Beyond Pizza and Champagne: Argentine wine production and tourism

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Despite “Pizza with Champagne” and “Patagonia Lamb with Malbec” jokes, wine and ecotourism will play a leading role in Argentina´s future.

When it comes to sociopolitical jokes, there is a long pairing tradition in Argentina, associating governments to food and wine combinations. From anarchist references in popular pastry names –“cannons and bombs”- to referencing both Néstor and Cristina Kirchner governments as “Patagonia lamb and Malbec” (because they came from the Southern provinces) through ironically labelling President Menem period “pizza and Champagne era” (because of the many humble origin functionaries that adopted a higher lifestyle), the nicknames reveal Argentine love of good eating, drinking and living.

Despite decades of inward-looking governments and economic policies that favoured isolation over integration to world economy systems, Argentine has managed to develop a highly sophisticated hospitality culture. The vast territory allows for all type of produce and animals to grow, and the successive in and out-migration waves gave the country access to international flavours and a taste for all things refined.

The 2015 election of President Mauricio Macri brought a determined effort to move beyond soybeans, oil and gas and put the country back into international commerce. The longstanding default ended by settling with the last bondholders, the Peso was depreciated to its real value, export controls were removed and official statistics recalculated to accurately reflect the state of the economy.

Macri –son of a successful Italian immigrant and himself a prominent businessman is also striving to generate employment and development through foreign tourism. His government plans to build on Argentine natural climate and landscape diversity and the lifestyle penchant already in place, with wine tourism the rising star.

The new concept #ArgentinaWorldFriendly was created to attract 9 million international tourists by late 2019, lured by a favourable exchange rate and tax exemptions as high as the 20% hotel Valued Added Tax refunded to international credit cards. Plus the hospitality, wine and gastronomy attractiveness, of course. The plan is expected to create 70 USD million yearly revenues and 8.000 new jobs.

                                                               Tasting room in a Mendoza winery: Source Terrazas de los Andes

Wine tourism –ecotourism- is a big staple in Argentina, the only South America country that pairs excellent growing conditions with an Old World wine culture. Wine grapes arrived back in 1551 with Spanish conquerors and as early as 1852 Agronomical Engineer Michel Pouget introduced Malbec, now the Argentina flagship variety. The optimum chalky soil, large day-to-night temperature range and semi-desert climate of the Andes slopes favoured extensive growth in the winemaking industry. Today there are wine regions in eight provinces spread along 2500 km of North-South route 40 and 700 ft. to 9300 ft. altitude.

                                                                    Argentine winegrowing valleys: Source wines of Argentina

International winemaking companies have long ago taken note of Argentine privileged geography. In the fifties, Moët & Chandon chairman Jean de Vogüé sent winemaker Renaud Poirier to search for terroirs suitable for producing sparkling wine outside of Champagne. Their first overseas company –Chandon Argentina– was established in Mendoza. In 1959 they created the first Chandon Extra Brut, a sparkling fresh wine harvested from chardonnay and pinot noir vineyards 2200 to 3300 ft. above sea level and from there went on to produce internationally renowned blends.

Moët Hennessy (Chandon as people informally name it in Argentina) has set the bar to measure the country´s wine production and is a growth driver for the sector and in turn for the entire country. It is presently buying new terroirs and presses, planting new fields and upgrading to drip irrigation. It is also installing solar panels, both in compliance of government requirement of 8% industrial energy consumption to be renewable and in anticipation of the rise of energy prices when official price supports for oil and gas are withdrawn. This falls in line with the parent firm policies and its in-company carbon fund.

                                                      Terrace grape plantings in Cafayate, Salta: Source Terrazas de los Andes

Now part of the world leading luxury Louis Vuitton Moët Hennessy group, the firm opened in 1996 two additional estates harvesting Malbec, Cabernet Sauvignon, Cabernet Franc, Merlot and Petit Verdot varieties to create wines that synthesise France and South America. Terrazas de los Andes produces four distinctive yet complementary wines from Terroirs at the optimum altitude for each ripening condition. An alliance of the Saint-Emilion Château Cheval Blanc Premier Grand Cru savoir-faire and the altitude terroirs of Terrazas de los Andes created Cheval des Andes.

All three brands reinforce the luxury lifestyle concept. Chandon all-in-white parties in seaside Punta Del Este are a summer social fixture. In the heart of the Terrazas estate is the original 1898 winery building and six refined guest rooms dedicated to grape varieties and Argentina “Art de Vivre”. The Cheval des Andes estate features an exclusive wine loft overlooking a polo field and is the site of refined wine events (see cover photo).

                                            Golf course besides grape fields and Hotel, Salta  Source: La Estancia de Cafayate,

Other foreign investment groups have picked up the idea and there are many combinations of production and recreation facilities that provide employment and growth opportunities to the wine regions. Most wineries offer exclusive restaurants and personalised tours and major hotel chains are building in the area. Big developments like Algodon Wine Estates in Mendoza and La Estancia de Cafayate offer lots adjacent to the terroirs and golf courses, exclusive hotels, spa and fitness facilities, horses and connected activities. Traditional tourist attractions –lake fishing, mountain hiking, horse riding, rafting and biking- also benefit from the increased flow of visitors.

At the government level, wine and food tourism have long been known to outperform the country´s economy, with the sector accounting for nearly 5% of formal employment and even more in wine provinces.

Since the 2006 Consolidation of Wine Tourism project financed by the Inter-American Development Bank (IADB) the sector has shown considerable growth. The main project result has been the establishment of sixteen wine routes (Caminos del Vino) in eight provinces under similar service quality parameters and a national wine Observatory (Observatorio Vitivinícola Argentino) that centralised information from all stakeholders including ecotourism. Between 2004 and 2010 the wine routes visitor number went up 158% versus 33% in general tourism, while the wineries open to tourism went from 62 to 167.

There is also official encouragement for the development of 5-star hotels in Mendoza, where most of the production is located and plans to improve the airport infrastructure.

Yet all is not easy in the near future. Investors have responded positively to Macri´s changes but consumers and local producers are still under the blow of the Kirchner price subsidies disappearance. Inflation and taxes are still high and the low exchange rate is a problem for all export activities. Additionally, the tourism and hospitality sector have seasonal employment shifts not always taken into account by rigid labour laws.

Congressional elections in October 2017 will define the future of Macri´s intended reforms and the fate of the long-term planning needed both for completely changing the Argentina economy and wine tourism industry development. In the meantime, the sector relies on private investing and the Argentine people inventiveness. Cheers to that!

Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and disposal.

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