Wines and SpiritsThe Tribulations of Exporting Argentine Wine
On November 3, 2004, only 36 hours after stepping off a plane from Los Angeles to Buenos Aires, Daniel Karlin met the girl he was going to marry. They just got married in July.
In the interim, Karlin, with the help of his wife Lourdes, started Anuva Wines, a company that sources, imports, distributes and markets boutique wines from Argentina for the U.S. market. The original impetus for the business came from a simple observation that tourists to Argentina fell in love with Malbec and Torrontөsthe quintessentially Argentine varietiesjust like Karlin did when he arrived. The problem was that they had virtually no way of getting more of these rare gems in the U.S.
Karlin created a wine club to ship specially selected wines from Argentina directly to American tourists who had visited Argentina. They could then enjoy these different collections of winesall hand selected by Karlin and a panel of wine experts and all from Argentinain their homes after returning from their trips. Anuva Wines now ships these exclusive wines to 34 states in collections featuring limited productions of the classics Malbec and Torrontөs and also unique varieties like Bonarda and Tannat. Setting up this home delivery service, however, wasnt as simple as Karlin thought it would be.
We spent a lot of money on lawyers to be able to understand how to ship wine to people, Karlin says with a smile. The alcoholic beverage industry in the U.S. is highly regulated. In addition to Anuvas shipping service to clients and wine club members across the U.S., they have the only wine-tasting service for tourists in Buenos Aires. Anuva also offers in-home wine tastings in select cities in the U.S.
Karlin grins again when he talks about his discovery of Julian Cavagnaros Viӱa Marӭa vineyard. Cavagnaros great grandfather immigrated to Mendoza from Italy and settled their ancestral land in 1891. Now Julian, the namesake, makes a little-known yet award-winning, 4000-bottle production, single-vineyard Malbec called Cavagnaro Reserva. I shared it with some retailers in New York and Los Angeles. They all guessed that the retail price to be double what we sell it for, Karlin remarks.
Because of its success with brands like Cavagnaro, Anuva is now branching into the wholesale side of the business where they see even more upsides. Since the financial crisis, we realized that price points are everything and thats where Argentina wins, says Karlin.
With a lower average cost per liter than any other major wine-producing country in the world, Argentina is growing by leaps and bounds. Not only have they increased their market share of imported wines by 400% over the last 10 years, surpassing Chile to become the number 4 imported wine by country (behind France, Italy and Australia), but they were the only country besides Chile to grow in both dollar value and in volume when comparing the data of 1st Semester 2009 to 1st Semester 2008. Argentinas imports to the U.S. grew over 30% in both volume and dollar value. The only other country to come close to those values was Chile, while every other countrys imports to the U.S. have fallen dramatically. France is down 27% in value and 11% in volume, Italy 20% and 7%, Australia 5% in value, and Spain, South Africa, New Zealand and other minor regions are all down as well. Interestingly, the overall wine market continues to grow in the U.S. for the 15th consecutive year in addition to the fact that imported wines as a segment are also growing.
We think were in the right business at the right time, says Karlin. Malbec and tourism to Argentina are very popular right now but we need that trend to continue.
So why isnt everyone jumping on this business? Karlin says barriers to market entry include proficiency in Spanish, the cultural gap, wineries without websites, wineries with websites but with incorrect contact information, corruption and dishonesty, stolen domestic shipments in Argentina, poor understanding of label regulations, brettanomyces (a bacteria found in older wineries creating a barnyard aroma and flavora big problem for some Argentine wineries) contamination, the ins and outs of international shipping of controlled substances and U.S. import law and logistics issues.
Our learning curve was steep and treacherous and we made a lot of mistakes, Karlin says, listing such setbacks as delayed shipments, extra costs, interactions with customs officials, and complicated paperwork. Only now, after three years of operation, does he feel ready for his expansion into wholesale. Were getting better with age.