(RoboBank) -  Increasing costs and an overvalued Argentine peso have been denting the competitiveness of bottled wine at the low-end segments. According to a report by Rabobank, if the recent economic developments persist, Argentine wine producers will likely see further margin contraction even for their mid-tier brands.

Valeria Mutis, Rabobank analyst commented: “The competitiveness of Argentine wine exports is being undermined. Increasing domestic costs are one of the main causes of the squeeze on sector margins. Whilst official figures set the inflation rate at approximately 11 percent per year, private estimates put the yearly inflation rate at 25 percent. Although the Argentine peso has weakened, this devaluation has been less than the inflation rate, and this has hurt the sector’s competitiveness abroad.”