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ARGENTINA DIGS IN

The Argentine wine industry is bracing itself for a difficult 2002, as the full toll of the past month's economic and social unrest starts to sink in. So far, according to Harpers' sources in Argentina, the industry has not been directly hit by the rioting and looting which led to the death of 27 people and the resignations of four presidents over the Christmas period. There have, however, been reports of unrest in both Mendoza province (the country's biggest and most important wine area) and in Salta in the north, and the police have stepped up their presence in both areas. But while industry figures are playing down the threat of violence, the threat to their livelihoods remains. In the wine industry, as in the whole of the Argentine economy, (domestic) consumption is going down,' said Jos Alberto Zuccardi, president of La Agricola in Maip, Mendoza. And some of the planned foreign investments will not now take place because of the problems.' There is uncertainty, too, about the imminent devaluation of the peso via the abolition of the dollar/peso tie. As 80% of Argentine loans or mortgages are currently issued in dollars, the 30% devaluation could see some companies automatically increasing their debts by a corresponding amount. On a positive note, Zuccardi and others believe that the devaluation could end the damage to our competitiveness in the export market' caused by the previously unreal' value of the peso. Jorge Degese, export manager at Pernod Ricard Argentina (owner of the Etchart brand), agreed. There is a general consensus that the export business will take priority and be able to get us over this severe crisis.'

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