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Winemakers Make A Big Push Abroad...And Rivals May Need A Stiff Drink (Int'l Edition)

International -- Spotlight on Argentina


Nicolas Catena's family has been making wine in the cool foothills of the Andean mountains since his grandfather emigrated from Italy at the turn of the century. Still, as the head of Bodegas Esmeralda for the last 35 years, he always doubted whether Argentina could make wine with a body and flavor matching up to world standards. Well, not anymore.

After 15 years of hard work and a $10 million investment in new technology and higher-quality European and Californian vines, the visionary vintner is harvesting the rewards. In a recent tour of the U.S. and Europe, the winery sold out 1,800 cases of a newly launched special reserve line selling for a pricey $40 to $50 a bottle. Renowned connoisseur Robert Parker appraised the winery's malbec, a grape variety discarded in Europe for its unimpressive taste, as equal to the best France had to offer. "This is the first serious recognition that Argentina can belong to the group of great winemakers," said Catena. Still not satisfied, he aims to make the once scorned malbec the country's signature grape, and he has just bottled a blend he plans to sell for a juicy $100 a bottle.

But while Bodegas Esmeralda is a front-runner in the quest for quality, it's not the only Argentine winery looking to make its mark abroad. A new bunch of winemakers are beginning to test international markets for the first time after years of industry isolation and decline. The fourth-largest wine producer in the world, with 1,500 wineries, Argentina rarely sends its unique blends beyond its own borders thanks to one of the highest per-capita wine consumption rates, ranking only below France and Italy. But domestic consumption has been cut by half, from 92 liters to 43, since 1969, as Argentines shifted to soft drinks and beer--and economic instability in subsequent decades saw the country's harvested area cut by a third. It was only with the introduction of market-oriented reforms in the early 1990s that the industry began to blossom once again, because the end of hyperinflation gave investors new confidence.

NEW ENERGY. Since then, Argentine wineries have been following in the footsteps of California and Australia, investing some $150 million to make bolder-tasting wine. Vintners began planting chardonnay, cabernet sauvignon, pinot noir, and merlot, while developing more offbeat grapes such as malbec and sweet wines such as torrontes. Winemakers are also jazzing up packaging, changing bottle shapes and designing snazzier labels. The effort is paying off. Argentine sales of fine wines abroad has jumped 300% since 1994, to 28.7 million liters in 1996, and is expected to double again in 1997. "We're the new wave from the New World, and we've got new energy," says Dolores Lavaque, fourth-generation vice-president of Bodegas Lavaque.

But the Argentines are up against some stiff competition--and not just from the old wineries of Europe. On the other side of the Andes, Chile has been aggressively exporting wine for over a decade, and its inexpensive offerings continue to crowd out their Argentine counterparts. Chile's wine exports are four times Argentina's.

To clear counter space for themselves, some two dozen Argentine makers of fine wines banded together in 1993 under the marketing banner "Argentine Top Wines." The wineries have begun attending international exhibitions, sponsoring tasting tours, and flying in critics and journalists. Their goal is to place their wines abroad at midlevel prices, thereby avoiding the problem the Chileans now face of trying to raise prices after flooding the market with cheap wine.

But Argentina has a ways to go. Precious few of its wineries make wine that can compete with the world's best. Help could be around the corner, though, thanks to a wave of capital-rich foreign investors. Kendall Jackson of the U.S. and Donald Hess, the Austrian entrepreneur and owner of the Hess Collection vineyard in California's Napa Valley, are both building wineries from scratch. In November, Portugal's Mateus bought out a local winery, adding to the list of foreign owners that includes Pernod Ricard, Allied Domecq, and Moet & Chandon. Given Argentina's blend of new world-class wines, cheap land, and vast production potential, Chile had better watch out.EDITED BY HARRY MAURER By Andrea Mandel-Campbell in Buenos AiresReturn to top

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