(Teatronaturale) - A growing demand for wines at higher price points saw Argentinian exports take off from the early 2000s. However, in 2012 export volumes of Argentinian still bottled wine began to contract, unveiling the challenges the sector is currently facing. According to Rabobank's Wine Quarterly Q3 report, Argentina must find ways to regain competitiveness, while maintaining the country's brand image, through market diversification and innovation to drive growth in the domestic market.

"Wine production costs have increased as much as 100% over the last four years", notes Rabobank analyst Valeria Mutis. "Movements in the exchange rate are also far from being on par with inflation rates. While the industry has little or no capacity to alter the current economic context, there are a number of strategic steps that it can undergo to improve its competitive position."

In 2012 Argentina accounted for more than 3% of world wine exports, heavily weighted towards the US. An expanding community, the US Hispanic segment is a natural niche market for South American and Spanish wine producers. Additionally, opportunity exists in the Mexican market where alcohol consumption is relatively high and a burgeoning middle class exists. According to Rabobank, diversifying to these 'natural' markets presents potential for continued long-term growth. Elsewhere, exports to Canada and China have recorded strong pricing gains, suggesting a growing market appreciation and an attractive target for future promotional efforts.