A Region with Barrels of Potential Inside »
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FT SPECIAL REPORT Latin America’s Regions Doing Business in Mendoza Wednesday November 13 2013 www.ft.com/reports | @ftreports A region with barrels of potential Inside » The resourcerich Argentine province has a bright future, writes Tourists taste John Paul Rathbone the good life Skiing, climbing n the world stage, Argen- tina is perhaps best known and polo are all on for three things, all begin- offer before dinner ning with the letter “M”: Lionel Messi, the world’s Page 2 Obest footballer; mismanagement – Argentina is unique in its radical reversal from the advanced economic Plan for tunnel development it apparently achieved in the early 20th century; and Malbec, through Andes the Bordeaux grape that is celebrated Ambitious rail as Argentina’s most distinctive wine varietal. project could This report – the first in a series on transform region Latin America’s regions – is about a fourth “M”: the region of Mendoza. Page 3 Abutting the Andes, this desert state is a microcosm of Argentina’s poten- tial, although in this case “potential” Oil chief seeks is an overused word: Mendoza has already realised much of its promise. shale funding There is its wine, of course, because Miguel Galuccio is Mendoza forms the centre of Argen- tina’s centuries-long wine tradition working to attract that has been upgraded with Zen-like new investors attention to oenological detail to earn its vineyards, such as Bodega Catena There is Impsa, a turbine manufac- second biggest media company; and All in good time: wine casks ageing Most distinctive of all, however, is Page 5 Zapata and Mendel Wines, a global turer that has the technology to take large mineral and energy deposits, at Mendoza’s Bodega Catena Zapata the state’s work ethic – which Charles profile. No self-respecting Argentine – on global competitors. With deep from uranium, potash and copper, to Darwin missed when he visited and or for that matter European or Cali- roots in the state, the family-owned gas and oil. wrote that “the happy doom of the Former banker fornian – millionaire with more than a company, now in its fourth genera- “Mendoza produces a fifth of Argen- Mendocinos is to eat, sleep and be passing interest in wine does not also tion, has annual sales of more than tina’s oil,” says Miguel Galuccio, chief idle”. But Darwin visited almost 180 indulges taste want to own at least a few hectares in $1bn and is a genuine “multilatina” – executive of YPF, the national oil years ago, and in the summer, when for liquid assets the wine lands of the Uco valley. a Latin American company with a company. temperatures can top 40 degrees and a But it is not only wine and its larg- presence across the region. With the development of the vast siesta is almost obligatory. O. Fournier owner est exporting companies, such as There is also Roberto Zaldívar, one Vaca Muerta shale gas formation set Mendoza’s celebrated work ethic has no regrets Peñaflor, the eighth largest wine com- of the world’s leading ophthalmolo- to push ahead over the next few derives partly from its proximity to pany in the world, that gives Mendoza gists, who practises out of his Mendo- years, it will soon account for even Chile – Santiago, the capital, is only Page 6 a certain cosmopolitan air. cino clinic; Grupo Uno, Argentina’s more. Continued on Page 3 Sunkissed state that has clasped the joys of winemaking to its heart counterbalances this. grapes earlier and reducing Mendoza’s vineyards the number of new oak used to be concentrated on The resultant barrels. the fertile plains around grapes have There has been no the city, making vast shortage of outside quantities of slightly rustic time to build up investment in Mendoza reds and pinks and some wine. decidedly heavy, often subtlety as Prominent incomers oxidised, white wines. well as sugar include Michel Rolland, the Rainfall here is low – world’s most famous barely eight inches, or consultant winemaker who 200mm, a year – but the departments for fine wine owns the Clos de los Siete melted snows of the Andes production in the Uco winery; Diane and Hervé have (so far) provided valley, with La Consulta Joyaux Fabre of Fabre supplies of irrigation water district cool enough to Montmayou; California’s – sufficient to plump up have encouraged growers Cuvaison; Cava giant the grapes nicely. to plant white wine grapes Codorniu; and José-Manuel So high were yields as well as the finicky Ortega, a Spanish former Expert view traditionally – often several Pinot Noir that ripens banker whose wife also JANCIS ROBINSON hundred hectolitres per so early it needs a runs one of many exciting hectare, when the usual particularly cool climate. restaurants in the wine I have been to most of the limit for France’s better But Malbec is by far the country outside the city of world’s wine regions but wines is about 50 hl/ha – dominant grape variety of Mendoza. I have never been to a that Argentina was at one Mendoza province. Indeed, Argentina, with its waves place where wine is so time the fourth most Mendoza Malbec has of immigration from deeply embedded as in important wine producer in played by far the biggest France, Spain, Italy and Mendoza. the world. part in Argentina’s Germany, has long Bordeaux and Porto run Americans have planted successful transformation benefited from its it close, but both have the vine so enthusiastically into a successful wine particularly diverse range other important that the US has overtaken exporter. of cultural influences and commercial activities. Argentina in terms of total It produces rich, all of these are reflected The neat grid of tree- volume produced, helped powerful wines, in the increasingly lined streets of Mendoza’s by the fact that Argentina, typically packaged in wide variety of wines capital, also called not much of a wine overweight bottles coming out of Mendoza. Mendoza, seems designed exporter in the 1980s, had that satisfy Rather unexpectedly, to spirit you as quickly as a national vine pull marketeers if not Mendoza turns out to possible to one of the scheme. ecologists, and be the source of some numerous vineyards But, in the past 25 years conform to what has particularly fine, outside the city. or so, the Argentine wine been the stereotype of distinctive Walk through the industry has woken up, a successful red wine. Chardonnay, a grape brilliant white 19th-century become much less insular, Mendoza Malbec that seems to thrive in Spanish colonial façade of and started to export in was such a hit in the relatively long the Park Hyatt, Mendoza’s great quantity. the US market hours of Mendoza most prominent hotel, The crucial ingredient that producers in sunshine. overlooking Plaza in the mix was a redrafting Cahors in Torrontés, the Independencia, and you are of the Mendoza wine map. southwest Argentine assailed by invitations to Since the late 1980s, France, home speciality white sample a glass of wine in vineyards have been of the grape grape, also a bar, join a tour of the planted at much higher variety, started thrives there, as vineyards or buy a bottle altitudes, where cooler calling their does Pinot Gris or two. nights slow the ripening grape Malbec and even There is something about process and prolong the instead of Friulano, as the quality of light – growing season, meaning using their well as, from a brilliance typically that the resultant grapes traditional the highest filtered by the leaves have time to build up names Cot and vineyards, overhead – that echoes subtlety as well as sugar Auxerrois. Sauvignon what the local producers while retaining refreshing But the Blanc. believe defines their wines. acidity. winds of Mendoza is no At 750m elevation, the The belief is that the change have longer a one- city of Mendoza is already clarity of light here plays a recently been grape wonder, relatively high. But it is part in building up the blowing even if hail the altitude of the phenolics so important to through the remains the vineyards and the quality fine red wines. vineyards of bane of every of the ultraviolet light Many of the best new Mendoza, with vine grower’s there that gives vineyards have been many producers spring and distinction to them and planted in the Uco valley deliberately summer. their produce. at altitudes of up to making finer, Mendoza is on roughly 1,700m. In Europe, 500m is more scented the same latitude as Tunis, regarded as the maximum reds from their Light fantastic: which is normally too altitude at which grapes signature grape Mendoza’s wines close to the equator for can be persuaded to ripen. variety by, echo the unique good quality wine Tupungato and Tunuyán among other characteristics of production, but altitude are the most important things, picking the region 2 ★ FINANCIAL TIMES WEDNESDAY NOVEMBER 13 2013 Doing Business in Mendoza Mining potential not yet realised Tumbling prices leave potash mine in limbo Minerals A law But under the concession’s terms, Development the Brazilian group had to pay a meant to protect small fee every year and make a mini- The loss of a big investor has mum capital investment within the farmers is blocking put a potentially valuable first five years, all of which it did. “Vale over-complied,” says Raúl development, says export industry in doubt, Rodríguez, a mining specialist at Bar- writes John Paul Rathbone raza, Rodriguez, Diaz & Gregorio, a Benedict Mander Mendoza law firm. “With the annual fee paid, the concession is fixed and It was a sign of how bad things had safe.” he vast mineral wealth deep become.