Economic Impact of the Malbec & Tannat Wines in Argentina
Wine Industry of Argentina
Role in exports
Improvement in labor market
Attraction of Foreign and local investors
Tourism development
URUGUAY
Wine Industry of Uruguay
Economic role of wine industry
Tourism industry and role of wineries
Exports of wine
Improvement of economy through wine industry
Argentine
Uruguay
Wine industry has played major role in the economic sustainability of both Argentina and Uruguay. Whereas Uruguay has much smaller economy as compared to Argentina, the wine industry in Uruguay is developed and provides much of the economic support for the militarized country. In Argentina, the bulk and retail buyers flock the famous wine market called Mendoza and San Juan in the southeast region of Argentina. During the past two decades, Argentina's wine producing firms have significantly promoted their "malbec-based red wines in the world market. Huge networks of farms growing grapes have been developed by the Argentinians; this has provided considerable employment in an otherwise problematic state. The International Organization of Vine and Wine (OIV) ranks Argentina as the fifth largest producer and ninth-largest exporter of wine, respectively. Not only the country is a large exporter of wines, the Argentinian population consumes wine domestically as well. Bedegas Luminis is the famous wine being marketed by the wine industry of Argentina. With majority of production concentrated in Mendoza area of Argentina, the area houses more than 900 wineries. The industry has also attracted considerable foreign direct capital (FDI) investments. Some of the major international companies that have lately invested in the wine industry of Argentina include Pernod Ricard of France, Trivento of Chile, and Finca Filchman of Portugal (GTSA, Gatewaysouthamerica.com).
This paper explores the economic impact of Malbec & Tannat Wines in Argentina and Uruguay. This paper is divided into subsections and each section deals with elaborated particular aspect of impact of wine industry created on the economy of both these countries. After the introduction, part II of this paper will highlight the economic impact of wine industry on the economy of Argentina. Part III describes the role of wine industry, specifically the Tannat wine producers in economic life of Uruguay. Part IV will highlight some aspect that can be used by Argentina and Uruguay to uplift their economies by utilizing wine industries of theirs. Part V will contain the conclusion of this paper by restating the overwhelming observations made through the study.
ARGENTINE
II- Economic Impact of the Malbec & Tannat Wines in Argentina
Wine Industry of Argentina
With $920 million worth exports of wine till February 2013, Argentina has posted 13% year over year (YOY) growth of wine exports during the past few years (GTSA, Gatewaysouthamerica.com). McDermott (p. 2) observed that despite weak institutional and social support system, Argentina has successfully improved the global presence of its wine industry and currently, over 2% of the $12 billion global wine market. Mendoza and San Juan provinces of Argentina provide considerable economic support for the country's financial position as both these provinces support thousands of wineries. Since 1990s, the main emphasis, McDermott (p. 2) observed was upon the improvement of products and processes and Mendoza province has accumulated much of the growth of wine industry by providing "constellation of institutions and networks." The main policy actions that were taken to improve the share of wine industry in global wine market were twofold. Firstly, the Argentine Congress and president signed the law that granted independence to the wine industry by administering it under a non-state body. The corporate body was comprised of research institutions, business associations, federal as well as provincial ministers. Currently, Mendoza province produces about 70% of the wine exported from Argentine. The years in which the world was facing the Global Financial Crisis (GFC), 2008, Argentina wine exports grew 29%. Both institutional support and a rigorous capital investment in the wine industry has increased the industry revenues and export volumes by manifold (ProsperAR, p. 3). The country has also experienced significant increment in glass bottled wine exports. The first quarter of 2009 saw 8.7% increase in exports of glass bottled wine of Argentine.
Role in exports
Exports are vital for the economic development of any country. Central American countries heavily rely upon exports for earning revenues. Argentina also relies on the exports of red wines to earn revenues from foreign countries. Canada and the U.S. are the largest importers of wine originating from Argentine. Although, in 2012 wine production in Argentine fell off...
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