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Gains in Malbec lost due to Argentine El Niño

Published:  08 June, 2016

An Uco Valley winery is picking up the pieces of some of the worst weather in decades as sales of its "trendy" malbec plummet.

In December and January, summer rains from the El Niño climate cycle brought unusually wet weather to parts of South America.

Winemakers in Argentina have been reeling from the bad weather which doubled the price of bulk wine and seriously impacted Argentina's profitability on the world stage.

A month-and-a-half after their unprecedented early harvest, French winemaker François Lurton and founder of Domaines François Lurton, says the weather has had devastating consequences in one of their biggest markets.

"Malbec was very trendy in the United States, but it had lost its attraction because the price went up too much. The crop killed the change. Malbec is now too expensive for the cheap market."

"Prices have gone through the roof," he added. "We started buying grapes at 8 pesos per kilo (60 cents) and we finished the crop at 20 peso per kilo ($1.50). The price of bulk wine has doubled what it was."

In January, the company's vineyards in the Uco Valley received between 1500 to 2000 mm of water - nearly four times what they're used to - and forced them to bring their May harvest forward to April.

However, according to Lurton, his vineyards were saved from the worst of the rain by protecting his crops with a type of organic treatment common in France but still relatively unknown in South America.

"In Argentina we're used to 400 or 500mm of rain and people weren't prepared. The average yield of my neighbours during this harvest was 30% less," he said.

Lurton, who has been making wine in Argentina for 25 years, says he has taken a drastic hit on margins for his white wines - none of which are aged - but hopes to make up the difference when the reds are ready to hit the market.

As well as in Europe, the brand has vineyards in Chile and Argentina; but it has most of its investment in Argentina which is source of concern for Lurton.

"Argentina is a very political country whereas Chile is much more simple," he added.

"Argentina is big for me, especially in the US. It's always impossible to predict the future, but I'm going to focus on developing my business and try to maintain volumes and low cost."