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Review of Findings:
September 2008 Visit to the Wine Producing Regions of Chile and Argentina

The purpose of our recent trip was not to conduct a thoroughly documented study of the two South American countries’ Wine Producing Regions (WPRs), but rather to acquaint ourselves with the owners and key managers of numerous highly regarded wineries and obtain a comprehensive, first-hand feel for the WPRs. We discussed with some of them the potential of our company serving as a sales agent in certain foreign markets of a few such wineries, and learned as much as possible about the countries, their WPRs, and the pricing of the more aggressive and high quality exporting wineries. This was a very ambitious agenda for a two-week period but we believe we accomplished a great deal, benefiting from the extensive amount of “homework” done in advance of the trip and the generous amounts of time spent with us by key winery personnel.  Mil gracias a todos y hasta la proxima vista.



It is great fun to be a “Wine Tourist” in both Chile and Argentina once you get into the wine country itself. The food is excellent, the wines superb, the weather grand, the prices reasonable and the people delightful. And a number of foreign tourists (especially from higher cost of living areas) just may elect to buy homes and retire there as well, once they visit. (The American dollar goes further there all the time.) Just don’t expect to see a return on any locally invested capital, amigos.


To truly enjoy these wine regions, one needs to be prepared mentally and with sufficient days budgeted to make it a vacation, not a marathon. A week per country is the minimum time we suggest. Most wine tourists will benefit substantially by being advised by knowledgeable travel agents. A lack of preparation will probably result in "moments" of high frustration, which would be a pity.

We also suggest use of www.tripadvisor.com, the free Expedia website service. Trip Advisor says its branded sites comprise the largest travel community in the world, with over 6 million ("m") registered members, 15m reviews and opinions, and 25m visits per month. Their motto: “Get the Truth, then Go."  We agree completely.


There is great opportunity in the marketing of Chilean/Argentine wines world wide, but perhaps especially so in North America, due to decent proximity, relatively compatible time zones, and increasing popularity of wine tourism which can result in great “word of mouth” advertising. The wines of both countries should be bargains for years to come as substantial investment capital, largely from local sources but supplemented by overseas participation, continues to be committed to modernization of all phases of production.

As stated, we were most interested in the “wine tourism” potential of both Chile and Argentina, as we believe increased tourism (especially from the US and Canada) will lead to greater and more sustained branded export sales in North American countries, an increased general consumer appreciation of wine quality and foreign wine regions, and increased marketing sophistication of the better wineries.

With such an agenda in mind, let us review a number of findings (of widely varying significance) which may be helpful for other wine industry professionals considering involvement in brands, and travel to, the two countries, as well as for wine consumers/prospective tourists to either country, and, of course, to their industry associations and their world-wide wine competitors.



Chilean wine history and current total production. Wine has been grown in Chile (and Argentina) since the mid/late 1500’s, although Chile’s role as a wine exporter was insignificant until the North American aphid Phylloxera struck Europe in the 1870’s. Spain and France then imported significant quantities until they determined how to replant with resistant rootstock. Subsequently Chilean wine exports have been on a roller-coaster for almost 150 years. This has provided a great deal of marketing experience, but it also has lead to periodic consolidation of the wine industry, since during the down years the lesser capitalized wineries could not survive by themselves. Few but large companies have sufficient financial resources to develop international brands. The last twenty years have seen a commitment to quality wines by Chile but that is barely a start in developing an international reputation at the top end. Further, with a 16.28 million population (as of July 2007), and 70% of their wine exported, Chilean wineries are inherently in a riskier position than, for example, Argentina, with a population of 39 million and only 27% of production exported. Clearly there is just not enough local demand in Chile to absorb the annual harvests grown in close to ideal conditions. Qué lástima! (What a pity!)

In an attempt to curb alcoholism, in 1938 Chile passed a law fixing a ceiling on annual wine production at 60 liters per capita, itself a pretty liberal level. (Note the per capita wine consumption in nearby Argentina was over 90 liters in the 1960’s!) But over the next 40 years, the population doubled, and with little incentive and freedom for wine producers, coupled with high tariffs on imported wine making equipment, wine technology, investment, and quality declined until 1979.  Since that time, great improvements have been made and high quality wine now is one of Chile’s leading exports. (See Miguel Torres discussion below.)


Santiago.  Not only the capital of the country, Santiago IS the country from a business, cultural, transportation and political standpoint. Santiago was the home of the 1971 Nobel Prize winning author Pablo Neruda, who died of leukemia just months after General Pinochet overthrew the elected, socialist government of Salvador Allende. (Neruda had been a close friend of Allende, and his assassination left him quite depressed. According to our guide, now there is a protection force around any sitting president that wears shirts that proclaim GAP- Grupo Amigos de Presidente.) World dismay with the military dictatorship also caused export sales of Chilean wines to suffer for many years.

Santiago has a population approaching 5 million people, in a country of less than 17 million. Due to prevailing Western on-shore winds, the immediacy of the truly impressive Andes to the east, and the sprawling nature of the city (think Los Angeles in the 1950’s), its air pollution is a significant detractor. While we visited in their early spring, it was still murky; we understand the best “air time” for Santiago is their summer, which is winter in North America.

Further, with a few exceptions, most of the wineries are significant drives from Santiago. Many Chilean wineries do not have the close proximity to the main city that Napa and Sonoma have to San Francisco, or Stellenbosch to Cape Town. We visited two wineries just south of Santiago, another at Curicó (about three hours south), and two in the general area of Santa Cruz, about two hours plus SW of Santiago. We stayed in these three cities, spent a half day in a fascinating museum in Santa Cruz and drove 40 miles to and along the Pacific coast to visit the internationally famous (at least in world surfing competition circles) town of Pichilemu (“small woods”), and did a small amount of touring/shopping in Santiago. Poof: a week had flown by. So in advising prospective wine tourists to consider Chile, we suggest they plan more like 10-12 days to get a good initial feel of the country and several of its distinct wine growing regions.


Tourism surprises. There are a couple of somewhat nasty surprises for tourists that warrant “prior disclosure,” and preparation for: the international airport tax and the Santiago freeway system. The new tourist airport tax is $131/person, and good only for the remaining term of the passport. For one, such as I, who has seven years to go on his passport, and who anticipates future trips to Chile, this is perhaps acceptable … but it still was an unanticipated shock. (For a family of four, this tax would be over $500!) On the current Chile information website (www.chileinfo.com), the international airport tax is still shown as US$30. In general, a high entry tax is not a way to encourage tourism from other countries.

Secondly, the Santiago freeway system can be very confusing, day or night. The roads are very good but if you miss a turn, which is easy, with many one-way streets, it can take some time to rectify your mistake in this large city; local driving knowledge is a definite benefit... something that most tourists don’t have it. Our international rental car company also sent us out with a car with 1/8th of a tank of gas! This really increased our stress level as we wandered around at night looking for the hotel and watching the gauge get very low.

Our rental car did have a transponder that paid electronically the tolls in Greater Santiago, but once you leave the metropolitan area, you will need Chilean pesos to pay tolls on the National highway. This means if you rent a car at the airport, you best convert at least US$100 into Pesos right off the bat, because tolls, like tips, require the local cash.


Wine touring by self-driven auto. We drove ourselves around and other than the challenges cited above in the Santiago area, we had only minimal aggravation. We believe most wine tourists can do the same thing, and therefore not have to rely on structured bus tours or hired drivers. However, we are convinced that better maps are needed for most tourists to plan their adventures in advance, and far better signage is needed for wineries that wish to encourage foreign visitors.

If you are really into investigating some of the newer grape growing sub regions, you are going to be doing lots of driving. It used to be all the vineyards were in a band from an hour north of Santiago to five hours south. Now vineyards are scattered over at least a 1,200 kilometer span, perhaps 800 miles, and perhaps 12-16 hours would be required to drive the length. (The same search for outstanding growing sub regions is also going on in nearby Argentina, an effort that tends to produce increasingly better wines, but guaranteed to exasperate a diligent wine tourist.)

Another thing to mention is that some Spanish literacy is a big plus if you are touring around by yourselves. Few rural people speak English, menus are usually all in Spanish, and just being able to confirm directions at filling stations or elsewhere is very helpful. (I may speak Spanish like a seven year old, but it certainly seemed to help a great deal. Plus if you have made the first effort in Spanish, many are more willing to try their equally limited English in response. (Muy agradable.)



Chile and its people are beautiful! With a country that is much narrower (about 110 miles on average) than the state of California, it seems you are always gifted with a view of the snow-capped Andes, or are in the coastal range approaching the Pacific Ocean. The fruit orchards as well were blooming when we were there in September and it was spectacular. Lastly, the people struck us as very friendly, and the incidence of street crime, especially against tourists, is reportedly quite low.

Our timing for winery visits, however, was unfortunate: we arrived for a week of three major national holidays. That aside, we were treated with the pageantry of the colorful, horsed mounted huasos, the Chilean equivalent of Argentine gauchos (cowboys). Almost entirely men and boys (we saw only one woman out of perhaps 200 mounted huasos) on beautiful horses, classic tack, and wonderfully colored serapes, on their way to or returning from village parades. Clearly there is a widespread, deeply felt sense of pride in the history and culture of the country.

Mounted huasos in the Apalta Valley


Wineries visited and their Regions:

To the South of Greater Santiago

Concha y Toro
: (www.conchaytoro.com Founded in 1883, CyT is Chile’s largest wine producer, its largest exporter, producing highly rated wines, and probably its most profitable. A publicly held company since 1933, yet controlled by the highly involved Guilisasti family, it is truly a powerhouse: in 2007, it produced the equivalent of 25.7 million cases, recorded sales of $528 million, and owned 7,810 planted hectares in Chile and Argentina . A major modernizing effort started in the 1980’s, (first French barrels:1987), has really paid off. The company is solely in the wine business and doing an exceptional job. Per their website, they export about 73% of annual production and are the 8th largest wine company in the world. (Note: Having completed this research on Concha Y Toro, we were sufficiently impressed that our corporate pension plan has become a small stockholder in the company via an ADR investment traded on the New York Stock exchange.)

At an old, beautifully landscaped 50 acre facility in the southern outskirts of the city, the winery tour game is also a big business for “Conchytoro,” as it is pronounced locally. Tours kick off every 20 minutes, at a cost of US$12/tour; we did not show up with reservations (!), so we had to return in about 90 minutes. The two wines tasted as part of the tour were quite nice but the overall tour feel is just mediocre for experienced winery visitors. In general, we would not recommend most wine tourists put Concha y Toro on their tour list unless they are confining their trip to only Greater Santiago. (But do buy and enjoy the excellent wine.)

Perez-Cruz: (www.perezcruz.com) a relatively new (first vines planted in 1992) winery, not many miles south of Santiago. The owning Perez-Cruz family built an absolutely striking wooden facility in 2001 that has deservedly won numerous architectural awards, but also appeared to be highly functional and efficient. The winery only makes red wine, and does that very well with its higher priced blends, although the entry level Cabernet Sauvignon seems to be missing distinction. The grounds and vineyards are gorgeous and make the winery a high-priority visit for Santiago visitors. However, it is generally closed on weekends, which can be a problem for some tourists. (Due to advance communication, their Export Director made a special effort to be available for us on a Sunday, which we really appreciated.) Do see this winery when in Santiago, or heading south, and buy their better wines.

Perez-Cruz Winery, features a dramatic laminated wood design

The snow-capped Andes are seen behind Perez Cruz



Miguel Torres: (www.torres.es) a large (250,000 cases/year), very attractive winery located on the Southern edge of the city of Curicó, was acquired in 1979 by the storied Torres family of Barcelona, Spain. Miguel Torres is widely acknowledged as almost single-handedly improving all Chilean wines by his continuing investment and quality leadership starting from that date forward. Torres sources grapes not close to the winery but from its carefully acquired and developed 400 Ha of vineyards, many located in cool weather areas. Result: the wines are first rate. Their US importer is Dreyfus, Ashby & Co (www.dreyfusashby.com) and the brand is widely available in the States.

Had we not stayed in nondescript Curicó to visit friends, we probably would not have visited the Torres winery as it is not in “scenic wine country.” This would have been a pity as Torres is a very good winery touring experience, with an exceptional, be it a relatively expensive, restaurant on the grounds. If you are heading well south on Ruta 5, the main national highway, and are passing Curicó, do yourself a favor and stop by Miguel Torres. You’ll be glad you did.


Greater Santa Cruz

Santa Helena: (www.santahelena.cl) originally founded in 1942, and now one of Chile’s top 10 exporting wineries, Santa Helena is now owned by VSP, a publicly traded corporation that also dominates the Chilean beer business. We did not know what to expect when we visited its very traditional appearing facility in San Fernando, “off the beaten path,” but on the way to Santa Cruz. However, its beautiful, modernized interior and production facilities were impressive, and its wines were just exceptional. Michael Goldner, the European sales director, who speaks a staggering 11 foreign languages, also went out of his way to meet with us on a national holiday. Santa Helena is open to tourists, but prior reservation is needed. Although the brand is virtually unknown in the US, we see a very bright future for Santa Helena that makes both great red and white wines for reasonable prices.

Barrel maturation at Santa Helena

Yes, we opened, tasted and enjoyed every one of the 13 Santa Helena wines  


Montes: (www.monteswines.com) without a doubt, the most impressive winery we visited in Chile. To use an old American expression, “they don’t miss a trick.” The wine is exceptional across the board, and their penetration of 83 foreign wine markets speaks for itself. (Interestingly, their second largest overseas market is South Korea.) The very publicly active winemaker and cofounder, Aurelio Montes, is tantamount to the “Robert Mondavi” of Chile, which means the winery has a Rock Star personality so often lacking in other local wineries.

Started by four partners in 1987, the virtually new physical plant winery opened in December 2004, in the Apalta Valley just outside Santa Cruz. While the wine making techniques are equivalent to Napa’s Opus One, the production level is over 20 times as great. The barrel room is a cathedral, complete with recorded Gregorian chants alleged by our guide to improve the maturing wines. The exterior beauty and landscaping is exquisite. Any serious wine tourist to Chile simply must visit Montes.

Montes Winery, in the Apalta Valley

The closer you get, the more impressive Montes looks.


Santa Cruz.  One hundred miles (150 kilometers) southwest of Santiago, the town of Santa Cruz in the Colchagua Valley is a St. Helena/Healdsburg equivalent where wine tourists should plan to base for several days. (In 2005 Wine Enthusiast magazine called the name Colchagua Valley the best wine growing region in the world!) In this area are also Casa Lapostelle, Viu Manent, J.F. Lurton, and Montgras, just to name a few more well recognized cellars, as well as the noted museum of the controversial (ex-arms dealer) Mr. Cardoen, who also owns the leading hotel and the sole casino in town. (We also recommend a restaurant a bit outside town called Pan Pan Vino Vino! Exceptional.)

We could have pushed ourselves and visited more wineries during our week’s stay in Chile, but we were trying to settle down and enjoy the country which, as noted above, was great fun. But just getting to these five wineries required a fair amount of driving, and staying for at least a couple of days in three different cities. As everyone knows, Chile is a long, skinny country, and this means driving distances, albeit in a land somewhat akin to a lower cost Switzerland: simply beautiful.

All the wineries we visited are fairly large producers, make exceptionally nice wines, with very nice packaging, and all five are highly export oriented. Carmenère is, of course, the Signature wine of Chile, but the other wines they are producing are also superb. When the word gets out about how good the better Chilean wines have become, and how low most of the prices are, all other wine producing countries will know they are now up against a top flight competitor.


Investment potential. While our principal business in the US and in South Africa is investing in and managing wine grape vineyards, by no means are we prepared to evaluate the wine industry investment potential of Chile. With a relatively small population of fewer than 17 million, and most who are on lower incomes, Chile is not a high gallonage wine consumption nation; reportedly 70-75% of their wine production must be exported. Therefore, the risk of investment in the local wine industry is that it is largely an export-oriented business, and therefore more subject to foreign markets and politics, matters Chileans cannot control or influence significantly. As such, wine investment is a riskier venture than in larger wine producing countries, with larger wine consumer populations, where accordingly there is greater stability of local wine demand.

That understood, on the trip we became acquainted with a very experienced international grower of Canola seeds who contracts annually with many Chilean farmers. According to him, the “entry level” labor rate locally is about $1.50/hour, fairly comparable to the vineyard labor rate in South Africa, once the value of employer paid housing in the Cape is included. Our new Canadian friend has also purchased an agricultural property, is having a neighboring vineyard operator plant some grapes for him, and is renovating an existing house. Clearly he enjoys Chile and is comfortable with putting a modest portion of his portfolio into the country.

Nevertheless, our gut feel is that while an investment is probably far safer in Chile than Argentina (as discussed later), any foreigner considering such an undertaking should largely do so based on the desire to “have a home in an overseas wine country,” much as many do in Napa or Sonoma counties, and not have any expectation of financial investment returns in their lifetime. We are not familiar with the current economics of grape and wine production in Chile, but judging from the low wholesale wine prices quoted us by several top flight wineries, we do not believe the cash returns from grapes alone could be significant.


Chilean wine industry drawbacks. There are some drawbacks, and while none appear to be “fatal flaws,” in concert they make it difficult to project the future prospects for Chilean wine exports, especially to the US. Nevertheless, Chile is consistently the fourth largest bottled wine importer to the U.S. and the U.S. is the second largest export market for Chile after England (aka the UK, or United Kingdom). Well over 14% of all Chilean exported wine is sold in the US, so the country is well established in the US wine market, despite certain drawbacks.

US market perception. Chile started selling wine in quantity in the US in the early 1980’s, about 25 years ago, at very low price points and initially lower quality. As a result, while Chile sells the equivalent of well over six million 9 liter (12-bottle) cases per year into the US, they are still overcoming an initial “low end image.” This is changing as more exceptional Chilean wine is favorably reviewed by journalists and increases market share in the US, especially in restaurants, but changed consumer perceptions do not happen quickly.


Distance to foreign markets. Like all the WPRs south of the Equator, there are very substantial distances to prospective wine markets in the US, Canada, the UK/EU, Eastern Europe and so on. Distance increases the cost to market products (both shipping and travel costs for winery sales reps) and decreases the likelihood of prospective customers (both trade and consumers) visiting the producing regions. That said, Chile has established a good foot hold in the UK market, as well as North America. Nevertheless, because jet lag fatigue is much less for North American visitors to South America, and less debilitating for winery marketing personnel visiting markets directly to the north.  We sense the more “natural” long-term export markets will be in North America, just as the more natural market for South African wine is the UK/EU/Eastern Europe regions, where travel to and from the consumer markets is easier, albeit still quite a distance.

That understood, Chilean wine is doing great in Britain, where it now represents 21% of all wine sales, having moved ahead of Spain.  Further, since 52% of Chile’s wine exports go to Europe, clearly they are doing a good job of overcoming any prior consumer misgivings there and at greater distances than to/from North America.

Wealthy, “uninvolved” owner image. Relative to other WPRs south of the Equator, Chile has fewer wineries in absolute number and a high percentage appear to be owned by wealthy, minimally involved families or large corporations. While a similar situation is true in many wine producing countries, the perception of this Chilean reality is well understood by many wine consumers and not to the country’s benefit. Especially in the US, virtually all wineries attempt to convey an image of involved family ownership. Be they the Gallos, the Mondavis, Jess Jackson’s family, or the thousands of smaller (be they start-up or established) wineries in the US, the US wine industry ardently conveys a sense of “local family involvement:” if the owner is not actually doing the farming and making the wine, the family (or families) are not far removed. (Normally true but “that’s our story and we’re sticking to it …” irrespective.) Chile is not always in a position to spin the “involved family winery” story (with a few exceptions like Montes and Torres), and this probably detracts from their marketing efforts, at least in the US, if not in other foreign markets as well.

Organization of Chilean wine industry. To change the image of a country, or an industry within a country, requires a sustained, joint effort of many people, including active and positive government involvement. Whether the owners and managers of the Chilean wine industry and the tourism departments of its somewhat socialist government (which takes 35% of all domestic wine sales revenues) can work together … remains to be seen. One would think a collaborative effort will pay very high dividends to all but getting people in the public and private sectors together in any country is difficult. (In South Africa, the recently disposed Mbeki administration was unwilling to assist the local wine industry, even in general tourism efforts.  This was because they perceived the industry to be largely owned by white South Africans, a very short-sighted position due to the wide spread benefits to the general population of increased tourism.)


Chilean wine industry advantages. The potential is there for Chile to be a world-class wine producing and internationally successful marketing region. We also think the “wine tourism” potential is unlimited, especially from North America, if promoted properly.

First and foremost, Chile is producing exceptional wine at  modest prices. When a WPR brings those attributes to the game, they should be a real player. Chile is definitely a player in a very competitive game.

The country is beautiful, it is relatively easy to drive around, given sufficient time, and the people are charming. This should make Chile a North American tourist Mecca for at least six months every year, starting in September, their spring season.

As anomalous as it may seem, we think the proximity of Mendoza, Argentina, the large wine growing competitor just over the Andes, can also be a big tourism positive. When we decided in early 2008 to visit the Mendoza region of Argentina, we immediately concluded we should also spend at least an equivalent time in Chile, an easy 45 minute jet flight from Mendoza … or we would kick ourselves later. We are so glad we did, and feel most “wine tourists” from substantial distances, and likely coming south for the first time, will feel the same. Further, making the trip a “two country package deal” will give prospective wine tourists an even greater incentive for at least a two (perhaps three) week vacation in South America.

However, whether or not the two national trade organizations, or their respective governments, will see it this way remains an open question. Wines of Chile (
www.winesofchile.org) is a private promotional body that represents 77 Chilean wineries with offices in Santiago, London and New York. Wines of Chile was founded in July 2002 to position Chilean wine around the world through strategic marketing and promotional activities, but we do not know their position (if any) on some sort of strategic alliance with the similar body, Wines of Argentina. (There is also a more generic government promotion agency called ProChile, www.prochile.us, which appears to work together with Wines of Chile from time to time.)

That said, we are quite encouraged after reading a very flattering and insightful article in the Washington Post about Chile's ambassador to the United States, Mariano Fernandez. Evidently Ambassador Fernandez has become a high-profile advocate for his country's wine industry due to his participation in numerous international wine competitions. He is an acknowledged wine expert, a member of numerous international wine societies, and has a personal 3,000 bottle cellar at his home in Chile. Ambassador Fernandez is the logical point person in integrating the country’s efforts for both wine tourism and wine exports, and perhaps close cooperation in similar efforts in Argentina.

In our opinion, the easiest way to see the WPR’s of Chile and Argentina is to fly into Santiago, tour Chile, and then fly over and tour the Mendoza region, ultimately returning  to Chile and then subsequently returning home from Santiago. There are several time, convenience and cost reasons we suggest this routing: first, Mendoza is almost a two hour jet flight from Buenos Aires (BsAs), and from their domestic airport, not the international airport. So anyone coming internationally to BsAs has to schlep themselves and their luggage by taxi the better part of an hour from their international airport (EZE) to another airport to make a connection.

Next, while most international airlines do not charge extra for two bags per person, we were billed extra, and significantly so, for a second bag (actually, any checked luggage over 20 kilos total) per person on flights from BsAs to Mendoza, Mendoza to Chile, and then Chile to Buenos Aires. For some, an efficient arrangement would be to come to Chile with two bags, perhaps leave one in Santiago when in Mendoza, and then pick it up when headed home from Santiago. By avoiding the Mendoza/BsAs round trip, such a routing obviously also reduces the total flying time about three hours and ticket cost as well as the ground transportation hassle in Buenos Aires, if not a forced hotel stay in BsAs for a night or two. So while Argentina has many attributes for “wine tourists” who want to visit both countries, travel connections are superior via Santiago.



Argentine wine industry perspective. Despite limited scholarship of Argentina and the historical roots of its wine culture, sharing the background we have obtained may be helpful in understanding Argentine wine today. Although wine grapes and the making of sacramental wine came with the Spanish priests in the 1500’s, it was not until about 1880 the large scale cultivation of Argentina wine began in earnest. It was then the great immigration of Italians began, first to Buenos Aires, the capital and South Atlantic port city, and fewer numbers, but not much later, to Mendoza, located far to the west, at the foot of the Andes, when a rail line was built in 1885. Even today 45% of the population of Buenos Aires (nicknamed Porteños, or “those of the port”) is Italian surnamed, and its historic vineyard industry is dominated by families who have been growing wine grapes for 100 years or more.

Before roughly 1988, just 20 years ago, very little Argentine wine was exported; the local Italians drank it all. They wanted abundant cheap red wine and their wine industry delivered it to them and in the process the country became the world’s fifth largest wine producer . Yet despite abundant local supplies, Argentina has seen its national per capita wine consumption drop substantially over the last 30 years, according to government reports cited in published articles on the subject. “In fact, from 1980 to 2002, the average Argentine cut back from 72.68 liters (approximately 3 bottles per week) per year to what they perceived as a measly 36.01.” Ironically, local consumption fell as wine quality was increased.


Buenos Aires. In addition to wine, the other legacy of the Great Italian Migration was the invention of the Tango, the complex, stylized, and exotic dance that originated in the Italian slums and brothels of Buenos Aires (often abbreviated as BsAs) starting well before the 1914-1918 WWI era. The proper, formal “establishment” Spanish Argentine families reportedly turned their back on the Tango in the 1920’s and 30’s as a vulgar, lower class bordello dance; but by the 1950’s, Argentina and the Tango had become internationally synonymous and now the entire culture embraces the dance as having always been theirs! Tango dinner clubs & shows are a big tourist draw in BsAs, and most assuredly we attended a great one; while the food and wine was mediocre, as one would expect in a tourist operation, the dancing was phenomenal. Bravo BA!


Bombillas for Argentina's traditional tea, called mate  


We first visited BsAs in 1990 and were aware the former “Paris of South America” had been going to seed; the extent of deferred maintenance in even the historical and classic older part of the city was clearly evident. Almost 20 years later, the city looked somewhat better but what had really improved was the wine in the restaurants. On our prior visit, most of the wine at affordable prices was barely drinkable, and even the Signature Malbec we drank merited little more than a grade of C.  Fortunately, far better wines than those times are now widely available.

Major changes began in the late 1980’s when Nicolás Catena imported the noted California wine maker Paul Hobbs, and Bodegas Etchart invited the help of noted Michel Rolland, the peripatetic Frence wine consultant. Collectively, they and then others set out to raise the quality bar, and are definitely succeeding. This is not to infer all Argentine wine is up to world standards, but the same qualification should be said about lesser wines from France, Italy, Spain, and the list goes on. The wine business today, if you want to export a bottle, establish a brand, and try to make a profit, requires a dedication to quality and a capital investment that has never been seen before in Argentina or in most other WPRs of the world, be they north or south of the Equator.

As discussed below, the vineyards and wineries of Mendoza produce approximately 60%- 70% of the wine grapes grown in Argentina, reportedly one billion liters (conflicting figures are a little sketchy). However, there are also six other wine regions, stretching over 1,200 miles between 22 and 42 degrees Southern latitude, all along the eastern foothills and valleys of the Andes, and into Patagonia. There are a myriad of microclimates that the total planted 221,700 hectares encompass, but more of the recently developed vineyards are at higher and cooler altitudes. Argentinean vineyards benefit from mild, dry weather, which causes vineyard diseases to be infrequent, irrigation with the pure water from the Andean snow melt, crystal clear skies almost every day, and especially in the mountains, a considerable daily temperature range (“thermal amplitude”).

That all said, Argentinean grape growing has one major risk factor seldom faced elsewhere is the world: summer hail! We don’t know what percentage of all their vineyards have strong hail netting installed, but in the Mendoza area it seemed like the majority of vineyards were protected. One grower told us that the strong, protective netting decreases the available sunlight by about 15%, but they have so much sun that it is not a major growing issue. Nonetheless, it is a significant capital expense ($10,000/hectare reported in 2002), and clearly some growers must look at hail damage as just one more risk of farming with which to be lived. The other drawback, at least from an investment standpoint, to high mountain grape growing we heard were lower crop yields, typically 1-1.5 tons/hectare.


Mendoza: grape growing and winemaking central.  Mendoza, the capital of the country’s wine industry, is both the name of a large farming province as well as its main city. “Greater Mendoza,” including its contiguous suburb villages, has a population of approximately 900,000, the fourth largest urban center in Argentina, radically larger, for example, than Santa Rosa, CA. The province is also quite large, and the principal growing area is a very flat, high desert, irrigated by acequias, open channels carrying water from the Andes. (Imagine a very large "Fresno County", in the San Joaquin Valley of CA, but far more charming.) That said, the better wineries we chose to visit were strewn around a rather large area; from Vistalba, our south/central Mendoza area point of residence, most could be reached within a 30 minute drive but they are quite separated. In between are villages, vineyards and orchards, and a lot of quasi-desert, so this is not the lush Napa Valley, with most of its wineries located on two main highways.

An interesting aside is that reportedly about 75% or more of the seasonal agricultural workers are Bolivian immigrants, as we understand the typical agricultural wage rate is an attractive $3/hour. However, since US$100,000 can buy a very nice home in Mendoza, living costs are relatively low by US standards.

We are quite comfortable driving around cities and the vineyard areas of most countries, but unless you have a lot of time, we would not suggest it for the Mendoza region. Winery visits must be scheduled in advance, signage is minimal, and it would be very easy to get lost, miss a turn, and get everyone frustrated. Our contact at Vistalba where we stayed suggested in advance that we hire a driver/guide and it was a good suggestion. Many of the roads are narrow, not well marked, and at night there are not a lot of lights. Let us repeat: unless you are touring with locals, hire a driver. The accident rate is allegedly second in the world only to Nigeria!


Wine industry Argentines are fun, smart, stylish, energetic and worldly, … and so are their modernizing or brand new wineries. We met a large number of “Mendocinos” (residents of the Mendoza area) who we would love to see again. The people are as wonderful as their wine, the perpetual bright sunny days, and the overwhelming beauty of the snow covered Andes. The attitude of the people you meet as a wine tourist anywhere is so important to having a good time; the great attitude of the Mendocinos cannot be topped. (Just realize that most good restaurants do not open for dinner until 9 PM so you are going to have long days!)

“Signature Malbec” dominates the Argentine wine scene, and reportedly is 70% of their exported wine, as this is clearly red wine country. However, many of the other cultivars are also quite nice, including whites such as Chardonnay, Sauvignon Blanc, Torrontes, and others, being grown at higher altitudes. Most Argentine wine available in the US is relatively inexpensive, but make no mistake, these people know how to make very good wine. Do some experimenting and see for yourself; you’ll be pleased you did.

A final advantage of modern Argentine wine is it is The Flavor of the Month in numerous wine markets such as the US. Since the country did not export much of its former low quality wine, new high quality wine does not have to fight a prior poor consumer impression. With a reported 40% of their wine exports headed to the US, this is very important.


Mendoza area wineries visited.

Some well established operations:

Hacienda del Plata (www.haciendadelplata.com.ar) The smallest and oldest family owned vineyard and winery we visited, Hacienda del Plata was really a treat. The original ranch in the Andes was acquired in 1880; it is now submerged by the Potrerillos Dam. Clearly a sustained family operation, headed by the charming Pablo Gonzales, they plan to produce just over 4,000 cases in 2009, or approximately 25% of his 44 hectares’ capacity. The balance of the grapes is sold to other wineries. The winery is located on a tree-lined boulevard at the family homestead; when visiting Mendoza, make a reservation for lunch, relax with their delightful Malbec and Sauvignon Blanc, and step back into an earlier time with wonderful people.

Sr. Pablo Gonzales, with his Zagal range of wine on pallets  


Rutini Wines.  (www.rutiniwines.com)  At infinitely larger Rutini, they also revel in their history and lineage that dates back to 1885. Any tour starts with their viticultural museum, designed “to give visitors a clear view of how wine making has been conducted over the years.” While old tractors and implements implicitly reflect a technological evolution, we think the museum falls short of teaching what has changed in wine making and what has not. But be that as it may, Rutini makes over 1.2 million cases per year, is one of the leading brands in Argentina, and has a major export program. Their marketing people are very professional and accommodating, and explained the winery sells wine in a price range of 6-400 Pesos/bottle (about $2-$200).  Rutini has developed new vineyards (85 Ha of Malbec and 30 Ha of Chardonnay) in several areas in the foothills of the Andes, and a new winery itself is under construction. Ever since 1994, when the Rutini family sold out to a local investment group with greater winemaking expertise, this firm has been modernizing and will continue to be a tough international competitor. We tasted both their Malbec and Chardonnays and were highly impressed.  


Rutini's charming and capable international marketing team: Alfredo Matilla and Sol Asensio  


Familia Zuccardi.  (www.familiazuccardi.com) Although a far younger enterprise than Rutini, having purchased their first vineyard in 1963 and constructed the winery in 1968, Zuccardi is an established and far larger bodega than most. They cultivate 650 hectares of grapes, which clearly makes it a large volume producer. Over 30% of their grapes is certified as organic, and the objective is to become 100% organic within five years or so. The grapes are trellised on a high “parral” system and flood/furrow irrigated, which they and other locals believe superior to drip irrigation. Progeny of the Zuccardi family, including “20 something” Julia and Sebastian, with whom we met, are very active in day-to-day management, and their involvement really shows. The restaurant is superb, the winery is spotless, the tasting room is in perfect taste, and the wines are excellent. Like many of the Mendoza area wineries, Zuccardi is located out in the eastern “suburbs” (the boondocks/bundu) of Maipu, but the visit is well worth the effort: lots of great wine and a nifty place to eat.  

The artistic and comfortable tasting room of a sensitive family bodega

Sebastian Zuccardi,  vineyardist and the energetic next generation

  Newer, talented guys with striking bodegas:

Chakana (www.chakanawines.com.ar) Chakana (or “square cross” in Mapuche, an Indian language) is a relatively new winery, sited on a 150 Ha parcel (120 Ha under vine, both young and old, all drip irrigated and netted) and owned by the Pelizzatti family. Its 65,000 case annual production (and growing) is 97% exported, and 50% of that to the US, the rest to the EU. Managing Director Juan Pelizzatti graciously met us and conducted the tour and tasting. While they presently have 460 barrels, they use oak staves extensively for their principal ranges. Juan is very bright, highly educated, and articulate yet he and his family are relatively new to the wine business; if he has a bias, it’s toward drinking red wines very young: “after 3-4 years, the fruit goes, and the wines all taste the same.” Clearly there are differing opinions on this matter, including my own. But be that as it may, this is a clued-up winery selling lots of reasonably priced wine overseas. We also noticed the respected Wine Enthusiast magazine just scored the 2006 Chakana Malbec 90 points and included it in their list of Best Buys in the world under $15.  Nice going, Juan!

The Andes are visually never far away from Mendoza

High quality hail protection netting at Chakana Wines


Vistalba  (www.carlospulentawines.com) We had the good fortune of staying two nights at this magnificent winery/restaurant/small lodge in the heart of Lujan de Cuyo vineyards, just south of the city of Mendoza. Unfortunately, our planned three night stay was truncated by missed airline connections, and we never had  time for a proper winery tour and tasting at Vistalba. However, the Sauvignon Blanc and Tomero Petit Verdot we drank there were exceptional. The owner, Carlos Pulenta, is legendary in the Mendoza wine scene and we look forward to meeting him on a return trip. The La Posada lodging with two large 70 m2 rooms is not inexpensive but an exceptional experience, especially the view of the early morning sun reflecting on the snow capped Andes. Whew!


Catena-Zapata  (www.catenawines.com) Generally acknowledged as one of the price and quality leaders, Catena-Zapata is also famous for its Mayan temple motif winery located SE of Mendoza. The founder, Nicolas Catena, arrived from Italy in 1898 and planted his first grapes in Mendoza in 1902. His son Domingo grew the business into one of the largest bulk wine producers by the 1960’s. But it was not until the early 1980’s that his son, Nicolás, by then an economics professor, left Argentina’s political chaos to become a visiting professor at UC, Berkeley, California. His subsequent visits to the nearby Napa Valley made him realize only a commitment to quality wine made economic sense, although his traditional peers at home thought him crazy. His subsequent experimentation with higher altitude plantings and clonal variations has paid off immensely with Chardonnay, Cabernet Sauvignon and Malbec. (As we learned from our tour, the average temperature declines 1 degree Centigrade for every 100 meters in increased elevation; this is important, as many summer days in Mendoza are 40C (or 104F, which grape vines don’t like anymore than people.)  However, while most Argentine wine commentators remark consistently on the massive contributions of American winemaker Paul Hobbs brought to Argentina by Nicolás Catena in the late 1980’s, the winery’s website curiously does not make mention of him.  Strange…

We tasted all three of their excellent varietals, but were especially impressed by the minerality of the high altitude Chardonnay. The winery’s Mayan temple architecture is, of course, unique, totally different from all others in the Mendoza area, and perhaps more impressive than beautiful. Also very interesting were their surrounding vineyards that did not have hail netting protection.

Dave and Catherine's private wine tasting at Catena

Melipal  (www.bodegamelipal.com) Melipal, which means the Southern Cross constellation in the Mapuche language, is a beautiful “new” winery (just two years old, yet the brand evidentally was established a few  years earlier) about 20 minutes south of Mendoza. Clearly the Aristi family had the resources to make sure that everything was done perfectly: the design, the execution, the landscaping, the exceptional restaurant view of the Andes, and so on. They own three separate vineyards in Agrelo, totaling some 188 planted acres, chiefly Malbec, and planted on their own roots (like phylloxera-free Chile). The property is managed by Santiago and Clarisa Aristi, who are also young parents to an infant in arms; they tasted us on four different Malbecs, ranging from a nifty young Rose to their stellar Reserve, from 80 year old vines and 18 months in French oak barrels. All wines were excellent and the hospitality exceptional.

A magnificent view of Andes from Melipal's cozy tasting lounge and terrace

Altos Las Hormigas (www.altoslashormigas.com) The owners of this eight year old winery are largely offshore Italians with a great sense of humor: the name translates into English as “Ants Heights.” As explained by the local partner, Carlos Vasquez, modestly “responsible for the vineyards,” he reported everyone involved with this project has worked hard, like a colony of ants; initially they also had an ant infestation; “a job for Ants" is also an old Argentine saying for humble, patient, and extended work. Therefore the Ant is their bottle symbol and good luck charm. They acquired a 201 Ha property in 2001 and 45 Ha are under vine, on bare roots and using flood/furrow irrigation. (The Argentine phylloxera aphid can not fly, and the flood irrigation reportedly  helps to control them by flooding  the colonies.)

Flood irrigation at Altos Las Hormigas; Andes in distant background 


This is a no nonsense, no secrets, not open to the public, and highly functional bodega specializing in Malbec, with a second label (Colonia Las Liebres, the jackrabbit colony) for the humble Bonarda  grape (originally called Charbonno).  Malbec is why the winery was created, however, and 90% of their highly rated production is exported. The regular Malbec is oak matured 100% with staves, and released one year after harvest. The reserve Malbec is 100% French barrel aged and released after two years: they estimate 8 years to wine maturity. While the offshore “real Italians” clearly are also wine professionals who wrote big checks and sell the wine overseas, we think the secret to the winery’s quick success is Carlos. A college trained agricultural engineer and oenologist, he spent 20 years in the industry-leading Catena group, then joined these guys at inception. He knew where the best grapes were, (75% of the red wine game), and how to get them. Bravo, todas hormigas!

  The newest guys with ambitious plans:

Vinos de los Andes/Naiara Wines. (www.naiarawines.com)  This entrepreneurial firm is taking a far different path than most: from a Buenos Aires corporate/sales base, they have developed five brands (labels) and evidently are sourcing their quality bulk wines as a négociant from existing Mendoza wineries. (They are also refurbishing a very old, non-operating winery in Maipu, east of Mendoza, that they hope to have running in 2009.) We were impressed with their Naiara line of Malbecs and wish them best of luck.

The Vines of Mendoza (www.vinesofmendoza.com)  With a charming courtyard tasting room near the Park Hyatt Hotel, Vines of Mendoza is a nice spot to start your wine tasting. The company operates an international wine club, shipping wines from 40 different wineries to most of the population of the US and Canada and providing valuable services for both tourists and those foreigners who would like to own a vineyard and make their own wine. For the past three years they have been developing some 250 acres in the Uco Valley for offshore owners; the typical owner parcel size is five acres. At higher altitudes the risk of frost and hail increases, but the day/night temperature variations contribute to exceptional wine quality and retain higher acids. The development’s sales manager is bilingual Matt Hobbs, the younger brother of famed American winemaker Paul Hobbs, with extensive Argentine experience, so we doubt any farming mistakes have been made. When the vineyards are mature and the planned winery and resort are built, this should be an operation to follow closely. (Per a WSJ article earlier this year, they also have at least one competing wine developer doing much the same thing.)

Matt Hobbs, enthusiastically hosting overseas dinner guests


Investing in Argentina in general and in its wine industry. While it is risky investing anywhere in the world in these times, we think it is exceedingly risky for foreigners to put capital into Argentina unless it is for personal residential/retirement housing or small hobby farming. The country has a very long history of debasing its currency, and more of this is anticipated. No one sees this more clearly than a old friend “Sam”, a Stanford graduate school of business classmate of many years ago and a native born Porteño who lived and worked in the US, throughout South America, and then returned to BA with his family some 25 years ago. Very simply, Sam has lived through much devaluation and anticipates yet another currency devaluation within 12-18 months, to perhaps 50% of current levels. And, in the words of the Wall Street Journal, “Argentina is now considered one of the worst places on the planet to put your money.”

Because most Argentineans have very low confidence in the government and their currency, it appears that a disproportionate amount of capital is going into the wine industry, and other real property. Such capital inflows may not be based on expectations of a current cash return in their lifetime but simply an attempt to find a domestic “storehouse or safe harbor for wealth” for generations to come. Irrespective of motivation or expectations, the additional investment will continue to improve the wines of Argentina, make them exceedingly strong competitors at all price levels in export markets, and continue to reduce substantially the de facto return on wine industry investment. (Que lastima for the bankers!)


Systemic drawbacks to Argentina impacting future wine tourism.

The biggest drawback today to Argentine wine is the Argentine government and their disastrous social and economic policies of long standing. The annual inflation rate may be running about 25%- 30% but nobody knows for sure because the government fired the honest economists. The wine industry is largely protected from foreign competition due to a 120% excise tax on imported wine, but high export taxes on agricultural products has the farming community furious. The Kirchner family (former President Nestor and current President Mrs Christina Kirchner) “idea of running an economy is to tax, prohibit, regulate, subsidize, and otherwise micromanage every aspect of Argentine life so that no decision can be made without checking first with them.” (Wall Street Journal editorial, 2008)

Anyone planning a trip to Argentina should understand the “tale of two cities” and make their plans accordingly. Mendoza and the wine country is rural and uncrowded while BsAs "proper" is a relatively crowded city, with an estimated population of 3 million. While there are some nice parks and most of the buildings appear in decent condition, there are LOTS of people. (Gran Buenos Aires, including suburbs, is over 13 million, or about one third of the country’s total population!) Think Manhattan, Brooklyn, and the Bronx, not metropolitan Paris, and according to my local friends, a great deal of street crime occurs, including muggings and “car jackings” that can cost your life. Wandering around on the streets with a camera, diamonds, or gold jewelry simply screams TOURIST and it is not recommended by knowledgeable locals. Frankly, I was not enamored with BsAs 18 years ago, and after three more days in September, my opinion is the same. BsAs may not be more dangerous than many large international cities, but it lacks much apparent charm other than Tango shows and some excellent restaurants. A great many Porteños must be quite disappointed in the secular decline of their city and country due to the socialist government.

That said, we understand the up-country wing shooting is fantastic for bird hunters, rafting and hiking is popular, Iguazú Falls simply stunning, and skiing Baraloche in the Andes always great fun. Argentina is a large country with every conceivable type of geography and climate, and a wide range of tourist activities. Wine tasting is one of many things to do in this interesting country and most of the problems of BsAs can be sidestepped with advance planning.


Dave Jefferson

President, Burdell Properties
405 Enfrente Road, Suite 200

Novato, California 94949

415.883.3283; cell 415.342.3141

SKYPE name: davidwjefferson
December 22, 2008