Foreigners change ways of Argentina wine country - Reuters.com - 14/3/2006

MENDOZA, Argentina (Reuters) - Former investment banker Jose Manuel Ortega Fournier has courted controversy ever since he plowed his savings into Argentina's wine industry.

Whether it was his space-age winery below the snowy Andes, his refusal to train vines on trellises or the sacrifice of half his grapes before harvest to improve fruit quality, the Spaniard took more than a few knocks from his neighbors.

"They would come out here and say 'What is this crazy Spaniard doing?'" Ortega said as he walked through the O. Fournier vineyards south of Mendoza, heavy with Malbec and Tempranillo grape bunches weeks before the 2006 harvest.

The 37-year-old is making some of the best wines in South America, according to regional wine bible Austral Spectator, and like many foreigners here, he is testing the limits of a wine region rich in potential and ripe for more investment.

Argentina is the fifth-largest wine producer in the world, but only in the last five years has it begun to shed its image as a producer of plonk, far behind other New World wine nations like Chile or Australia.

World-renowned wine critic Robert Parker calls Argentina "one of the world's most exciting new wine regions."

Argentina's thundering economic collapse in 2001-02 ironically gave a crucial boost to the business because the currency devaluation slashed the costs of production in dollar terms, making Argentina's then negligible wine exports more competitive.

It also allowed foreigners like Ortega to make big investments at a much lower cost. He invested $8 million, half of that to make a state-of-the-art winery that could double as a set for a James Bond movie with its space-station top and cavernous underground storage galleries.

MORE THAN MALBEC

Argentines continue to rule over their wine industry and the Catena family reigns supreme. Achaval Ferrer, widely regarded as the highest quality wine producer, is owned by Argentines working with an Italian winemaker.

But foreigners are flocking to Mendoza, spending $120 million in Argentine viticulture in the last five years. Top investors include Codorniu of Spain, France's Lurton and Dutch company Salentein, and their new, avant garde wineries stand out on the horizon.

This month, two of France's leading families, the Rothschilds and the Dassualts, join up to inaugurate the Flechas de los Andes winery and owners of Dassault jets will fly in for the festivities.

Chileans have also been big investors here as the export-oriented wineries find room to grow at lower costs than in their thin country on the other side of the Andes. Concha y Toro owns one of the top Argentine wineries, Trivento.

But Mendoza is not just about low costs. It is about available land with what many experts believe is exceptional "terroir" -- the industry's term to describe the soil, weather and grapes that give a wine specific personality.

Mendoza's wine-growing area spreads out from the Andes, mountains towering 20,000 feet over the valleys, and grapes are springing up on the dry plains to the east and high on the Andean foothills. Snow melt serves for irrigation.

"Mendoza has lands of great quality, not only for Malbec but also for many other varietals, like Cabernet, Merlot, Pinot Noir, Chardonnay, Sauvignon Blanc. It is a very, very good terroir," said local wine writer Enrique Chrabolowsky.

Malbec, a grape that has fared better in Argentina than anywhere else in the world, continues to stand out in the list of the country's' best wines. But varietal blends, like Malbec with Merlot or Tempranillo, are competing with pure Malbecs for the top spots.

Despite the vast array of varietals and new inroads with white wines, the dark and spicy Malbec will continue to be the flagship of Argentine wine for some time, even if there are doubts about its future as a world-class grape.

'SLAP IN THE FACE'

Laurel Glen, a California winery, has been buying Malbec in Mendoza for years and bottling it back home for its Terra Rosa label. Now it has made its first purchase of Argentine vines and will grow and make its own Malbec for export to the United States.

"Right now it is a very good commercial grape and the costs are low," said Laurel Glen's Ray Kaufman.

"But what is a great Malbec? Those standards haven't been set yet," he added.

Indeed, in a jaded, wine-saturated world, the unrealized potential of Argentina pushes foreigners to experiment with just about everything -- whether it is grapes, altitudes, areas, winemaking techniques or technology.

Ortega, who seems only to fear crop-destroying hailstorms, is game to try anything and put up with a little local scorn.

"This winery is a bit of a slap in the face," said his architect Mario Yanzon. "It has a lot to do with the different way of making wine that Jose Manuel wanted."

Ortega chimed in: "Yes, we'll be ready for the 22nd century."