Playing the Currency Markets; Portugal and South America
By John Szabo MS
The Canadian dollar took a beating last year, and continues to languish against most currencies. While this is good news for exporters, it’s nothing but strife for importers, who must continually wrangle with their suppliers and distributors over whose belt gets tightened to maintain steady prices.
In the Ontario wine world, however, there’s no wrangling with the retailer. The LCBO doesn’t cut margins to keep shelf prices of import wines steady. The onus is instead on the supplier, or the supplier’s Ontario agent, to cut profits, or see shelf prices rise. And even a $1 or $2 increase in the most vulnerable sub-$20 category can have a direct and dramatic effect on sales.
Last week, the Canadian dollar reached a 10-year low vis-à-vis the US dollar, dropping nearly 20% over the course of the past year. And the trend is predicted to continue. The full effects of that significant bottoming out have yet to be felt. The LCBO buying cycle is very long, often more than 6 months, so most of what is currently on the shelves was purchased at a more favourable exchange. And large companies can buffer currency fluctuations with foreign exchange reserves – for a while – but not forever. So you can expect to see the prices of all your favourite Californian wines inch inexorably upward in 2016, and real values will be ever more elusive.
The Euro on the other hand, gained a relatively modest 6% against our dollar in 2015, which, to be fair was already very strong in previous years, but is predicted to trend sideways or even lose against the dollar in 2016. The Australian dollar remained steady last year, and the Argentine peso actually dropped 4% against the dollar. The Chilean peso was almost steady, but the sputtering South African Rand has been on a downward spiral for several years, losing around half of its value in the last five years against our loonie.
So, what does this mean? In terms of pure currency exchange, for my money, the bargains to be found in 2016 will come from Europe’s already depressed economies, namely Spain and Portugal, and South America, while Australia will continue to regain the market share it lost in the first decade of the millennium. South Africa has been one of the best bargains of all in recent memory, and will continue to impress at every level.
Now factoring production costs into the equation, my predictions are similar. Wine is cheaper to produce in all of the above-named countries compared to the US or northern Europe. This same group of countries will be the ones to watch when seeking the biggest bang for your buck.
Portugal and South America – Playing the Markets
And as if to drive home the point, by luck or coincidence, or improbable foresight, the January 23rd VINTAGES release features a fine range of values from both Portugal and South America.
Portugal in particular is producing wines of exceptional quality at prices that hardly seem sustainable. For Europhiles looking for their fix of savoury, dusty, firm reds under $20, Portugal should be the first stop.
The Barão de Vilar 2012 Proeza, DOC Dão ($13.95) is a case in point, made by a port house belonging to the Van Zeller family. Proeza is a collection of wines from “meaningful” Portuguese regions, and this Dão is indeed a tidy little value, not fabulously complex or life changing, and a touch sweet, but at least as good as many similar wines at twice the price.
Similarly, the Flor de Maio 2012 Mayflower, Vinho Regional Alentejano ($13.95) is fine and spicy-floral, savoury red blend (Touriga Nacional, Alicante Bouschet, Syrah, Trincadeira, Aragonez, Cabernet Sauvignon) aged in stainless steel, juicy and firm, perfectly serviceable for the money, made by a partnership of three enologists under the company Magnum Vinhos. In fact, the complexity is quite high and the balance very good for the sub-$15 category.
It’s clear that the low prices for Douro table wines cannot be maintained. Once considered an afterthought, and subsidized by grapes destined for port wine production, the high production costs of dry Douro reds – made essentially from the same steep, low yielding vineyards as port – are not currently reflected in their price. Enjoy the likes of the Vale do Bomfim 2013 ($15.95) and the Pomares 2011 Tinto ($16.95) while you can. Both are representative of the region, on soft and supple frames. The former is attractively dark-fruited, the latter plush and supple, spicy and licorice-tinged. Each offers plenty of pleasure, and drinkability for the money.
South America, on the other hand, is a value haven for fans of new world style, generously proportioned fruit forward wines. Chile is particularly dynamic. A country in the midst of a comprehensive renovation from monochromatic cabernet and chardonnay, to a multi-coloured display of depth and diversity. One of the most exciting developments is the re-discovery of a wealth of old vines of once-unfashionable varieties, mainly in the deep south, and their revalorization.
The 2011 Santa Carolina Specialties Dry Farming Carignan, Cauquenes Valley, Chile ($17.95) is a prime example, made from 80 year-old vines dry-farmed in the Maule Valley. Santa Carolina’s Specialties range is where you’ll find the company’s most exciting wines, and this is an attractively herbal, succulent and juicy, yet still fruity, very ripe, almost liqueur-like carignan. 15% alcohol is high, but think of this in, say, a southern Rhône context and you’ll see that it fits into the world of fine value, with a savoury edge. Try with braised meat dishes.
But Chile also still does classic cabernet as well as anyone, as in the Cono Sur 2014 Single Vineyard El Recurso Block 18 Cabernet Sauvignon ($18.95). It’s a high-toned but varietally accurate Maipo Valley red from the company’s top vineyard, which finds a balance between succulent and juicy fruit, neither over nor under ripe. Modest wood influence adds another layer, rather than dominates, the flavour profile. Decant and serve with salty protein.
Chile has long been a source of particularly good value sauvignon blanc, and Casa Silva’s 2014 Cool Coast Sauvignon Blanc ($16.95) from the far out Paredones sub-region of the Colchagua Valley captures the cool pacific influence nicely in its lean, bright, sharp, and tangy and profile, as the name promises.
Over in Argentina, the market is still overwhelmingly dominated by malbec, but fans of rich and creamy west coast style chardonnay will love the Viña Cobos 2014 Felino Chardonnay, Mendoza ($19.95) by peripatetic winemaker Paul Hobbs. It delivers multiple layers and terrific texture, seamless, with excellent length, a fail-safe option to bring to any gathering.
For something other than malbec from Mendoza, check out the Trapiche Broquel 2013 Bonarda ($14.95) Made from a grape I’d like to see more of, this is a juicy, dark, succulent red with a touch of coffee liqueur on the finish from toasted wood, but still a fine mouthful of wine for the price.
That’s it for my VINTAGES Preview, but we’ll be back next week with our complete BUYERS’ Guide for the January 23rd release, with David and Sara’s picks as well.
See you over the next bottle.
From VINTAGES January 23, 2016
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