He was right to worry.

During his first trip to Mendoza, Hobbs, who had been an oenologist at Opus One and winemaker at Simi, found the industry in a shambles. Winemaking in Argentina had barely advanced beyond ancient techniques. “The wineries had no tanks, no modern-day crushers, no new barrels and they didn’t know about malolactic fermentation,” he says. Even worse, vintners there used outdated growing techniques that produced poor quality fruit. Hobbs fretted he would not be able to convince them to try contemporary methods, and that he would end up stomping the grapes himself.

Today Hobbs owns a vineyard and winery near Mendoza, which has become Argentina’s prized region for viticulture. Last fall he released the latest vintage of his label, Cobos, at $60 per bottle. And Hobbs is not the only North American to change his mind about South American soil. In fact, wine lovers from around the globe who are eager to invest in quality vine land are eschewing places like California, with its astronomical prices, and exploring the Andean cone instead. The transformation of this arid region into an international wine center in slightly more than a decade is nothing short of stunning. And, although prices for prime vineyard property are rising, land is still a relative bargain for foreign investors.

While Hobbs winced at the plonk coming out of South America at the time, he saw potential for liquid gold in the region’s dry, sunny climate and rocky, well-draining soil. “I went down to Argentina thinking it would be a wasteland, and instead, I found great grapes that just needed to be farmed a different way,” he remembers. Hobbs and a couple of investment partners paid $1,200 per acre for their vineyard seven years ago—a fraction of the $100,000 to $200,000 per acre that was the going rate in the better appellations of Napa Valley. “Had I bought the property when I first arrived in Argentina, I could have purchased the land for about $400 per acre,” he says. Hobbs has no reason to complain, however. Vineyards in the area are now valued at $14,000 per acre.

CLOS APALTA comes from the Chilean vineyard of Alexandra Marnier-Lapostolle, the Grand Marnier heiress who decided to launch a winery in South America rather than in California.

New World’s Order
Those who planted vines in the last 15 years have seen stunning profits. Alexandra Marnier-Lapostolle, the heiress to the Grand Marnier marque, shunned California a decade ago when she decided to start a new winery, Casa Lapostolle, in the Apalta appellation of Colchagua in Chile. She was first attracted to the area on the western flank of the Andes because of its abundance of old-growth, phylloxera-free vines. (Phylloxera is a fungus that can be deadly to grape vines.) Her property supports a mix of these ancient, gnarled vines and a sizeable portion of new, disease-free ones, which she purchased locally. “Many of these vines were brought over from France in the early 1870s, shortly before France’s vines were devastated by phylloxera,” Marnier-Lapostolle says. “So Chile has this wonderful climate that grapes love, and vineyards that are virtually free of disease, so you can grow the vines organically.” Colchagua has become noted for its Cabernet Sauvignon, Chardonnay, Sauvignon Blanc and Merlot grapes.

For her $12 million investment—a relatively small sum for a sizeable modern winery—Marnier-Lapostolle assembled a 100,000-case capacity facility with the assistance of local partners. Had she chosen to locate her winery in Napa Valley, she would have paid double that for a facility of comparable scope. Marnier-Lapostolle made another wise move when she hired Michel Rolland as a consultant. Rolland, a sought-after winemaker from the Pomerol region of Bordeaux, was the first internationally acclaimed vintner to give his nod to the region’s potential 15 years ago.

Rolland oversaw the purchase of expensive French oak barrels and top-flight winery equipment, and supervised a complete overhaul of the property’s magnificent 100-plus-year-old Merlot and Carmenere vines. Rolland is also advising Marnier-Lapostolle on the vineyard’s new winery building, which will feature cutting-edge, gravity-fed equipment on five underground levels. Today Casa Lapostolle exports 50 percent of its wines to the United States; the remainder it distributes to Europe and Asia. Marnier-Lapostolle’s nine different wines start at $10 per bottle; her premium reserve blend, Clos Apalta, sells for $70.

“I walked into the Apalta vineyard and just had a feeling about it, that it could be really something grand,” she says. “It has been everything that I imagined it would be and more. Chile is the Switzerland of South America. It is easy to invest your money, and it is a stable and lawful country nowadays. Plus, the economy is growing at a steady 6 percent, so it is a very fruitful place to be right now.” The land Marnier-Lapostolle purchased in Chile in the early 1990s for a few thousand dollars per acre is now worth close to $40,000 per acre. Of course, this makes it more expensive to expand existing facilities.

AFTER FLINCHING at first, winemaker Paul Hobbs saw promise in Argentina’s vineyards. He now produces Cobos there.

Much of Argentina’s and Chile’s viticulture looks very much like Napa and Sonoma did 30 years ago, when high-quality wine production was becoming the norm in California. South American vineyard hands and winemakers, trained by French and North American experts, are up to speed. Investors no longer need to bring in experts or equipment from abroad.

Dry Wits
Louis Vuitton Moët Hennessy’s Terrazas, a state-of-the-art winery started in 1997 in Mendoza, recently released a premium wine in partnership with the Grand Cru Chateau Cheval Blanc. Called Cheval des Andes, it is a blend of Cabernet Sauvignon and Malbec that sells for $65. “If you look at the winery landscape in South America, the finest houses from Bordeaux are here,” says Manuel Louzada, Terrazas’ winemaker. “They would not be here if they did not believe we could make superb wine. I would put Cheval des Andes up to any fine wine for comparison.” Baron Philippe de Rothschild is also on the South American scene. In the early 1990s, the company partnered with Concha y Toro in Chile’s Maipo Valley region to launch the Almaviva label.

Of course, buying wine-growing property so far away from home is not for the fainthearted. After a long flight to Santiago or Buenos Aires, be prepared to take another short flight to a regional airport, and then drive, perhaps for hours, to reach your property. Many South American vineyards are in remote, mountainous terrain. In Argentina, the best wines come from the semidesert lands of Mendoza, where rainfall averages just 8 inches a year, and where the Andes blocks humidity from the coast. Certain hearty grape varieties, such as Cabernet Sauvignon and Malbec, love the well-draining soil and sun of this mountainous area. Grapes grown along the foothills of the Andes thrive in excellent sun exposure and limited rainfall, which stresses vines to create deeply flavored, dark purple grapes boasting great concentration.

As the popularity of Mendoza has increased over the last decade, so too has its prices. For this reason, investors are turning to less expensive, undeveloped regions that have potential. In Chile, investors are looking outside of the popular Maipo Valley and Colchagua, and are testing vines in a southern region called Marcilhue, which appears to have proper soil and good sun. Leyda, a region west of Santiago, has also attracted new growers. In Argentina, two relatively undiscovered areas show promise: Rio Negro and Neuquen in the south for reds, and Salta in the north for whites.

In general, vineyard property in Argentina costs less than property of similar quality in Chile. Argentina has another benefit that Chile cannot match: the Argentine government, expecting to encourage agriculture on undeveloped land, is offering loans at rates below 5 percent. In these areas, unplanted property sells for just a few thousand dollars per acre. Much of the land rests between 1,800 and 5,000 feet above sea level, an ideal elevation for growing grapes. “In Chile, you want to be along the hills of the Andes because you will have the best drainage for the soil,” Marnier-Lapostolle says. “Also, try to be along a southern mountain because your vines will get good sun exposure, but not the really hot afternoon sun that can burn the leaves.”

Marnier-Lapostolle advises would-be investors to make their own scouting trips to Chile and Argentina rather than rely on the advice of international real estate brokers. “It is all about relationships down there,” she explains. “You won’t see ‘for sale’ signs on the vineyards. You will only find out what is for sale by talking to the grape growers and the winery owners. Then they can lead you to the sellers.” But beware the region’s charms. Hobbs, who lives in Sonoma, says he never intended to own property in Argentina, but once he saw the region’s enormous promise, he succumbed. Now he is as proud of Vina Cobos as he is of his eponymous Sonoma-based label. “I would not charge that much for my wine if I did not think it could compete with the best Bordeaux or Napa Valley wines,” he asserts.
 
Vine Advice
These organizations and consultants can assist those who wish to start a winery.

Instituto Nacional de Tecnología Agropecuaria (National Institute of Agriculture and Farming Technology)
Silvia Del Monte
Carlos Catania San Martín
3853 Luján de Cuyo
Mendoza, Argentina
+54.261.496.3020

Instituto Nacional de Vitivinicultura (National Vitiviniculture Institute)
José Gibbs
San Martin 430
Mendoza, Argentina
+54.261.521.6600
www.inv.gov.ar

Facultad de Ciencias Agrarias (Agriculture Sciences University)
José Rodríguez (viticulture)
Bruno Cavagnaro
(physiology)
Rosana Vallone (pedology)
Alte Brown 500
Chacras de Coria
Luján de Cuyo
Mendoza, Argentina
+54.261.496.0004

Pedro Marchevsky
+54.261.498.6572
pmarchevsky@
dominiodelplata.com.ar

Paul Hobbs
Vina Cobos
phobbs@paulhobbs.com

Local vineyard and winery brokers can assist individuals looking for productive vineyard properties in South America.

Argentina
Milan Ricardo Propiedades
+54.261.425.6705

Chile
Olivier Tirel
Cox Properties
+56.285.528.32
oliviertirel@123.cl

Tara Weingarten writes for Newsweek, Wine Spectator, the Los Angeles Times, Esquire and InStyle. tweing@earthlink.net