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| April 9th 2007 |
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| Argentina: Success has many fathers |
by Jürgen Mathäß
Despite its size Argentina managed to change direction in a very short period of time. Huge investments have turned what had been an antiquated approach into pure innovation. Of late, the leading export markets are starting to take notice of the unusual...
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features of Argentinian wines. Within four years the value of Argentina’s wine exports had tripled from $110 million in 2002 to $346 ( 263 million) in 2006. In addition, Malbec is beginning to garner not only attention, but also respect. Due to the sheer distances involved, the soils of the individual Argentinian wine regions differ greatly. All are, of course, influenced by the Andes. Near the mountains and on the slopes they are rocky in nature, while in the valleys the soils are more finely granulated. Sandy, porous soils are widespread, and fertile layers can be found as alluvial deposits near the rivers. There are also occasional outcrops of chalky or volcanic soils.
Varied Soils
For several decades, Argentina thrived on its large domestic market and, until about 15 years ago, its wine producers were not particularly interested in exporting wine. Since then, much has happened – and fast. The wine world has taken notice of the unusual terroir of its vineyards, Argentinian producers have realised the potential of global trading, and the peso has been unpegged from the dollar.
Despite its size – it has more than 200,000 hectares of vineyards – Argentina managed to change direction in a very short period of time. Huge investments turned what had been an antiquated approach into pure innovation. The leading export markets started to take notice of the unusual features of Argentinian wines, and within four years the value of Argentina’s wine exports had tripled from $110 million in 2002 to $346 (€263 million) in 2006.
Discounting was not a factor, since even the most dynamic export market, the United States, has been trading up. In addition, Argentinian Malbec has gained recognition in key markets such as the United States and Brazil - and is beginning to garner greater attention elsewhere. In 2006, 20% of all Argentinian wines exported were made from Malbec.
It is becoming increasingly obvious that Argentina will be one of the winners on the global wine market, as the following reasons make clear. Due to the sheer distances involved, the soils of the individual Argentinian wine regions differ greatly, though they are all influenced by the Andes. Near the mountains and on the slopes they are rocky in nature, while in the valleys the soils are more finely granulated. Sandy, porous soils are widespread, and fertile layers can be found as alluvial deposits near the rivers. There are also occasional outcrops of chalky or volcanic soils.
Sandy, pebbly soils are characteristic for the climatically different vineyards of the Province of Salta, at an altitude of 1,800–2,000 metres. Rioja, with its vineyards situated at 1,100–1,400 metres, is the birthplace of winemaking in Argentina. It was here, in the 16th century, that Spanish priests planted the first vines that they had brought with them from Peru. Rioja and Catamarca possess relatively rich soils – some chalky or sandy, some of clay – on which |
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formidable quantities of grapes are produced.
The Province of San Juan, with its 48,000 hectares of vineyards, is the second most-important region and has always been considered to be the ‘younger brother’ of the Mendoza region, situated some 170 kilometres further south. Fertile soils guarantee abundant grape crops which, in turn, are the reason why San Juan is still renowned not only for the production of grape juice concentrate but also for wine in Tetra Pak. More recently, however, there has been an expansion into less-fertile areas.
In Mendoza, by far most important wine-producing area in Argentina, the terroir of the widely spread vineyards can differ dramatically. Common to all the vineyards, though, is that they lie on the final 150 kilometres of a plateau that slopes gently towards the west, beginning at the Atlantic Ocean and climbing for 1,000 kilometres to the foot of the Andes, at an altitude 1,300 metres. The highest vineyards, which are also the coldest and most barren, are the most westerly, situated at the foot of the Andes. They are also the vineyards which experienced the boom that started in the middle of the 1990s.
Traditionally, viticulture took place between 600–1,000 metres on sandy, clayey and sometimes even chalky soils, and it is here that today some of the most outstanding vineyards and wines can be found.
Around Lujan de Cuyo there are chalky soils that favour Malbec, as well as alluvial deposits with a high concentration of gravel. Vineyards have also been established at higher elevations towards Alto Agrelo and Tupungato. The Valle de Uco starts some 60 kilometres southwest of Mendoza near Tupungato and crosses Vista Flores and La Consulta in the province of Tunuyan until it reaches San Carlos. Here, on soils that are barren, yet rich in minerals, are to be found the most promising vineyards.
From 1995 onwards, spectacular new plantations took place after French investors bought up large areas of uncultivated land. The fertile soils around La Consulta and San Carlos have long been known for their outstanding terroir. In the southern part of the province, near San Rafael, the soils are more marshy, with a relatively high concentration of chalk.
More than 800 kilometres south of Mendoza, in Patagonia, one again finds professional viticulture. The soils of this ‘wine region of the future’ derive from both scree and alluvial deposits, and are very stony and sometimes sandy, with high gravel content. The high concentration of minerals, particularly basalt, porphyry, granite and gneiss brought down from the mountains by rivers, are an advantage.
A Unique Climate
Argentina’s vineyards have the unique advantage of being located on a continental plateau. Fifteen years of modernisation and an ever-increasing number of world-class wines demonstrate that the development of this future potential has only just begun. Despite the distances between Salta, Rioja, San Juan, Mendoza |
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and Patagonia, these regions have in common the dry plateau climate found on the east side of the Andes. This climate is characterised by pure dry air, extreme variations between day- and night-time temperatures, and short-lived yet severe changes in the status quo. The rainy season is generally during the summer months and is often accompanied by thunderstorms.
This unique climate is completely different from the moderate climate of Argentina’s neighbour Chile, and offers the grapes unusually good conditions for maturation during the dry and warm vegetative phase. The dryness of the climate also reduces the outbreak of diseases, so that the vines can be grown with less interference. The winefarmers’ only natural ‘enemies’ are frost, regional hailstorms and the Foehn winds – called Zonda winds in Argentina.
Traditionally, world viticulture has taken place in warm areas with sufficient water to ensure large crops of grapes with a high concentration of sugar.
Although thousands of such vineyards are still to be found in San Juan and Mendoza, the beginning of the 1990s saw more and more producers turning to the production of higher quality wines for the sophisticated export markets. The fertile, easy-to-farm areas lost out to terroirs capable of producing wines with more character. This reorientation is taking place not only in the traditional wine-growing areas, but also in the higher altitude vineyards that have been planted over the past few years.
Towards the north of Argentina, near the provincial capital of Salta, there is rich green vegetation due to the nearby equatorial zone, and wine growers have had to move into the mountains to escape this subtropical climate. The most northern vineyards can be found at an altitude of 1,700–2,300 metres, and thus belong to the highest and most remarkable vineyards in the world.
Although their share of Argentina’s total vineyard area is still very small, their wines are among the most unusual in Argentina, full of character.
Three-quarters of all Argentina’s vineyards are to be found in the Province of Mendoza, which has shaped Argentinian viticulture. Large expanses of vineyards well-irrigated by the Mendoza, Tunuyan and Diamante Rivers offer diverse climates, ranging from extremely hot in the east, near Medrano, which is ideal for Syrah; to the cool temperatures of Tupungato or Vista Flores, where Sauvignon Blanc and Pinot Noir thrive; to near the Andes, where the cool climate imparts a fruity note to Cabernet Sauvignon and Malbec. The more southerly, cooler Valle de Uco is proving to be a terroir with an enormous potential for high-quality white and red varieties – its cool climate has average temperature variations between day and night of 15°C.
A wine style for the future
The unique combination of altitude, long hours of sunshine and temperature variation stimulate the production of wines that are fruity yet masculine, a |
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style that has become extremely popular on the international wine markets. They also combine the positive attributes of modern, fruity wines with the classical character and tradition of European wines.
In the past the strength of the traditional growing regions of Europe was in wines with robust structure, a welldefined framework of tannins and pronounced longevity. Over the past 20 years these wines have been challenged by fruity wines, in a softer style, which are immediately accessible, in particular, to the North American market. But while the more traditional wines do not display the same fruit or charm while still young, their ‘modern counterparts often lack the depth of flavour and longevity. The aim of most oenologists throughout the world is to develop an optimal combination of both these stylistic elements. Regrettably, as it requires cooperation between oenologists and viticulturalists, this has only been achieved by a few top-quality wines from special terroirs capable of producing enough fruit character before the more masculine elements of tannin and acidity are lost.
In Argentina, this ‘special terroir’ can be found in the distinctive combination of desert climate, high altitude, long hours of sunshine, and a clean, relatively cool atmosphere which allows a ‘separate’ development of both fruit and tannin. The photosynthetic production of fruit and sugar is encouraged by the long hours of sunlight, while the tannin and colour are influenced by beneficial temperatures.
At the same time, healthy acidity and a pronounced grapey aroma are stimulated by the difference in temperature between day and night.
The resulting wines display a distinctly pronounced aroma and fruity flavour only found in the best wines from the Côte de Beaune. Burgundian charm paired with a well-defined structure is undoubtedly one of Malbec’s outstanding features, and the secret of its popularity among lovers of wine throughout the world. It can continue to mature for many decades, as can be seen in the cellars of Weinert, Lopez or Norton.
As with all great varieties, Malbec is dependant on the terroir in which it is grown. Warm climates produce darkcoloured, almost inky wines that, when overripe, become reminiscent of honey. Cooler climates produce more pronounced fruit aromas and acidity, while high yields lead to an earthy, almost vegetal style. Once scorned by winegrowers as being the prima donna of all grape varieties – vain, obnoxious and temperamental – due to its susceptibility to frost, incomplete fertilisation and rot, they have now realised that Malbec, however irritating, is indispensable.
Admittedly, it has taken a while for Argentinian wine growers to realise how precious is the jewel that has slumbered in their vineyards. Even 15 years ago, that doesn’t come at the expense of structure, character or longevity. This is the wine style of the future, as the modern consumer wants to drink |
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neither hard, unapproachable wines nor those with a soft, almost boring fruitiness.
Malbec
Although originating in Europe, Malbec first demonstrated its full potential in Argentina. The well-known Malbec producer Ricardo Santos often jokes that ‘Malbec is an Argentinian variety that was once cultivated without success in France’ – and there is some truth in this. The Argentinian terroir, with its arid, warm climate, appears to stimulate this grape variety to new heights of character and flavour, particularly when old vines, chalky soils and a minimum altitude of 900 metres come together.
The typical Argentinian Malbec is a well-structured, but not angular wine that, in its youth, displays a violet-red colour. Ideally, the wine develops an earthy aroma, reminiscent of plums or cherries, and a smooth texture, a combination of charm and finesse normally old Malbec vines were being grubbed up, but fortunately sufficient old vineyards with exceptional terroirs escaped and Malbec has become Argentina’s viticultural ambassador to the world.
In 2007, 30% of all Argentinian wine exports were of Malbec – either as a named grape variety or in a blend – while in 2006 22% in 2005 only 19.5%. This indicates the repositioning of Malbec as a variety capable of producing a wide range of wines – from simple brands through to rosés and culminating in top-rated world-class wines. The high proportion of wines made from Malbec on the export market shows that the consumer is actively seeking out this variety – and not just because it happened to be the cheapest wine available. On the contrary, Argentina and Malbec have become synonymous, and Malbec is, without doubt, Argentina’s unique sales proposition on the most important export markets.
Torrontes & Co.
Malbec is the engine driving Argentinian wines to all corners of the world, but other grape varieties also thrive and deserve credit. While several international varieties achieve unique expression on the eastern slopes of the Andes, some of these varieties are indigenous to Argentina. The following are some key examples: Rioja is the home of Torrontés Riojano, the predominant variety of this area and since 1995 protected under the designation of origin ‘Torrontés Riojano Valles del Famatina’. Although unknown outside the region, there are one or two exceptional vineyards in the Province of Salta. The most characteristic feature of this variety is its aroma, reminiscent of a delicate Gewürztraminer or Muscatel. Indeed Torrontés is possibly the ideal grape variety to illustrate the effect that climate and temperature can have on the development of aroma, and for this reason many experts predict that it could become the white sequel to the Malbec success story.
Bonardo might sound Italian. However, the fact that it is not of Italian origin is the only accurate information latter excels with its more mature fruit and |
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leathery overtones.
Even Syrah reaps the advantages of the elevated desert climate, being possibly the most underestimated variety in some of the warmer Argentinian terroirs. Colour, aroma and tannin structure benefit from the dramatic changes in temperature in the lower regions of Mendoza and in San Juan, endowing the wines with a luscious, aromatic fruit and an almost a European style.
Pinot Noir should not be overlooked, either. When successful, it is a true work of art and for this reason oenologists have been experimenting over the past 10 years in selected higher altitude sites in Mendoza as well as in Patagonia. We remain impatiently curious!
Further, even Tempranillo has been successfully resurrected in the area around La Consulta and Chardonnay, of course, has for some time produced firmly contoured and long-lasting wines.
available about its origins, and the ampelographer Alcalde claims that it is identical to the old French variety Corbeau. While for many years this variety was used to produce enormous quantities of simple red wine, there is now a trend towards reducing the crop size and enjoying the succulent, deep-red yet finely structured qualities this variety is capable of producing.
Until it was overtaken by Malbec, Cabernet Sauvignon was, for a long time, the insider’s tip when it came to Argentinian wines. However, it would be wrong to underestimate the typically Argentinian style of Cabernet Sauvignon, which is generally mature, but without any loss of the grape’s characteristic complexity or structure.
For those more curious in nature, the difference between Chilean and Argentinian terroir becomes immediately apparent here. While, the former is often marked by a soft, fluffy fruit, the latter excels with its more mature fruit and leathery overtones.
Even Syrah reaps the advantages of the elevated desert climate, being possibly the most underestimated variety in some of the warmer Argentinian terroirs. Colour, aroma and tannin structure benefit from the dramatic changes in temperature in the lower regions of Mendoza and in San Juan, endowing the wines with a luscious, aromatic fruit and an almost a European style.
Pinot Noir should not be overlooked, either. When successful, it is a true work of art and for this reason oenologists have been experimenting over the past 10 years in selected higher altitude sites in Mendoza as well as in Patagonia. We remain impatiently curious!
Further, even Tempranillo has been successfully resurrected in the area around La Consulta and Chardonnay, of course, has for some time produced firmly contoured and long-lasting wines.
Investment and Modernisation
Fifteen years ago, with very few exceptions, the Argentinian wine industry had no vision for the future. The maturation of wines in barrique was still at an experimental stage, wineries were in the “colonial” style, featuring concrete fermentation vats with |
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no temperature control, and fermentation often even still took place in enormous wooden vats from the local Rauli.
Drop-irrigation and trellis cultivation were things of the future, seen only in books, and crop restriction was a foreign word. Since then, however, Argentinian viniculture has undergone a major revolution. In the face of declining domestic wine consumption and the explosion of Chilean exports of modern, international-styled wines, this change was radical and necessary. Modern vineyards and improved production brought with them better quality wines, and the country saw the advantages of exporting. The necessity to invest in new technology for this phase was understood by some businesses and forced others, who could not follow suit, to sell their wine cellars and vineyards. This attracted international players, such as Swarovski, Pernod Ricard, and Donaldson, Lufkin & Jenrette, who made investments that amounted, unofficially, to $1,550 million. Several firms, such as the Familia Arizu, Valentín Bianchi, La Agrícola, Grupo Catena, Bodegas López, Goyenechea, nevertheless remained in Argentinian hands.
According to a survey carried out by the Consejo Empresario Mendocino (Business Council of Mendoza) between 1999 and 2005, the vinicultural sector made investments of 1,800 million pesos (AR$). Continuing stability allowed planned investments to continue, and these are anticipated to total around AR$600 million (€147 million between 2006 and 2010. These funds are expected to be made up of 45% Argentinian capital, 37% European capital, and 14% Chilean capital.
Global perspective
Fifteen years ago, almost no Argentinian wine producer had export experience. In 2007, however, there is a long list of dynamic enterprises with state-of-the-art production and marketing facilities, stable domestic connections, and a professional appreciation of business abroad. The leading producers, such as Catena, Peñaflor (Trapiche), Norton, Terrazas, Pernod Ricard and Familia Zuccardi, are dynamic organisations with international experience and strong brands.
The fact that, with the exception of Catena, these companies were established through international investments or are part of multinational conglomerates with global distribution networks, illustrates how international the Argentinian wine business has become - without losing Argentinian character!
It is now taken for granted that even middle-sized bodegas have professional export departments to negotiate with their foreign customers. The opening up of the export markets has, in turn, revived the domestic market. Brands that had only been successful abroad are now gaining recognition on the domestic market, resulting in an improvement in both quality and price. The percentage of high quality wines is increasing, as is per capita consumption.
José Zuccardi, who knows the Argentinian market as well as most of the key important export markets, describes |
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these phenomena as follows: ‘The entire way of living with wine has changed, both with regard to importers and specialists as well as the finals consumers themselves.’
Strong brands
Strong brands are a key when a wineproducing region enters a new export market. The next step is for the exporting country to prove that, alongside these major brands, it offers specialities in the most diverse price segments. Argentina has an advantageous supply structure, and it was thus relatively easy to achieve high rates of growth in key export markets.
The leading Argentinian producers have been able to establish their brands on the most important markets - and brands such as Alamos, Norton, Fincas Las Moras, Trapiche Reserve and Trivento have become household names. Since these companies are well-equipped to expand their portfolios with either additional brands or higher quality terroir wines, room has been created for numerous younger, smaller producers working with wines of exceptional quality. Fin del Mundo, Colome, Clos de los Siete, Noemia, Carlos Pulenta, Fournier and Dominio del Plata are examples of this development. Between the extremes of brands and terroir wines, there is also sufficient room for producers of mid-range wines, and Argentina displays considerable strength in this value for money category. Growers also have the capacity to produce bulk, grape must or concentrate as easily as bottled wines.
Unlike other wine-producing countries, premium Argentinian wines do not suffer from the production of bulk, since these, for the most part, are sold anonymously on the global markets as table wines with no claimed region of origin.
Generic Marketing
Under the Wines of Argentina banner, the wineries of Argentina speak with one voice. Thanks to corresponding regulations and improved funding, this voice is now being heard loud and clear the world over.
Susana Balbo, the president of Wines of Argentina, is also the best-known oenologist in the country, having worked in several of its regions. Together with her husband, Pedro Marchevsky, she now runs her own Bodega, Dominio del Plata, founded just a few years ago.
Here she discusses the future of Argentinian wines in the most important export markets with Jürgen Mathäß. Jürgen Mathäß: Over the past four years, Argentina has been able to dramatically increase its wine exports. Which wines are going to be successful in the future?
Susana Balbo: I think that most obvious candidates are Malbec and Torrontes. Both have already made their mark. Over and above this, there are a number of other varieties with which Argentina can prove that, given the right climate conditions, it can produce exceptional quality Cabernet Sauvignon, Chardonnay, Merlot and Pinot Noir alongside lesser-known varieties such as Angelotta or Aglianico. After all, Argentina is famous for its plurality.
Wines of Argentina will have considerable spending |
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power over the next few years. How and in which countries will this money be spent? Wines of Argentina has set out a strategic plan, ‘Argentina: Plan Estratégico Vitivinicola 2020’. Having just concluded last year’s business at 3%, we expect to command 10% of the total world wine export business by the year 2020. Part of the plan foresees six key countries being selected for the period 2005 to 2007. In decreasing order of importance, these are the United States, England, Brazil, Scandinavia, Russia and Canada. We will be closely monitoring the developments in these countries so that we can make the corresponding adjustments or changes towards the middle of each year. The key factor is, of course, whether we can achieve the goals we have set ourselves.
Which arguments can Wines of Argentina present to international companies to encourage them to become involved?
Wines of Argentina will continue to work hard to enhance consumer awareness. Research has shown that the consumers do not have sufficient knowledge of Argentina, and many do not even know that we produce wine, let alone wine of quality. As a result, we are currently working on ways to make this information available to more and more organisations.
In addition, we are participating in consumer fairs, and are showing our would-be exporters how to contact the key people in the international wine business and how to present their offers effectively. We are forging strategic alliances with international hotel chains so that we can run Argentinian theme weeks or months in their hotels. We are also working closely with the Argentinian National Tourist Agency in order to promote the idea of wine and tourism. We negotiate consumer tastings with major retailers in order show the consumer what makes Argentinian wines so different and illustrate the interaction of price and quality. Obviously, we also work closely with key people in the wine business to promote the idea of Argentinian wines at this level.
The interests of the large producers and brand owners are, by definition, different to those of the smaller producers of top-quality wines. Do you intend to adapt your activities to the needs of different producers or other segments of the market?
We work closely with the bodegas, and for the smaller producers we organise trade-contact meetings prior to the tastings. We offer training programmes showing how to make contact with the key players and how to awake their interest for the products in question. We maintain a databank containing addresses and information that we make available to the smaller bodegas, as well as organise marketing seminars in key countries.
For the larger producers, we manage the public relations’ work together and coordinate advertising campaigns. These companies are generally already established on the markets in question and are the engines for creating even more demand for Argentinian wines.
The smaller producers only need to |
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follow suit with higher quality wines and make their contribution to an enhanced image Brand Argentina.
Satisfied Importers
10 What are the major advantages for wines from Argentina compared to those from other countries? Adam Sager: First, it is the consistent quality, with little vintage variation, and the wide diversity of varietals that thrive there. Argentina’s core competence is, of course, Malbec. Further, organic farming is well suited to the climate and geography of region. Finally, the people behind the wines are friendly, passionate and market driven. The only other region that compares is Australia.
When did you start with Argentinian wines and how is their evolution? Adam Sager: We met Jose Zuccardi at Vinexpo in 1995. Depletions were slow in the beginning, as Argentinian wines were not yet mainstream. However, our sales have grown nicely over the last two or three years and we expect the fastest growth is yet to come. What are the major advantages of wines from Argentina compared to those from other countries?
Alex Batholomaus: The three big points for wines of Argentina as compared to other countries are:
(a) low cost and high quality. The wines coming out of Argentina today continue to increase in quality. The favorable currency causes costs there to be much lower than in California or France. Because of the lower prices associated with doing business in Argentina, wineries are able to charge less for their products than wineries in other areas of the world. This is eventually reflected in the final retail price for the end consumer.
(b) In the case of Bodega Catena Zapata, and many other Argentine wineries, vineyards are thriving at very high altitudes. It has been proven that these high altitudes create ideal characteristics in the grapes that are not present in the same magnitude in fruit grown in the lower altitudes. The cooler temperatures allow for the grapes to grow to full maturity at a gradual pace. This allows for a smoother and more mature tannin structure and the aromatics develop to be much more intense. The geography of Argentina, with the Andes Mountains and their foothills, allow for vineyards to be planted as high as 5000 feet above sea level.
(c) The third element that really makes Argentina stand out from its wine producing counterparts is Malbec. Although it grows in other areas of the world, no one has had the success with this grape that Argentina has had. Malbec has grown to become the most well-known and respected red varietal coming from Argentina.
When did you start with Argentinian wines and how is their evolution? Name: We got our start working with Argentinian wines through my father, Alfredo, the founder of Billington Imports. He started the company in 1985 and built our business on selling the wines of Chile. Following this success, the wineries of Argentina began turning to us to bring their products into the United States as well. We began working with Argentinian wines in |
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the late 1980s and launched Bodega Catena Zapata in 1990. With our passion behind the product, Argentina secured its place on the wine producing map and Billington once again earned the title of pioneer.
Having grown up with my father's appreciation for wine, I graduated from the College of William and Mary in 1994 and joined my father full time. Four years later, in 1998, I took over the day to day operations of the company and now carry the title of President and Chief Executive Officer.
What is special about wines from Argentina compared to other countries? Matthew Dickinson: Argentinian wines represent exceptional value for money. The fruit character and finesse are seriously interesting. And we really value the potential. In terms of exports, the situation with Argentinian wines is pretty embryonic. The wines are going to get even better in five, six, or seven years time, when the vines are older. And the Argentinians are still fairly unsophisticated in terms of how to attack a market compared with, say, Australia. When did you start with Argentinean wines and how is the evolution?
Matthew Dickinson: Thierry Cabanne went to Argentina in 1991, looking to expand his portfolio outside France. Argentina had that slightly Wild West feeling. There was a sense of really pushing out beyond established frontiers. José Alberto was a vineyard owner, who was selling wine in bulk. What Thierry liked was the one question José Alberto asked: what do I need to do to make better wines, and build a stake in the UK market? Thierry told him he needed a proper winery, vineyards better than anyone else’s, and that he had to build a philosophy and develop a personality for the wines. But it was that question that started the relationship going. Thierry liked José Alberto’s inquisitive mind. Now Zuccardi is one of our longest staning suppliers, and we have a great relationship. It hasn’t always been easy to import Argentinian wines. And there was a question of returning to bulk shipment a few years ago, but José Alberto felt it was the wrong thing to do, and we’ve stood by that decision.
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