explanation for this decrease must be sought in the deep fall in the domestic market that was partially offset by the increase in exports. Of course, this is for the industry as a whole that allocates 23% of its volume to external markets, but many companies have behaviors that are far from this average and several of them have a high position in the domestic market with which made his situation worse “, indicates Merino.

Regarding the domestic market, the report indicates that per capita consumption climbed to 19.6 liters in 2019, with per capita wine spending standing at 1,174 pesos per year, the lowest level for more than a decade.

“If the macroeconomic determinants were the salary and the interest rate in 2019, the relevant question is that we expect these two variables. The salary or the number of employed people will surely decrease in 2020 due to the precarious Argentine economic situation before the plague and aggravated with the appearance of it. With which, it is possible to expect a drop in the demand for wines in the domestic market“Merino warns.

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