Wine Industry in Argentina Finding Blend for Success
Sunday, April 16, 2006
MENDOZA, Argentina -- The wineries tucked beneath the distant Andes mountains nearly have it all: warm days and cool nights for growing the lushest of grapes, state-of-the-art technology and restless vintners bent on lifting Argentina's wine production to a point where it rivals the world's best.
Australia, France, the United States and even neighboring Chile still far outpace Argentina, but more than $1.5 billion in investments in the last 10 years to overhaul wineries and raise production standards -- coupled with a tightly focused marketing campaign -- is producing an international buzz about this country's up-and-coming grapes.
Argentina exported nearly $400 million in wines and grape juice concentrates to more than 70 countries in 2005, the second record mark in a row after exports topped $305 million in 2004, the country's Institute of Wine reported.
Now, nearly 900 wineries in leafy vineyards all around Mendoza, about 640 miles west of Buenos Aires, and more than 300 wineries elsewhere in this big South American country are exploring ways to create new blends for increasingly fickle and demanding wine drinkers the world over.
They are also fine-tuning existing flagship reds such as Malbec, the varietal grape brought to Argentina by European immigrants in the 1880s that first put the country on the wine map years ago. And winemakers are talking of achieving even bigger export numbers in 2006, principally in the key U.S. and European markets, but also in Africa and Asia.
In the early '90s, Argentina opened its state-oriented economy to globalization, forcing traditional winemakers to seek new markets abroad.
Now dozens of entrepreneurial winemakers such as Walter Bressia, 49, along with large traditional wineries and vintners from as far away as France and Spain, are revitalizing the Argentine industry. Many are overhauling old vineyards by planting new grape varieties, improving irrigation and harvesting techniques, and even upgrading fermenting, aging and bottling methods.
"We've already shown the world that Argentina is capable of producing pleasing wines at a reasonable price," Bressia said. "Now Argentina must consolidate its position as a maker of wines of great prestige."
Quality winemakers are fast erasing last century's image of Argentine wineries as sleepy ventures with a reputation for unadventurous and often overripe table wines served up to a large but captive domestic market. Whether it's Bressia's small winery or the sprawling plants of far bigger wineries such as nearby Familia Zuccardi, the mantra is quality control.
"In 1992, Argentina exported less than 1 percent of its harvest," said Jose Alberto Zuccardi, director of the business started by his father in the 1950s. "In 2005, we are exporting in values above 16 percent. Today Argentina is seen as a country of the new world of winemaking . . . and its wines are very appetizing on the international markets."
Many wineries imported advanced European equipment during the 11 years in which Argentina's peso was pegged by law at 1-to-1 against the dollar. But while imports were cheaper, exports became prohibitive in that era -- and then came the economic crisis of December 2001, which forced the near-collapse of the economy, South America's second largest after Brazil.
But an overnight devaluation that put the peso at 3-to-1 against the dollar also made Argentine wines cheaper to produce and export. More than 1 million tourists flocked to what was a bargain-price tourist destination and took the new buzz about Argentine wines back home.
Still, some remain cautious as the wine world's gatekeepers demand more years of proof that Argentina can yield a track record of continuously heavy volume combined with good quality and pricing.
Manuel Louzada, director of winemaking at the big Bodegas Chandon plant in Lujan de Cuyo, said the combination of European standards with excellent geographical conditions and local know-how continued to close the gap between potential and reality.
He spends at least six weeks of the year on the road promoting Argentine wines in the United States and said crowds from Boston to Seattle and on down to Texas and Florida are continually surprised by Argentine wines.
"So far, the Argentine wine story has been successful, but we are still at the beginning," Louzada said. "Our volumes of Argentine wines are growing all over the world. Yet I think there is still a good way to go."
He noted that Chile had developed great export strategies since its success in the ' 80s and said Australia's savvy marketing was key to its recent export-driven boom. Argentina, he said, is demonstrating the ability to match them.
Still, he said, competition is enormous.
"If you go to a liquor store in the U.S., you have, what, a thousand or two thousand brands? If you go there, you see the Argentine shelf is still quite small."
Nonetheless, wine drinkers are always seeking something new, he said, adding, "If you would think 10 years ago that the consumer would be tired of California chardonnay, someone would say, 'Are you kidding me!' "
Philippe Rolet, general manager at the Alta Vista winery here, swirled his own red and white brands one day as fields of grapes ripened outside his 19th-century bodega near sweet-smelling fields of lavender.
A French winemaker with years of experience in Chile, Rolet agreed that Argentine wines were beginning to come into their own -- particularly the Malbec products, which he said stood their ground against French versions, but also the whites and newer, lighter blends.
Alta Vista now exports to more than 30 countries, first to the British market and then Brazil.
"The emerging image of Argentina is one of very good wines, but not an image associated with a cheap price," he said. "That is the great advantage of Argentina today."