Argentinean wine is attracting more and more international investors. JOHN DOWNES MW explains why it's such a draw.
Enthusiasts may wax lyrical about the amazing vineyards and their potential, the unique climate and the excellent wines, but without investment the smoothest talk comes to nought. It’s a simple fact that these days wine quality cannot be achieved without big bucks. As investors scour the world, it’s a tribute to Argentina that so many companies and individuals have chosen to splash their cash in its vineyards on Argentinean wine.
The major players have come, seen and are about to conquer. Money is no object. Top quality wine is their only goal. So why is Argentina so special? The answer lies in the world of finance and investment as much as in the world of wine. A country may make the best wine in the known universe but if the sums don’t add up or basic business rules cannot be applied then the investor will simply turn away and look elsewhere. The reason why so many are queuing to pump money into Argentina is because as well as producing quality wine it also meets all the strict financial requirements.Any country earmarked for investment must have the potential to produce quality wine. That’s base one to the investor, but base two is harder to achieve. The chosen country must have low production costs as well as available and reasonably priced land. On both scores Argentina is a winner. Wine quality is improving in leaps and bounds and with land and labour cheap and plentiful, the men with the dollars are hearing all the right answers.’Unlike Europe, labour isn’t a problem here, and as for vineyards, there are still top sites available, although prices are rising,’ says Tiago Alfonso Trigo, Finca Flichman’s export director. Flichman was bought by the Portuguese giant Sogrape in 1998 for $18 million and Trigo, who is Portuguese and familiar with both markets, was appointed to direct operations. ‘We’ve since invested a further $8 million,’ he adds.But to arrive so easily at base two cuts no ice with the hard-headed businessman and there are more boxes to be ticked before the chequebooks appear. Base three is more risky. Ideally, the new wine venture should have a low presence on the export market. ‘This gives added value to the product,’ explains Enzo Mugnani of Finca La Celia, which has Chilean firm San Pedro as a major investor. It doesn’t take a financial whizzkid to see the difficulties.
How can somewhere producing good wine not be represented on the export market? This might seem nigh-on impossible but Argentina’s unique history of self-production means that, amazingly, it fits the bill perfectly.San Pedro arrived at base three quickly but took more than a year to choose the site in the Uco Valley. La Celia’s first vintage was in 2000 and it was made in ‘a borrowed winery’, notes agricultural engineer Mugnani, pointing to the nearly completed winery. ‘This will be ready for this year’s vintage,’ he adds.’Mendoza has huge potential so we’ve bought 460ha of vineyards in Maipú, Tupungato and Rivadavia,’ he explains. Chilean confidence in Argentina is further evidenced by the Chilean giant Conha y Tora, which has also purchased large vineyard areas and, confirming its commitment to Argentina’s future, has invested heavily in a winery with a huge capacity. So far so good, but the investor could still change his mind. ‘Does the country have a winemaking heritage?’ could be his next question. Under normal circumstances this isn’t possible, especially when linked to a country with low exports. Heritage, by definition, means a history of exporting.
‘In 1992 we bought 100ha of vineyard in San Rafael, says Carlos Fernandez, regional wine director for the Latin American arm of Allied Domecq, which purchased Bodegas Balbi back in the early 1990s. ‘We’ve continued to invest heavily since then so we can produce international class wines for the world market.’ Bodegas Salentein is like a Hollywood film set. The solemn brick monolith is set on a vast plain of vineyards in the lap of the Andes. Stainless steel glistens within the lofty circular winery, and the amphitheatre below is temperature and humidity controlled to provide the perfect scene and environment for the myriad barriques. The Dutch owner, Mr Pon, made his fortune securing the franchise for Volkswagen cars but is now determined to make a world-class wine. Named after Mr Pon’s hometown, the bodega was opened in 1995. ‘Initially we bought 180ha of 30-year-old vineyard, and we then planted a further 120ha. The total investment in the winery was $12 million and $6 million in the vineyards,’ says export director Diego Jordan.More European investment has been injected into Mendoza by Georges Langes Swarovski, an Austrian businessman whose fortune is founded on a highly successful glass crystal company. Already the owner of vineyards in Austria and Italy’s Veneto region, Swarovski soon realised Argentina’s potential and in 1989 bought Bodegas Norton. ‘An immediate investment into new technology and vineyards soon produced a big improvement in quality.’ says CEO Michael Halstriek. Bodegas Norton is now one of Argentina’s flagship brands, with 680ha of vineyards producing 6 million bottles annually, exporting to 27 countries.
Kendall Jackson is one of wine’s global heavyweights and in 1996 invested heavily in Argentina’s Uco Valley. ‘The vineyards have enormous potential and we are already having great success by using the same progressive techniques that we use in California,’ says recently retired KJ president Jess Jackson.
It’s one thing for Chileans, Californians, Portuguese, Austrians and Dutch to invest in a wine-growing country, but when a proud Frenchman shows his hand it’s different. And more than one Gallic card has been played.Moët & Chandon has invested in Bodegas Terrazas to produce red and white wines as well as its usual trademark sparklers. Jacques and François Lurton, the sons of André Lurton (of Château la Louvière in Graves, Bordeaux) have created Château Lurton to produce Cabernet Sauvignon and Chardonnay with a European edge. And Bordeaux has yet another presence at Domaine Vistalba, where French classic grapes again produce fruity wines in a distinctive European style.It’s no fluke that Argentina attracts worldwide investment. Not only are the exceptional vineyard regions ripe for quality wine production, but the investment equations and financial calculations, not to mention the marketing mix, also make perfect sense.
There’s one name that tells the Argentinean story in two words: Michel Rolland. No matter where you travel, from France to Chile, from California to South Africa, winemakers proudly name him as ‘our consultant’. Monsieur Rolland knows the global vineyard like the back of his hand. And where is he personally investing? You’ve guessed it – Argentina.