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PATRICIO REICH: "THE NEXT WINE REVOLUTION COMES FROM PACKAGING".

The CEO and owner of Bodega Renacer, Patricio Reich, talked extensively with journalist and sommelier Gabriela Malizia for an article in her blog "El Triunfo del Baco". They discussed different topics related to the current situation of the winery, as well as the current situation of our country and the changes that society is adopting when it comes to wine consumption.

When the Chilean businessman Patricio Reich started coming to Mendoza back in 2001, he anticipated a promising future for the wine of these lands. The numerous reasons he had for landing in Mendoza and developing his project, Bodega Renacer (located on Brandsen Street, one of the most beautiful streets in Luján de Cuyo), were unravelled in a long, frank and entertaining conversation, in which we particularly addressed the changes generated by both the Covid-19 pandemic and climate change, both enormous challenges not only for the wine business, but for humanity as a whole.

"All our business depends on terroir, but if terroir changes terribly because of the climate, we will be out of business. Today in Chile, wineries are buying wineries well to the south because global warming and the lack of water are hitting", begins the businessman, who is concerned about the lack of measures taken by world leaders to stop global warming.

The other big topic of our conversation is the pandemic. "I think Covid has helped the world to realise that we have limits as humans and that we have clearly exceeded them, as nature has no mouth to speak, it has a different way of expressing things," he sums up.

It was this ecological awareness that led him to invest in this land. "We are in Argentina and in Mendoza because I believe that this terroir is optimal and at the level of the best for producing red wine in the world. In 2001 I saw the differences between Chile, where the vineyard sector has developed in a very similar way to the American one, with large vertically integrated wineries. Argentina, on the other hand, has many small and medium-sized wineries that need to buy services and therefore there are services at all levels, for example mobile fractionation, it is an ecosystem that allows small and medium-sized wineries to survive without unjustified investments. In addition, the terroir meets several requirements, the luminosity that falls per meter in Argentina is unique, something that does not happen in Chile because of the humidity, that is a wonderful advantage to achieve a perfect maturation of all red wines," he emphasised.

Among the advantages, he also mentions that Mendoza is an inclined plane, that it has a great diversity of altitudes and a great diversity of grapes of the same variety, in the different valleys. "As in Chile we don't have philoxera, we also have a great restriction to incorporate new varieties, so Argentina has more ingredients to prepare different dishes", he exemplified.

Reich, who ten years earlier had seen Chile transform its export sector "from Vino to wine" as he calls it, from massive, low-quality wine production for the domestic market to more carefully produced wines for export, arrived in Argentina just as this phenomenon was beginning. "And we had this marvel and diamond in the rough that had to be exploited, Malbec! Now every importer has a Malbec, the French, the Chileans, the Americans, they all grow Malbec, so it's time to innovate," he says.

· As a foreign investor, how did you experience the differences in the macroeconomic context that Argentina offers?

When we started the situation was very different, we had reasonable taxes that today have become highly unreasonable. This affects not only the wine industry but all sectors that at the end of the year end up feeling that they are working for third parties. The wine business is nice, but it is not charity. It is a shame that everything that is exported has to go through Chile because the port of Buenos Aires is the most expensive in the world. If Argentina has a serious dollar problem, what it has to do is to increase exports, and not maintain this protectionist and restrictive attitude. If a lot of dollars come in, everything can be bought. In short, these are complex, long-standing problems that are causing the industry to lose dynamism. There is a lack of bottles, a lack of design companies, and if there is a lack of inputs we cannot work, because we do not export wine, we export a very sophisticated product.

· Why do you think the view in Chile is so different? The central government supports any export activity, regardless of the region.

In Chile there is no such region-capital dichotomy. Chile does not grant any benefits for the installation of an industry in a certain place. Macroeconomic policies in Chile are quite different from those in Argentina in any case.

· Going back to the topic we started with, the need to have sustainable and ecological industries, at Renacer you achieved organic certification in vineyards and wineries. What other actions are you taking in that sense?

We were the first winery in Mendoza to be certified carbon neutral in product delivery. We recently installed solar panels on the roof of the winery which saves an incredible amount of energy, with which we manage the temperature in the barrel room, and two or three years ago we started with the organic wine that we will launch in the second half of the year because we think we have to differentiate ourselves and follow the trends of the rest of the world. Covid-19 accelerated the trend to be more responsible with health. Everyone is looking to eat healthier, not to consume products with industrial components, and even betting on ecological packaging in wine, such as sugar cane stoppers and lightweight bottles. I believe that the next revolution in wine comes from the packaging, more for the container than the content, since the latter is stabilised.

· Tell me more about this packaging revolution...

There are countries like China, for example, that still ask us for natural caps, but practically everyone wants ecological caps. I think that 750cc glass bottles that sometimes weigh almost a kilo are a bit anachronistic, mass consumption in Chile and Argentina is in tetra packs, so I think we will move towards more ecological packaging, such as bag in box. We are moving at great speed towards more sustainable and ecological products and Covid accelerated this process. New ways of selling wine will come.

· Would you put one of your Reserva wines in a can? Or in a tetra pack?

I would put a Punto Final Reserva in a can or in a tetra pack, the problem is that the consumer still doesn't get these old ideas out of his mind. Current tetra packs are biodegradable. We want to innovate but we have limitations, because to put wine in a can they ask you to make a million bottles.

· What about the content? There are 5 proof drinks, we could go to wines like that? This is also quite revolutionary!

Today we are being attacked with two new weapons, very different and attractive craft beers. The other is the famous Hard Seltzer, a thing that is 5° alcohol, easy to drink and not intoxicating, alcohol is still a problem for mass wine consumption, however, when you take the alcohol out of the wine, you take the backbone out and it's like a weird hybrid, so I'm not sure this is the way to fight these other trends.

· To what do you attribute that despite all these healthy trends, as soon as the pandemic arrived, wine consumption revived in all countries?

Many reasons, boredom, ease of shopping in supermarkets which for a long time were the only thing that was open. We were having such a bad time that we wanted to gratify ourselves, human beings, when they have been handicapped, want to gratify themselves with something immediate. Wineries like ours suffered a lot from this trend because we worked mainly with wine shops and restaurants; if we look at what happened in the last 2 years, the big winners are the wineries that had connections with supermarkets and e-commerce, but now a new balance is being reached.

· You say you haven't been in Mendoza since February 2020, how did you manage the company during this time of absence?

I have not been able to taste either the 2020 or the 2021 wines, but our team -which is excellent and to whom I am very grateful- allowed us to overcome this situation, many meetings by zoom, a lot of dialogue. Thanks to him we survived with difficulties, we were able to pay everything and we ended up without debts.

· How has the grape price increase impacted you this year?

The 2019 and 2020 prices were absurdly low, and paid in instalments, and this year's increase was too big, the real price will be somewhere between the 23 pesos and 79 pesos we are paying today. It so happens that last year so much bulk was sold, that today they are asking 80 to 100 pesos for a litre of ordinary wine. One dollar, this is excessive, 9 dollars of juice plus 10 dollars of dry inputs makes a cost of 19 dollars, that makes us enter and leave certain markets and that is not good. We need to stabilise grapes at a reasonable price, 60 cents on the dollar.

· What are your expectations for the second half of the year?

In the domestic market I think prices will go up, and pocket income will fall, so we don't see an increase in consumption. Foreign markets are somewhat normalised for now, but we are very much waiting to see what will happen with the Delta variant. The problem is still the sales channels and the lack of trade agreements in Argentina, which is always detrimental to us. Chile has a free trade agreement with China, and Argentina does not, we continue to face Argentina's structural problems, you cannot do much business with a country that does not want to be part of the world. It is logical that those who buy from you also want you to buy from them. The globalised world is moving towards free trade, in Chile we have agreements with 94% of the world. In the first half of the year Chile exported usd 727 million while Argentina exported usd 432 million with a much greater potential. This is where we have the bottleneck and this is where the differences can be seen.

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